Task 1

Anglo-Swedish drug firm Astra Zeneca spend approximately $11 million per working day on Research and Development (R&D). What sort of level of sales revenue and profit does the company have to manage in order to justify this level of investment? Go to the Astra Zeneca Business Profile to find out more. (http://www.bized.co.uk/compfact/astrazen/azindex.htm)

What sort of effect would you expect if a new product failed to live up to expectations, given the R&D cost involved?

Image: What level of sales revenue do new products need to justify the amount of investment in R&D? Copyright: Paul Quinlan

Task 2

Go to the Guardian article about the 'Crestor' launch in the USA, to read more about problems that have surfaced over the launch of Astra Zeneca's new cholesterol-lowering drug 'Crestor'. (http://www.guardian.co.uk/business/story/0,3604,1055734,00.html)

Create a list of main points made after reading through this material to show some of the risks taken by firms with high R&D spending.

Here's a list of information that should prove helpful:

• In America in 2004, it was calculated that 58 million adults were overweight, 40 million were obese and 3 million had life-threatening obesity levels.
• The US market for cholesterol-lowering drugs was worth $13 billion in 2003.
• Astra Zeneca expenditure on promoting Crestor was forecast to reach $1 billion in its first year.
• Market leading company Pfizer spent double this on promoting their Lipitor product in 2002.
• Lipitor generated $8 billion sales for Pfizer in 2002.
• According to a study in 2001, one in every five adults in England - around eight million in total - is obese.
• Obesity was the cause of 18 million days of sickness absence in England in 1998.
• By 2010 obesity and its consequences are expected to cost the economy in England more than £3.6 billion a year.