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Direction (Q. Nos. 59-62) Read the following Passage and answer the question based on it.
Krishna Reddy was the head of a pharmaceutical company that was trying to develop a new product. Reddy, along with his friend Prabhakar Rao, assessed that such products had mixed success. Reddy and Rao realised that, if a new product (a drug) was a success, it may result in sale of 100 crore but if it is unsuccessful, the sales may be only 20 crore. They further assessed that a new drug was likely to be successful 50% of times. Cost of launching the new drug was likely to be 50 crore.
Now. Reddy and Rao were in a quandary whether the company should go ahead and market the drug. They contacted Raj Adduri, a common friend for advice. Adduri was of the opinion that given the risky nature of launch, it may be a better idea to test the market. Rao and Reddy realised test marketing would cost 10 crore. Adduri told them the previous test marketing result have been favorable 70% of times and success rate of products favorable tested was 80%. Further, when test marketing results were unfavorable; the products have been successful 30% of the times.
Krishna Reddy was the head of a pharmaceutical company that was trying to develop a new product. Reddy, along with his friend Prabhakar Rao, assessed that such products had mixed success. Reddy and Rao realised that, if a new product (a drug) was a success, it may result in sale of 100 crore but if it is unsuccessful, the sales may be only 20 crore. They further assessed that a new drug was likely to be successful 50% of times. Cost of launching the new drug was likely to be 50 crore.
Now. Reddy and Rao were in a quandary whether the company should go ahead and market the drug. They contacted Raj Adduri, a common friend for advice. Adduri was of the opinion that given the risky nature of launch, it may be a better idea to test the market. Rao and Reddy realised test marketing would cost 10 crore. Adduri told them the previous test marketing result have been favorable 70% of times and success rate of products favorable tested was 80%. Further, when test marketing results were unfavorable; the products have been successful 30% of the times.
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