...Hemopure. | 2. Postpone launching Oxyglobin until Hemopure’s FDA approval. -Mixture of production of Oxyglobin and Hemopure. -No prior unfavorable price expectation. -Market research on Oxyglobin is available. Launching Oxyglobin without waiting for 2 years for Hemopure is the first alternative we came up with. As no 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...
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...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...
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...Background - Biopure is planning to introduce two new blood substitutes: Hemopure for human market and Oxyglobin for animal market. Oxyglobin, expected to command $150-$200 per unit, is already FDA approved whereas Hemopure, expected to command $600-$800 per unit, has entered final stage of clinical trials. The main issue is whether to launch Oxyglobin now and Hemopure later when it receives FDA approval or wait until Hemopure is approved, launched and established as a product and then launch Oxyglobin. The reason for concern is that some members in Biopure management feel that releasing Oxyglobin first will jeopardize the high price that Hemopure will eventually command. Market Potential for Oxyglobin and Hemopure– The potential market for Oxyglobin is significantly smaller than that for Hemopure, yet both are attractive because demand for blood exceeds supply. Absence of competitive products, lack of adequate blood banks for animal market, low cost advantage of just $1.50 per unit of blood against its competitor and the fact that its blood substitutes eliminates the need for storage and refrigeration makes BioPure an attractive option for both primary care and emergency care vet practices. The total potential for the animal market is 354,750 units per year. Since production of Oxyglobin is limited to 300,000 units per year, the total potential revenue generated by Oxyglobin could be projected at (300,000 units * $150) = $45M. In contrast, demand for blood substitutes in...
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...The Problem: Biopure Corporation has two new products that are Oxyglobin and Hemopure. Oxyglobin is the first new blood substitute for the veterinary market and is ready for consumer use. Hemopure is another new blood substitute for the human market and it will take two years to launch the product from now on. Ted Jacobs, vice president for Human Clinical Trials, is concerned about creating an unrealistic price expectation for Hemopure by marketing Oxyglobin before Hemopure. On the other hand, Andy Wright, vice president for Veterinary Products, believes that selling Oxyglobin has benefits for the company in terms of generating revenues for the use of launching Hemopure and learning how to market and make mistakes prior to the launch of Hemopure. Carl Rausch, the president and CEO of Biopure Corporation, has to decide if the release of Oxyglobin would be beneficial for the company without jeopardizing the potential of Hemopure. The Solution: I think that launching Oxyglobin has many benefits for the company. For this reason, I agree with Andy Wright’s decision to begin by selling Oxyglobin. Ted Jacobs indicates that the veterinary market is small and price sensitive. He also believes that if the company prices Oxyglobin around $150, it will be very difficult to price Hemopure at $800 because of the huge difference in price for the same product. I disagree with Ted Jacobs because although the production processes and physical characteristics of these two products are identical...
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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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...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 and...
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...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 ...
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...Biopure Corporation has two new entries, Oxyglobin and Hemophure, which are blood substitutes designed to perform the function of carrying oxygen to different parts of the body as usually done by the blood. Oxyglobin, intended for animal use was FDA approved and was ready for commercial use whereas Hemopure, intended for human blood transfusion was two years away from FDA approval. Problem Statement The CEO of Biopure Corporation, Carl Rausch must make a decision on whether to launch the FDA approved Oxyglobin prior to Hemophure or wait until Hemophure gets a FDA approval which is estimated to take two years. Solution It is suggested that Biopure Corporation do not wait for Hemophure to get FDA approval and go with launching Oxyglobin as the company will have many benefits by launching Oxyglobin upfront. Framework SWOT Analysis: Strength • Improve Biopure’s financial status • Gain market experience Weakness • Acceptance for human blood substitute • Market launch of Hemophure depends on FDA approval Opportunity • Market share generation and positive brand equity • Set market dominance • Good distribution network Threats • Both the products have same production process • Competitors with better production facility may establish distribution channel The Company can implement the following to achieve huge benefits out of the launch of Oxyglobin. Business Strategy: The Company can start selling Oxyglobin at an initial price of $150 per unit to the intensive...
