Biopure Case Analysis

In: Business and Management

Submitted By tforman
Words 351
Pages 2
To: Carl Rausch, President and CEO, Biopure
From: Team 1

Subject: Launch Strategies for Oxyglobin

Team 1 strongly recommends the launch of Oxyglobin in the veterinary market as soon as possible. In order to make this launch as successful as possible, Team 1 recommends: * Launching Oxyglobin from a fully-owned subsidiary of Biopure * Establishing an initial launch price of $xxx * Focus the supply chain on Critical Care Veterinary services * Establish a direct to consumer advertising campaign

The team feels that this launch strategy will provide substantial value to Biopure and set up for a strong introduction of Hemopure once approved by regulatory authorities. The successful launch of Oxyglobin will: * Create a path to get income for initial public offering to reduce risk associated with Hemopure * Give opportunity to learn how to position Hemopure within the human market * Define Biopure as a socially acceptable blood substitute company * Provide 5 year exclusivity in the veterinary market * Respond to the market demand

While every launch presents risk, Team 1 feels that we are setting up Biopure for the best possible launch position. The move to a fully-owned subsidiary will allow the launch of Oxyglobin into the veterinary market while minimizing risk to the human market. Customers will be less likely to feel that they are being prescribed an “animal drug” once Hemopure is approved. Establish a price of $200 to veterinary practices allowing for a charge as much as $400 to the consumer. At this price point, it will allow for the introduction of Hemopure at a premium in the human market. Focusing on the critical care veterinary practice will provide the highest probability of success for the pricing strategy. Market research data suggests that pet-owners are willing to pay higher prices for critical care,…...

Similar Documents

Biopure Case

...Biopure Corporation: Case Write-Up Problem Definition In February 1998 Biopure Corporation faced a difficult decision regarding the launch of its newly developed “blood substitute” products. Biopure had developed “Hemopure”, a blood substitute for humans, and an ancillary product “Oxyglobin” for the veterinary market1. Hemopure was still in the process of gaining Federal Drug Administration (FDA) approval , while Oxyglobin had already been approved and was ready to be launched1. FDA approval was estimated to be two years away2, but this could change as the approval process is inherently complex and uncertain. The main problem Biopure faced was whether to launch Oxyglobin now, or wait until Hemopure was approved and launch both products simultaneously. This was a complex problem as the early launch of Oxyglobin would have both positive and negative repercussions for Biopure. These repercussions needed to be carefully analysed in order to decide what the best course of action is. Another problem was that Biopure had competitors with similar human blood substitute products in the pipeline 3 . Biopure have to consider how to position and price their products in relation to their competitors. An additional problem exists in the pricing of Oxyglobin and Hemopure in order to appeal to their respective markets4. Lastly, Biopure has no current cashflow and therefore needs to be successful with its upcoming IPO in order to raise the requisite cash and solidify its future5. Analysis......

Words: 1372 - Pages: 6

Biopure Analysis

...SITUATION ANALYSIS Blood Supply - 14 Million units were donated, 12.9 were not analogous and 1.1 mill were - in 1995 3.2M units of blood into 1.5M patients - chronic illness (ex: anaemia) - 8.1M units were put into 2.5M patients - acute blood loss demand of human blood is often in shortage (in certain times) Blood substitutes - used for an alternative to human blood 1997 - no approved blood substitute Biopure has spent $200 M in the development of bovine-sourced substitute Oxyglobin - animals, Hemopure - Humans No revenue, enough capital to operate 2 more years 1998, Biopure was one of three legitimate contenders in the emerging field of “blood substitutes.” Oxyglobin ready to launch OPPORTUNITY/PROBLEM/ISSUE 1. How do you assess Biopure’s potential in the human market? (Hemopure) *Pros and Cons Table *Hemopure against competitors Table Competitors have larger production capacity, established distribution network Hemopure Product Characteristics - “Universal,” no blood typing needed, less potential for rejection - Cannot cause infections or be contaminated - Increased shelf life, can be stored for 2 years - 100% efficient at carrying oxygen to vital organs - Purity, efficacy, convience - Need in critical-care situations Finances - Received $50 million for funding Competitive Advantage - Baxter and NL compete for limited available (1.2 million) expired or rejected units - Biopure has unlimited supply from cows (10,000......

