Read the following
link:
Information from:
https://www.cnbc.com/2015/10/19/the-16-billion-business-of-flu.html
Manufacturers are distributing more flu vaccine in the U.S.
than ever: a projected 171 million to 179 million doses this year. That’s up
from 147.8 million distributed last year, amounting to $1.61 billion in
revenue. An estimated 44 percent of American adults get vaccinated for the flu.
Most years, the vaccine proves to be just about 50 to 60 percent effective. Flu
vaccines are unique because they change every year based on which strains are
expected to be in heaviest circulation. Every year public health agencies
provide seed viruses to manufacturers and then companies have from February
until about June to complete the manufacturing process, execute quality
controls and get Food and Drug Administration clearance. Most flu vaccines are
incubated in chicken eggs. There are a few major makers of the flu vaccine in
the U.S.: Sanofi Pasteuris supplies a projected 65 million doses, CSL supplies
about 54 million doses, and GlaxoSmithKline supplies about 38 million doses.
Different kinds of vaccines exist; manufacturers offer 3-strain vaccines,
4-strain vaccines, vaccines with a smaller needle, nose sprays, and vaccines
made for people who are allergic to eggs.
Each year, millions of people get flu, more than 200,000
Americans are hospitalized with complications, and the virus kills thousands of
people. There are a few antiviral drugs—Tamiflu, Relenza, and Rapivab—that are recommended for
treatment against the flu. These medications are prescribed by a doctor and
might shorten someone’s flu symptoms by 1-2 days.
Please answer the following questions in less than 500 words
(approximately one single spaced page.)
While I am going to pose a numbered series of questions, I would like
you to write the document in memo format.
Your grade will be based on the quality of your answers to the questions
and quality of your memo response writing.
1. How would
you label and describe (in terms of structure, conduct, and performance) the
market for the flu vaccine? How about the market for Tamiflu?
2. Are there
barriers to entry in the flu vaccine market? Are those barriers because of
something about the technology or the production or are the barriers legal
barriers?
3. Using the
Lillrank framework from the class readings, how would you label the market for
the flu vaccine? How would you label the market for Tamiflu?
4. Compare
the price elasticity for the flu vaccine and for Tamiflu. How do you think
separate increases in the prices of each of these products will affect revenue
in both markets (i.e., consider how a price increase in one will affect both
markets)?
5. Many
employers offer free or subsidized flu vaccines for their employees. How does
this affect the market?
6. Most flu
vaccines are made using chicken eggs. How are the market for flu vaccine and
eggs related (hint: consider the average prices of eggs published in the CPI)?
How would a sudden change in the price of chicken eggs affect the supply curve
and equilibrium quantity of flu vaccines?
