Biopure Case Study Essay

The key issue is to determine when Oxyglobin should be introduced to the commercialise without jeopardizing Hemopures potential and how it should be marketed.In addressing the issue, the sideline were considered a aesthesia analysis for potential consumption of different expense series, associated revenues and costs, and gross realize from different distribution methods.It is recommended that Biopure1. Introduce Oxyglobin immediately at a price of $100 to veterans. 2. Have an autarkic sales force distribute the merchandise to maximize profits. 3. Advertise Oxyglobin in both veterinarian journals and trade rises. 4. lay down a successful brand to launch Hemopure in the future. 5. Oxyglobin should be denoteBased on other Massachusetts companies initiatives that have not gotten FDA panegyric in the last few years, it is safe to assume that it is a incident not to get the favourable reception or to be given the approval rather late as it happened to Baxter. Further, the po tential dip in the personal credit line price if Hemopure were rejected good deal be avoided if the comp whatever acts quickly and takes good of a market that currently has no competition the animal rip substitute market. Obtaining market sh atomic number 18 is detailed now that Biopures Oxyglobin has been approved. Biopure has a chance to be the first player to enter this market and be cured _or_ healed its research and development costs within cardinal years.Even when Biopure was primarily focused on developing a human personal line of credit substitute, the opportunistic development and later approval of Oxyglobin, an animal parenthood substitute, is a expensive opport social unity that has to be considered. Exhibits A and B place potential take up (1995) at 3.9 one million million units for noncritical cases and 0.35 million units for critical sensations. Further, Exhibit C shows the hazard of consumption in units after factoring in the probability that veterinari ans and pet owners would try Oxyglobin at different price series. The table shows that at $100 a unit, Oxyglobin would be used in 81% of critical cases and in 28% of noncritical cases.Hemopure, the human blood substitute, was only virtually to enter the third phase of the FDA clinical trials. Only because Oxyglobin and Hemopure are roughly identical in physical properties and appearance, it does not mean that they cannot be priced differently. at that place are currently different medical increases and services for humans and animals that are differently priced. Exhibit 8 from the case shows that very few veterinarian procedures are priced over $100. In contrast, a human blood blood transfusion is priced above $1500 without insurance according to the Houston Memorial Hospital.Hemopures market consists of large number who lose blood in large quantities like in accidents, gunshots. And and aging population (double of what it is today by 2030) in need of Red personal credit line Cells to treat certain conditions like chronic anemia and acute blood loss. Launching Oxyglobin at a low price would not of urgency create an unrealistic price expectation for Hemopure because human health mete out is far more expensive than animal care. Additionally, the emerging and growing necessity for blood substitutes will yield great demand in the following years which will translate to higher selling prices for Biopure, all things equal. in spite of the fact that Baxter supranational launched the first human blood substitute, HemAssist (presumably priced between $600 and $800), Baxter Internationals and Northfield Laboratories blood substitutes rely on outdated human blood as a source of hemoglobin which is more expensive than Biopures raw materials (bovine blood) at $1.50 a unit. Moreover, their products need to be frozen until used, sequence Biopures products are shelf-stable at room temperature. This makes Biopures products more beneficial because buyers can save m oney on refrigeration costs as the company makes a higher profit because of their raw materials lower price.In terms of turnout, Biopure has capacity to produce only one product at a time, namely, an annual capacity of 300,000 units of Oxyglobin or 150,000 units of Hemopure or some linear combination of the two. On the other hand, Baxter has a production capacity of 1,000,000 Northfields capacity is at 10,000 units per year, which is considerably less than Biopure. gibe to Exhibit D, potential demand for Oxyglobin alone priced at $100 is 1.3 million. Biopure does not have any competition but cannot supply that level of takings presently, which would potentially raise prices as demand skyrockets once the product is introduced in the market.Biopure conducted two surveys that showed customers willingness to try the product at a higher price depends on the gravity of the emergency. Exhibit E shows that by selling the product at $100 a unit, $137 million can be generated in revenue, w hich is more than the revenue that can be obtained when selling it at any other price. This has to do with the probability of consumption and its correlation to the gravity of pets situations in general.Veterinarians have expressed their frustration with current animal blood distribution. Biopure has two options distribution options National-Regional-Local and Independent Sales Force. Comparing distribution costs from Exhibits F and G, it is clear that going for the independent sales force approach Biopure can more than reduce costs by half. Distributing the product (at $100 a unit) with the NRL option would cost around $41 million as contrary to $18 million with independent sales distribution.Exhibits H and I show that the highest gross profit attainable is $120 million when using an independent sales force and pricing Oxyglobin at $100 a unit for veterinarians. These and all exhibits show that Biopure should launch Oxyglobin immediately and recoup the $200 million developing cost s in only two years.