Words: 816 - Pages: 4


...Biopure Market Potential Exercise Suggested Solution Question 1) How would you revise the market potential for Hemopure? The best four-segment solution to the usage problem includes these categories: elective surgery; emergency surgery; in field trauma; and chronic anemia. Current Usage Change Potential Usage Trauma (in field) 200,000 *10 2,000,000 Currently only 10% of trauma cases get blood transfusions in the field. With better storage potential and no need for blood typing this could be increased to 100% (a factor of 10!). This is the potential usage in 1995. In order to project the numbers forward to 2000 (the date of product release), we must estimate population growth. The elderly population (65 and older), which currently receives 40% of all acute blood loss transfusions, is expected to double by 2030. Assuming linear growth, we can expect this age group to grow 14% by 2000. Similarly, the remaining adult population (under 65), which currently receives 60% of all acute blood loss transfusions, is expected to grow 5.9% by 2030 ((6 – 5.67) / 5.67 = 5.9%). # over 65 # under 65 1995 x 5.67x (85% / 15% = 5.67) 2030 2x 3 * 2x (75% / 25% = 3) Assuming linear growth, we expect this age group to grow .84% by 2000. The revised estimates of usage for the year 2000 are as follows: Potential usage (1995) Change Potential Usage (2000) Under 65 1,200,000 *1.084 1,300,800 Over 65 800,000 ...

Words: 1164 - Pages: 5

Biopure Case

...other competitors are in the vet blood substitutes market, Biopure will definitely have the first-mover advantage as long as they launch it in a timely manner/fast enough. Also any other competitors won’t be able to jeopardize the Oxyglobin’s profitability as it takes about 2 to 5 years for them to obtain FDA-approval. Assuming that Biopure decides to launch it, they also have to consider how much they are gonna charge for the product. In the first option, the price will be set at a low rate, ranged from 80 to 100 because pet owners are price sensitive. The average cost that pet owners spend per visit to the vet is about $60, which is pretty low. Also, Vets double the price as they sell the product so it is necessary to keep the original price low. For instance, even if Biopure sells a product at $50, Vets will sell the product at $100 to make profits. Therefore, pet owners will still feel that the price is beyond their budget and would go with a cheaper alternative available. (in a heartbeat). However, other sales team members claimed that it should be launched at a higher price carrying $200 premium, which is the second option. In case of emergency, pet owners are definitely not going to just let their pets die to save a couple of hundreds dollars. The price is anticipated to run from $200 up to $1000 in critical cases. Given that, the study has shown that 65% of pet owners are willing to pay $400 in critical cases, and 75% said they would pay $300. The other......

Words: 483 - Pages: 2

Biopure Case Study

...MKTG 510 Jason Biopure Case Recommendations 6/4/13 To: Carl Rausch, President and CEO of Biopure Corporation From: Jason RE: Biopure Product Release Analysis Date: 6/4/13 Dear Mr. Rausch, The contents of this letter will provide you the information and analysis you will require in order to make an effective decision on the timely release of your Biopure products (Oxyglobin and Hemopure). Reccomendation Based on the analysis conducted by our firm, we are recommending you proceed with launching Oxyglobin. Our recommendation to release Oxyglobin prior to hemopure is based on the financial analysis performed on Oxyglobin (see exhibit A) and the need to fulfill the market demand of veterinary care and emergency centers with an adequate supply of blood. Financial Analysis Our team has determined the selling price of the Oxyglobin product to be $100. As defined in the table on the far right, our profit from Table A Financial Report_ January Sales Revenue $2,500 Cost of Goods Sold $1,600 Gross Profit $ 900 Fixed Costs Production Costs $1,250 Material Costs $ 1 Sales Training $ 300 Total fixed Costs $1,600 Net Profit(loss) $ 900 January Sales Revenue $2,500 Cost of Goods Sold $1,600 Gross Profit $ 900 Fixed Costs Production Costs $1,250 Material Costs $ 1 Sales Training $ 300 Total fixed Costs $1,600 Net Profit(loss) $ 900 operations will be $900k monthly or $10.8M...

