Cap and Dividend

Article Kollmeyer, Barbara. Novartis prepares for crucial medicines apparent(a) expiry: daybook. foxbusiness.com (online), December 31th 2008 Essence of the story This article talks roughly the soon-to-be patent expiry for the drug Diovan in 2012. This drug is employ to incompatible high-blood pressure and is the leading drug in the commercialize overdue to its patent by Novartis AG. Novartis is now looking into spic-and-span types of interrogation to counterbalance the loss of this patent, and the enormous drop in gross sales that pass on follow. It is predicted that Novartis AG get out lose 21% of its $39.8 in sales, making it a move up quarter drop in total sales. The comp both has move to a raw drug called Tovaris. They plan to invest hundreds of millions of dollars in this hypertension pill as well as new drugs to treat wadcer and early(a) diseases. They also plan to flip ones wig sharply into emerging grocerys to expand their sales befo re their patent loss. The synopsis will accord with the affect of the patent expiry on this particular drug market. Economic Analysis Economically, the loss of a patent generally intend that a market switches from a monopoly to a more hawkish market. A patent is a yield made by a government that gives special rights to the precedent of an invention to make, use, and snitch that invention for a set uttermost of time.

A unattackable becomes an automatic monopoly in any market that they own a patent to. By having the sole rights to snitch this product, the firm has bonus to maximize mesh because it has no competition. T herefore, by reducing its end product from ! QE to Q1, it can effectively append price from PE to P1 to maximize its profit (Operating at MC=MR). An reward of having the patent is that the firm can operate at subnormal profit without being shake of having to change its price or output at any given time. So in 2012, when the patent expires for this drug, new firms will have incentive to embark the market and sell the drug under a generic...If you requirement to get a ripe essay, order it on our website: BestEssayCheap.com

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