...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...
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...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 Human...
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...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...
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...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...
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...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 =...
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...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 (e...
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...Problem Statement Should Biopure introduce Oxyglobin now or until after Hemopure is approved by FDA? Analysis Two types of blood substitutes were invented to replace the functions of biological blood for human and veterinary use, particularly for blood transfusion purpose. Oxyglobin is designed for animals, whilst, Hemopure is for humans. Given Oxyglobin has been approved by FDA and Hemopure is still pending for final trial, there is a fierce debate within Biopure on whether Oxyglobin should be introduced now or wait until after Hemopure is approved. To analyze the situation, let’s take an in-depth look at the current veterinary and human blood markets. Veterinary blood market With low number of acute blood loss cases, the demand for veterinary transfusion indeed is not large. However, with few animal blood banks, the veterinary blood supply is very limited. Donor animals are the main source of blood supply which is inhuman and costly because the animals have to be housed solely for blood donation purpose whenever in need. Besides, without proper blood typing and cross-matching system, veterinary transfusion is not efficient enough that prolonged recovery period for a patient animal is always required. Thus, most veterinarians are reluctant to carry out blood transfusion unless they encounter a really critical case. With the introduction of Oxyglobin as a universal blood substitute, donor animals, blood typing and cross-matching are no longer required. According to Table...
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...Biopure is the company associated with research and development of substitute blood in the medical market. The first blood substitute, called Oxyglobin, is ready to launch to the veterinary market. Another blood substitute, called Hemopure, is for human market. It is still in phase 3 of clinical trial, which needs two more years to be officially approved by FDA. The CEO of the Biopure, Carl Rausch, is pondering whether the early release of Oxyglobin would be beneficial for the company. Or she should postpone the launch of Oxyglobin until after Hemopure had established itself in the marketplace. The immediate launch of Oxyglobin can bring Biopure many benefits. For instance, it can generate revenue and establish brand awareness in the marketplace. Additionally, if the rough break-even analysis is estimated, the price of $150 of Oxyglobin could help break even less in a year (see appendix 1). According to the article, 84% of the vet doctors expressed dissatisfaction with the currently available blood transfusion alternatives. There is also the lack of time and resource to tie the donor and recipient. As a result, Oxyglobin can help solving many existing problems in the veterinary blood market, as well as has a good chance to become a leader in blood substitutes industry. While two years waiting of FDA’s approval of Hemopure, the early launch of Oxyglobin has well established the brand reputation and brought some profits through sales to the firm. Meanwhile, Biopure has also...
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...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 decisions...
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...BIOPURE Corporation. 1. Give your best estimate of the sizes of Biopure’s market, potential market, and what you recommend as the target market in the animal market? Do the same for the human blood market? Who are these people (or animals)? Since the definitions of these different markets can be vague, it may be useful to operationalize these concepts in terms of circles on a target which represent the likelihood of being a customer and when they should be targeted by the company. Thus, the “target market” (center) would be those customers whom the company should try to attract now since the product could/should have strong appeal at the present time. Or, another useful way might be to describe each group, its size, and the probability that that group will be a prospect (and then explain why). The discussion of target market selection on pp. 48, 72-74, & 231 in the textbook may help. The “market” would include the target market but would also include those who are either less likely to benefit now from the product and/or should not be targeted at this time for some reasons (e.g., the amount of resources available). The potential market would include the above but also other segments that would have much less need or ability to recognize their need at some time. Note that there are likely multiple segments with decreasing likelihoods of adopting the product at any time, depicted in outer rings of the target. Potential Market – Set of consumers who have a sufficient level...
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...BIOPURE INDUSTRIES A Marketing Analysis By Veronica Stepanova 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 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 (e.g. car accident) and exceeding 2-3 units (1 unit = 10% of total blood content of human body) needs immediate blood transfusion. • Price is largely cost-based (storage, implementation) – blood donation is free. Existing options. • Red blood cells and their components (hemoglobin, platelets, and plasma) are collected via donations, organized by blood collection centers and then transfused into patients. • Current options allow for storage for 6 weeks in refrigerated conditions...
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...from blood replacement. Figures given in the case indicate that only 2.5% of those 12 million dogs (the “critical cases”) are actually transfused with four units of blood, each. An additional 3.51 million dogs stand to benefit from blood or blood product transfusion, resulting in a net potential market of at least 3.87 million units of blood or blood replacement product. Naturally, neither every dog, nor every pet owner, nor every veterinarian will achieve 100% of the potential consumption. Biopure, with a production capacity of only 300,000 units of Oxyglobin, cannot satisfy the total potential market, but the potential market instructs not only the marketing plan but also the pricing strategy for Oxyglobin. Based on market research including willing-to-pay surveys of both veterinarians and pet owners, and based on the full potential of the market, a veterinarian (wholesale) price of $200 per unit is recommended (retail, or billed, price of $400). The market for Oxyglobin based on Biopure market research is 138,353 units. Revenue from this model would be $27.7 million, assuming capture of 39% of the existing, “critical case” market. Revenue maximization would result at $100 per unit cost, with maximal revenue of $127 million. Maximum revenue realization would necessitate not only perfect market adoption among the entire 30% of transfusion-eligible dogs, but also a production capacity of over 1.2 million units of Oxyglobin per year. The current...
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...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 distribution...
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...Bus 252a Marketing Management Mondays and Wednesdays 2: 11:00 – 12:20pm Fall Semester 2014 International Hall Sachar Building Grace Zimmerman Senior Lecturer Email: gzimmerm@brandeis.edu Office: Lemberg 161 Office Hours: Mondays and Wednesdays 11:00 – 12:20 and 2:00 – 3:00 pm, or by appointment Brandeis University International Business School Course Description Marketing is the sum of the activities undertaken by a company to stimulate sales of its product or services with its customers. The marketing objective is to create, promote and distribute products or services, at a price and quality deemed valuable by the company’s customers, in order to create value and profit for the company. Maintaining a strong and compelling value proposition and long-term relationship with the company’s customers are vital for the company’s continued success and require constant monitoring of market, environmental, technological and competitive forces. Marketing is therefore integral to establishing a company’s strategic direction. This in turn makes marketing skills and perspective essential to the success of all business managers in any business. This course provides an in-depth exploration and practical application of basic marketing tools. These include...
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...Bus 252a Marketing Management Mondays and Wednesdays 2: 11:00 – 12:20pm Fall Semester 2014 International Hall Sachar Building Grace Zimmerman Senior Lecturer Email: gzimmerm@brandeis.edu Office: Lemberg 161 Office Hours: Mondays and Wednesdays 11:00 – 12:20 and 2:00 – 3:00 pm, or by appointment Brandeis University International Business School Course Description Marketing is the sum of the activities undertaken by a company to stimulate sales of its product or services with its customers. The marketing objective is to create, promote and distribute products or services, at a price and quality deemed valuable by the company’s customers, in order to create value and profit for the company. Maintaining a strong and compelling value proposition and long-term relationship with the company’s customers are vital for the company’s continued success and require constant monitoring of market, environmental, technological and competitive forces. Marketing is therefore integral to establishing a company’s strategic direction. This in turn makes marketing skills and perspective essential to the success of all business managers in any business. This course provides an in-depth exploration and practical application of basic marketing tools. These include product policy, pricing, promotion, distribution...
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