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Exectuive Summary

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Submitted By rapaka89
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I N TE R O FFI CE M E M OR AN D UM
TO:

CARL RAUSH, CEO, BIOPURE CORPORATION

FROM:

NAVEEN KUMAR RAPAKA

SUBJECT:

LAUNCH OF OXYGLOBIN IN THE VETERINARY MARKET.

DATE:

SEPTEMBER 2, 2015

Biopure Corporation, has two game changing blood substitute products, Hemopure and Oxyglobin. Oxyglobin is the first ever blood substitute for the small animal veterinary market and already has the FDA clearance for commercial use. Hemopure, which is mostly similar to Oxyglobin is intended for human use and currently undergoing phase-3 trials and it would take at least 2 years for the approval of FDA for public use. The Vice-President of veterinary products, Andy Wright, avers that starting the sales of Oxyglobin will start revenue generation for the organization and also set the platform for the launch of Hemopure by helping to rectify the mistakes committed in the process of sales of Oxyglobin. The Vice-President of human clinical trials, Ted Jacobs, strongly condemns the commercial sales of
Oxyglobin until Hemopure is launched into the market as he thinks it would create a nonviable expectation about the price of Hemopure. It has to be decided whether the company would be benefitted with the launch of Oxyglobin especially considering the fact that the investors are desirous of taking Biopure for a public listing.
I recommend that Biopure Corporation should go ahead with the commercial sales of Oxyglobin. Of the many advantages that the firm is going to have with this decision, the most vital is the revenue generation. Although the veterinary market is small and price sensitive, Biopure Corporation would have the first-to-market advantage and this would help the company gain a positive reputation of having a product which was never heard of in the industry. Also
Biopure has close to 2 years before the competitors can enter the veterinary market as some of the competitors like
Baxter are still undergoing phase 3 trials. From the surveys we could see that 84% of the veterinarians are dissatisfied with the lack of alternatives to blood transfusion in the market and this indicates the demand for a product like
Oxyglobin.
I differ with the VP of human clinical trials, Ted Jacobs, on his view that the pricing of Oxyglobin at around 150 dollars might impact the price strategy of Hemopure. Although the properties of both the drugs are similar, they are targeting different markets and the demand for a human blood substitute would be very high when compared to Oxyglobin. He says that Hemopure could be priced between $600- $800, but it also depends a lot on the market condition in around
2 years as it is still needs the FDA approval.
If the company waits till the approval of Hemopure to launch Oxyglobin it puts the company at risk as competition may crop up in the veterinary market and entering into it with a competitor would flare up price wars. Also the success of Oxyglobin in the veterinary market will help Biopure Corporation with the marketing and market expectation as they will have the evidence and support of the veterinary market. Also one important factor that Biopure has to consider is that the phase 3 trials are still in progress and as in the case of Baxter the approval could be delayed or rejected which will have a negative impact on the share value given that Biopure is looking to go for an IPO.
I think that Biopure Corporation should go ahead with the commercial sales of Oxyglobin at a price of around $150 and use a direct sales system which would help avoid the distribution agent costs (close to 30% of selling price as
Oxyglobin is a new product) by 60% and advertise the product to gain major market share in the veterinary medicine before competition enters. This success can be translated into marketing for the launch of Hemopure and also help the company go public with a proven track record of a trauma product in the field of veterinary medicine. In the field of human blood transfusion where the risk of infection is high and the limited shelf life of RBC’s are a concern it would impact a huge population in trauma case and automatically adds up to the emotional side of a potential lifesaving drug for the humans, in the form of Hemopure.

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