Words: 438 - Pages: 2

Case Study: Biopure Corporation

...The Biopure Corporation developed two new “blood substitutes”: Oxyglobin (targeted the veterinary market) and Hemopure (targeted the human market). Oxyglobin was ready for the market, but Hemopure needed two more years to launch. Therefore, Carl Rausch, the CEO of Biopure, had to decide whether or not Biopure should launch Oxyglobin first or wait for Hemopure. Oxyglobin and Hemopure were almost identical in physical properties and appearance. However, the veterinary market was smaller than the human market. Therefore, launching Oxyglobin with a low price would create an unrealistic price expectation for Hemopure, so Biopure cannot optimally price Hemopure. This essay will discuss this challenge as well as the recommendations for confronting this challenge— launching time, and pricing. The Biopure Corporation should release Oxyglobin on the veterinary market now because Oxyglobin would bring more benefits for the company. This was an opportunity for Biopure to introduce Oxyglobin— 84% of veterinary doctors complained about the lack of blood transfusion alternatives in the market. As a first mover in the veterinary market, Biopure did not have any competitors, so the company could monopolize the market. If competitors wanted to enter the veterinary market, they had to wait at least two years to get an FDA approval. Carl Rausch did not need to worry that launching Oxyglobin would jeopardize the company’s ability to price Hemopure. The reason was demands were different in the......

Words: 379 - Pages: 2

Biopure Harvard Business Case

...To: Carl Rausch From: Sukhada Kulkarni RE: Release of Oxyglobin Date: October 30, 2013 The intent of this document is to provide suggestion for the timeline to release Oxyglobin. I would recommend releasing Oxyglobin to the market as soon as possible. Situation Analysis: There has been a debate if Oxyglobin release should be delayed by two years as it might jeopardize the sales of Hemopure. The concern here is that the estimated price of Oxyglobin ($150 per unit) might not allow Hemopure to be released at a higher estimated price as $600 per unit. As per my analysis this should not be a major concern as the advantages of releasing outweighs this concern. Here are the reasons why Oxyglobin should be released soon in the market: * As FDA approval takes time, being the first player in the market will give us an edge over the others and we will get an opportunity to establish Biopure. The possibility of success of Oxyglobin will become a platform for Hemopure to use the brand image already built. * The competitors Baxter Internationals and Northfield Laboratories are expected to release their products for human blood substitute at a price $600 to $800 per unit. The price of Hemopure should be compared against other human blood substitute as opposed to animal blood substitute. * As we do not have prior experience of going into market, this will be a good opportunity to experiment and learn before releasing Hemopure. It will also help us to form contacts with......

Words: 738 - Pages: 3


...Kim Le BBUS 438 July 9, 2014 Case Write-up #5 Biopure Corporation Oxyglobin and Hemopure are Biopure’s products in the field of blood substitutes. Hemopure targets the human market and oxyglobin for the animal market. Oxyglobin received the final FDA approval to enter the market, while Hemopure still has another two years for approval. The two products are almost identical in physical properties and appearance, are being priced with a tremendous price gap: Oxyglobin being set at a price almost 500% less than Hemopure. The problem that arises is determining when the best time would be to introduce Oxyglobin and at what price, and how should the company market the product that ensures that the potential for Hemopure is not jeopardized. I recommend that Biopure introduce Oxyglobin to the veterinarian market as soon as they can with the price of $200 to satisfy demand. The expected demand will be treating 2,340,000 dogs, parallel with the same amount of Oxyglobin units. There are currently 15,000 small vet practices according to the case. 800 dogs suffer from acute blood loss per practice, while 30% of these dogs would have benefited significantly from a transfusion of blood. I made the assumption that this 30% will be treated Oxyglobin (800 * .30 = 240 dogs). At a price of $200 per unit, 5% of veterinarians are willing to pay for non-critical situations and 60% for critical situations. This means we will sell Oxyglobin for the treatment (.05 * 15,000 * 240 dogs......

Words: 622 - Pages: 3

Mkt6301 Case 1 Biopure Corp.

