Without would be the suggested price per pill?
The R&D and development costs for the new drug were $1.2B. Variable costs are estimated at $25 per pill and allocated fixed costs are estimated to be $8 million per year. Since interest will be highest in the early period after launching from all the existing AIDs/HIV patients, Actavis would like to recoup 100% their development costs from U.S. sales only in 3 years if that is possible and, of course, earn a good profit margin of at least 30% by year three and beyond. There are 39 million possible consumers. For pricing let’s assume that the average channel margins based on retail price for prescription drugs are as follows: 10% wholesale, and 20% retail.