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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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...BG: blood substitute (low revenue with little debt and financing) Human market: hemopure Human blood market: rising demand but Low rate of donation, short shelf life, need of exact blood type matching, risk of AIDS. Human blood substitutes Industry analysis(competitors): Biopure: “Hemopure” Source of hemoglobin: Bovine blood Cost of production: $15 million Raw material cost: $1.5 per unit Storage: room temperature Clinic trial phase: Phase III Expected launch time: late 1999 or early 2000 Pricing: $600-$800 Baxter International: Over $5.4 billion sales, $670 million net income in 1996. It's an acknowledged leader in development, manufacture and sale of blood related to medical products. Product: “HemAssist” Source of hemoglobin: Outdated RBC of human blood Cost of production: $50 million Raw material cost: $8 per unit Storage: need to be frozen Clinic trial phase: Phase III Expected launch time: late 1999 or early 2000 Pricing: $600-$800 Product capacity is 1000000 units per year NorthField Laboratories: Northfield was a small 45- person firm founded in 1985. Their main focus is human blood substitute. Product: “Polyheme” (similar to HemAssist in production and functions) Source of hemoglobin: Outdated RBC of human blood Cost of production: $70 million Raw material cost: $26 per unit Storage: need to be frozen Clinic trial phase: Phase III Expected launch time: late 1999 or early 2000 Pricing: $600-$800 Product capacity is 10000 units...
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...Biopure Corporation In this case, the Biopure Corporation faced a long debate between Vice President Ted Jacobs and the Vice President Andy Wright. Their main concerns are the fate of two new products developed by the company, Oxyglobin and Hemopure for the veterinary and human market. Ted Jacobs insisted that the release of the Oxyglobin should be delayed until after Hemopure was approved and had established itself in the market place. On the other hand, Andy Wright insisted that Oxyglobin should go to the market first, saying that the company has the opportunity to adjust the potential mistake that Oxyglobin might generate before the launch of Hemopure. The company’s two Vice presidents both had their own consideration and speculation under different circumstances, however, some of the points are incomplete due to some facts. According to Ted Jacobs, the veterinary market is small and price sensitive. However, the information in Exhibit 7 shows that the there 15,000 profiles of Veterinary practices in the United States in 1995 and they have averagely hundreds of monthly case load, which generates $570,000 of revenues per year in average. It is still a profitable market especially for a brand new product. In addition, the information from the Veterinary Blood Market session clearly stated that blood transfusions in the veterinary market were infrequent and there were large number of dogs suffering from acute blood loss. That means the veterinary markets desperately...
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...Citi Bank Case Presented by :- Faridabad centre. Kapil Mitra Anurag Aggarwal Sanjay Saxena Jayant Mohanty Umesh Sharma Banking – Industry structure - Pre restructuring It was multi divisional structure – M form Decentralised on the basis of geographies. Decentralised unit performance varied on the geographical market conditions and the ability of the geographical team . Corporate office governance had limited visibility to control, evaluate and forecast the business growth . Since the operations were locally marketed & controlled with locally available skill set ,it was easy for the competitors to copy or even excel . Necessity is the mother of invention or change . With Citi Bank into crises due to losses and uncertainties in the real estate lending it was going through a tough time and immediate corrective action was required. This required Better control and accurate forecasts to take correct decisions wrt to commercial implications of the decisions. Thus needed centralized structure allowing multi-geographical spread and further globalization. This also meant that experts were required to standardize the processes. Change of approach- Customer Focused Earlier Market segmentation was based on geographies. New approach was more Neiche segment with customers either global or have potential to go global . Customer list was prepared for focused 1400 customers . Broadly GRM and emerging Markets were created as 2...
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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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...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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...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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