You are the Chief Data Analytic Officer of a large pharmaceutical company. Your company currently has two drugs A and B under development for treading two different diseases, with 79% and 80% efficacy (chance of curing a patient) respectively based on your clinical research so far. To get approval from FDA, you need to show effectiveness on at least 800 out of the 1,000 patents tested in the final clinical trial. You cannot market a drug without the FDA approval.
Hint: You can model the FDA approval process using a Binomial distribution with n=1000 and p = 0.79 for drug A (0.80 for drug B).
Your team has collected the following information on these two drugs. Please note, if your product does not pass the FDA test, you won’t be able to market the product so you won’t have sales, nor marketing promotion expenses; but you do incur R&D expenses.