...Sep 19 Student Name: Miao Wang Net ID: mxw142330 Case Study 1 Biopure Case Questions: 1. Hemopure: a. Identify relevant market segments and speculate whether the product is valuable to each segment at the suggested prices ($600-$800) As the case said the Biopure in human market, sometime the Hemopure could be $600-$800 per unit, which is very higher price than the Oxyglobin. This high price product which relevant market segments should be taken this price level , following the attach Exhibit 5 excel we can Identify four-segment : * elective surgery; * emergency surgery; * in field trauma; * chronic anemia. Both we know that ‘When a thing is rare , it becomes precious .’, so when we analysis the requirement of this 4 –segment , which that we can found maybe we can position the Hemopure price to that. Exhibit 5 Red Blood Cell Donations and Transfusions in the United States in 1995 |   | Use of Red Blood Cells | Units (in 000s) | | | Acute Blood Loss: | | | | Elective Surgery: | | Anonymous Donations | 5,800 | Autologous Donations a,b | 1,100 | Emergency Surgery (in hospital) | 1,000 | Trauma (in field administration) | 200 | Acute Blood Loss Subtotal | 8,100 | | | Chronic Anemia | 3,200 | | | Not Transfused | | Due to Rejection | 1,200 | Due to Expiration | 1,500 | Not Transfused Subtotal | 2,700 |   |   | Total: | 14,000 |   | Source: Stover & Associates LLC | a Autologous......

Words: 1932 - Pages: 8

Biopure Marketing Analysis

...BIZ2120: Marketing Case analysis #1: Biopure Corporation Submitted by MARCO TARANTA ID: 2013843468 SEMESTER: Fall 2013 1. What is the potential market size for each of Oxyglobin and Hemopure? The veterinary market is valued at $638,550,000. Since the expected market share for Biopure is 100% and assuming that the total U.S. veterinary practices (15,000) remains the same, we can state that the potential market size for Oxyglobin is $638.550.000. The main segments in the veterinary market are “Primary Care” and “Emergency Care”. The veterinary practices are approximately 15,000, 95% of which are Primary Care and 5% Emergency Care. Furthermore, the average of transfused blood units in each Primary and Emergency practice is 17 and 150, respectively. The potential market size is based on roughly 4,257,000 blood units. In the case, it is specified that only 354,750 units are actually transfused in particular cases deemed critical. Thanks to its innovative benefits, Oxyglobin is able to break through the barrier and reach the potential units which correspond to the revenue shown above. However, we must point out that the price to compute the expected revenue is open to variations. In fact, Oxyglobin can be priced up to $200 per unit considering that a survey shows that a high percentage of pet owners are willing to be fully aware......

Words: 1398 - Pages: 6

Biopure Case Study

...Case Write-up #4: Biopure Issues: The main issue for Biopure corporation was the strategic decision on when to introduce Oxyglobin. What should be the launch strategy for Oxyglobin that ensures that the potential of Hemopure would not be affected? SWOT analysis & Reommendation: S: Oxyglobin is the first blood substitute that has received full government approval. The FDA approval would be a time consuming process, the company will be the first player to enter the market and gain first entry advantage. Biopure products are universal blood substitutes, free of infectious agents and contamination, and could be saved up safely up to 2 years. Able to immediately start off with 100% efficiency at transporting oxygen. W: No distribution channel, and lack of prior expertise in launching the product and marketing. Potential unrealistic price expectation for Hemopure blood substitute. O: By entering first, BIopure could gain market exclusivity. The Company could generate more revenues that could be used to counteract possible loss in the price of Hemopure. The dissatisfaction with the currently available blood transfusion alternatives in the marketplace is very high, so the demand for blood substitutes would be expected to be extremely high. Entering first with Oxyglobin could bring brand image to Biopure and discover possible side effects. T: Main competitors were Baxter and NorthField which might potentially come out with innovative developments in the future. There were...

Words: 420 - Pages: 2


...BIOPURE INDUSTRIES A Marketing Analysis Based on the data from the case study by Jonn Gourville, Biopure Corporation, HBS, 1998 April 20, 2005 By Veronica I. II. Stepanova Executive Summary……………………………………………………………………………… 2 Situation Analysis Human Market………………………………………………………………………..3 Animal Market………………………………………………………………………..5 Marketing Plan for Oxyglobin…………………………………………………………………….6 Final decision……………………………………………………………………………………...7 Appendix 1 A (Excel documents, separate attachment) Appendix 1 B Executive Summary • • • • Many opportunities are available in the human blood market due to several disadvantages of the currently available alternatives. Even more opportunities exist in the animal blood market. Oxyglobin should be positioned as a high-quality product designed for middle- to upper-class budgets. The price for Oxyglobin should be about $200 for the consumer and around $100 for the supplier (animal hospital) to account for distribution markups and other carrying costs. Distribution should be oriented in the regional vicinity of the operation and implement larger clinics. In addition, only emergency clinics are to be targeted. Current opportunities are favorable for Oxyglobin’s launch. 2 Situation Analysis I. Human blood market. • Patients with acute blood loss from trauma and surgery – 40% individuals aged 65+. • Chronic anemia patients (any age) – 1.5 million for the year 1995. • Blood loss, resulting from trauma......

