...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 veterinary market and the human market...
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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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...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 very little to prevent competitors. The acceptance of donated blood was also very high. There would be some possibility that the public would reject the Hemopure blood substitute. Recommendations:...
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...1. Launching Oxyglobin without waiting for Hemopure -First-mover advantage Launching at low price($80 ~ $100) | Launching at high price ($250 ~ 300) | Pet owners are price sensitiveVeterinarian’s role of gatekeeper | Emergency care practice. Low pricing jeopardize pricing 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...
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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 $200 per unit, 5% of veterinarians are willing to pay for non-critical situations and 60% for critical situations. This means we will sell Oxyglobin for the treatment (.05 * 15,000 * 240 dogs =...
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...$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...
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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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...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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...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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... 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 of all alternatives available for treating their pets. *** In order to analyze Hemopure market size, firstly, we have to identify the potential segments of the human blood market. Excluding 2,700 blood...
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...nature of industry and other product lines within the same category. Given the situation within which blood transfusion is required (traumas and non critical cases) the possible reference price for the Hemopure customers, hospitals as well as individual patients, includes a comparison to the value of anonymous blood donations ($207.5/unit which provides Hemopure with a positive differentiating value of 50% saving on transportation and a reduction in blood match expense) – this would be used as an anchor in cases of regular blood donations or transfusions. In the current market this is the only valid comparison point available for patients. Customers would then factor in the perceived value received from the positive differentiating factors for using Hemopure in comparison to the traditional anonymous blood donation approach. This includes reduction in risk of infections, increased shelf life, 100% efficiency in oxygen transportation and universal blood type and matching. The benefit of the differentiating factors is valued at $592.5/unit – a value agreed by the other competitors in their pricing strategy as well. This would be a major reference price influencing the decision making of the customer. The second and most important reference price that would influence a Hemopure customer’s decision making would be direct comparison to competitor pricing. In cases of in-field trauma cases there is no prior reference price as cases have gone unattended due to lack of supply. In this...
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...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 received feedback on public acceptance of blood substitutes. Now Hemopure is prepared for the marketplace and ready to compete with its competitors. Personally, I suggest that Hemopure should be sold in a premium...
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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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...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 cattle...
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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...
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