Re: A certain pharmaceutical firm recently developed a new medicine, Denda
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05 Mar 2025, 01:43
OFFICIAL EXPLANATION
(A). The argument provides information about the substantial costs associated with the development of Dendadrine. Yet the management views Dendadrine as a highly profitable project. To reconcile these claims, the correct answer choice will demonstrate that the drug will generate profits that will more than compensate for the high initial expenditures associated with its development.
(A) CORRECT. If management expects to earn patent protection for the new drug, then the company can also expect to charge the unusually high prices that will more than compensate for the initial research and development costs.
(B) While this choice explains the high costs associated with the development of Dendadrine, it says nothing about how well such products do on the market and whether they subsequently become profitable.
(C) Although this choice supports the idea that Dendadrine will sell well, it does not specifically support the contention that the drug will be profitable in the face of unusually high costs.
(D) Although this choice supports the idea that Dendadrine will be the primary, if not only, treatment for this market segment, it does not support the contention that the drug will be profitable in the face of unusually high costs.
(E) Although this choice supports the idea that the market for Dendadrine is very large and will generate revenues in excess of $\$ 5$ billion within a few years, it does not specifically support the contention that the drug will be profitable in the face of unusually high costs.