Managerial Analysis FINA 6387 Swati Basu Due by 6 p.m. on April 10 (in class) Question 1 (75 points) Please read the Case \"Pricing the EpiPen: This is going to Sting" included in your HBS course package and answer the questions listed below. This case examines the public controversy that erupted over the increasingly high price of EpiPens, culminating in a media fire storm and political intervention. Please keep your discussion within 180 lines (single spaced, 12 pt. font) for the analysis (all parts included). You can add additional charts and tables in an appendix if you like. Please give a line count of your document. Academic integrity is vitally important. This is a group assignment and please cooperate within your own group only and please quote all references that you use for your work. No late submission will be accepted and no exception will be made. Please note that you a welcome to express your personal opinions on this case but please support all answers with case evidence and outside research. Questions (3*25=75 points) 1. Discuss the role of patents in the pharmaceutical industry in general (discuss the typical life of patents, the need for patents and the effect of patents).Please refer to the articles in the reading list and discuss the role of regulation in this market. 2. Using your knowledge of market structure, discuss how you would characterize the market for EpiPens. Discuss the different barriers to entry in this market, and compute a Herfindahl Index for the market for EpiPens. Show the computation clearly with a clear discussion of how you define EpiPen's relevant market. 3. Discuss in detail the variation in prices across countries. What is the economic rationale of this price variation? Please be as detailed as possible. QUESTION 2 (12.5 Points) Market research has identified three different types of consumers based on survey data. The following schedule gives the reservation prices of these customers for the two most popular products you sell. Assume that there is one customer per \"Customer Type\". Customer Type Product 1 Product 2 1 $65 $ 100 2 170 75 3 140 120 The marginal cost is $70 per product. Compare the profits from pure bundling, mixed bundling, and selling the products separately. QUESTION 3 (12.5 Points) Buyers of new cars shop for their preferred features - power seats, power steering, sunroof, ABS brakes and leather interior being a few examples. Several options combining some of these features are available from the dealership. Market research has identified three different types of consumers (roughly equal in proportion) based on survey data. The following schedule gives the reservation prices for the two most popular options at the dealership. Note that the options are mutually exclusive- i.e. the features offered in one option is not repeated in the other. MC of Option 1 is $2000 and that of Option 2 is $1000 For simplicity of calculation you can assume that there is one consumer per type. Compare the profits from pure bundling, mixed bundling, and selling the options separately. Would your answer change if customer type 3 was 50% of the market? Customer Type Option 1 Option 2 1 $6000 $5500 2 5500 4000