Words: 1666 - Pages: 7


...As the saying goes, ‘it is better to lose a battle and win the war, rather than ruing the day’, a similar situation awaits Biopure. A solitary decision over a timely product launch would either allow them to capitalize on a market or lose the ‘war’ in the competitive field of blood transfusion substitutes. The idea of using blood substitutes as a replacement for the existing traditional methods of blood transfusion stemmed from the complications associated with the acquiring, handling and storing of whole blood. Biopure Corporation was one such company which had produced two products, Oxyglobin and Hemopure, both of which were bovine derived hemoglobin products. The advantages of these products over classic blood transfusion techniques included elimination of blood typing, cross matching and refrigeration steps, higher oxygen carrying capacity, increased shelf life of 2 years along with infectious and contamination free products as an end result. In addition, Oxyglobin was approved by the FDA. Owing to the privilege of being the sole supplier of blood substitutes in the veterinary industry, it had a huge potential to monopolize the market. The lack of competitors would generate a significant amount of revenue from which they could recover the development cost and would simultaneously allow Biopure strengthen their position in the market in case Hemopure gets approved by the FDA in the near future. Due to the aforementioned salient benefits, launching Oxyglobin seems logical......

Words: 1552 - Pages: 7

Biopure Case Analysis

...Areya Popal Case Analysis: Biopure Corporation Background: Biopure Corporation is a company that produces artificial “blood substitutes” that are used in humans and animals. Currently their product for animals, “Oxyglobin”, has passed FDA approval and can begin selling but the human product “Hemopure” is still in phase 3 trials. The problem presenting itself for Biopure is whether to release Oxyglobin now or later, with Hemopure. This is because they feel that it will bring up questions as to why Hemopure is so expensive compared to something so similar in product. Market Outlook: Biopure has the ability to profit substantially with Oxyglobin, which could help in earning positive cash flows. From the case we know that 240 dogs (clinic/average of 800 patients) needed blood transfusions for acute blood loss but only 2.5% of the total 800 received them. The biggest hindrance to a bigger blood transfusion market was the lack of adequate blood supply and lack of value in current alternatives. If an adequate blood supply was easy to access at a price point of 150$, emergency clinics make up a market potential of 16.875 million USD [750 emergency clinics x 150 units of canine blood transfused x 150$]. For primary care centers the market potential would be 36.3 million USD [14,250 clinics x 17 units of blood transfused x 150$]. If we were to take into consideration the price point survey presented in the case then out of the 240 dogs with acute blood loss, 76 of them would receive...

Words: 472 - Pages: 2

Biopure Case Stusy

...Biopure Corporation: A Case Study Biopure Corporation specializes in blood substitutes for transfusion patients, both in the veterinary market and the human market. However, in 1998, Biopure faced the monumental decision of whether to begin selling Oxyglobin, a blood substitute, to the veterinary market or to wait until Hemoglobin, a blood substitute for the human market, became available for sale. Biopure’s problem was simple: should the company launch Oxyglobin before Hemoglobin is FDA-approved or wait until after Hemoglobin is approved and released into the human market. Ted Jacobs, vice president for Human Clinical Trials at Biopure Corporation, argued that Oxyglobin should be released later because Hemoglobin would not be able to be priced at such a high rate if the same product (for a different market) was charging much less. However, Andy Wright, vice president for Veterinary Products at Biopure Corporation, countered that Oxyglobin would increase the market and make people familiar with the Biopure name, thereby giving the company competitive edge in the human market. Our recommendation is to release Oxyglobin immediately rather than wait for Hemoglobin’s FDA-approval. The reasoning behind this decision follows from an analysis of both the veterinary blood substitute market and the human blood substitute market. Reasons to release Oxyglobin immediately are summarized in Exhibit A. This conclusion requires the Oxyglobin marketing team to make several subsequent......

Words: 1385 - Pages: 6

Rare Earth | HD How to Lose Friends and Alienate People (2008) | The Land Before ...