Biopure Case Study Essay

The key issue is to stop when Oxyglobin should be introduced to the market without jeopardizing Hemopures potential and how it should be marketed.In addressing the issue, the chase were considered a sensitivity analysis for potential consumption of different monetary value series, associated revenues and costs, and gross profit from different scattering methods.It is recommended that Biopure1. Introduce Oxyglobin immediately at a terms of $ snow to veterans. 2. Have an independent sales line distribute the intersection point to maximize profits. 3. Advertise Oxyglobin in both veterinarian journals and trade shows. 4. Establish a successful brand to launch Hemopure in the future. 5. Oxyglobin should be advertisedBased on some other Massachusetts companies initiatives that micturate not gotten FDA approval in the last few years, it is safe to turn in that it is a possibility not to get the approval or to be given the approval rather late as it happened to Baxter. Further, the potential pass in the stock scathe if Hemopure were rejected heap be avoided if the participation acts quickly and takes advantage of a market that currently has no tilt the physical simple eye substitute market. Obtaining market share is comminuted at a time that Biopures Oxyglobin has been approved. Biopure has a chance to be the first player to enrol this market and recover its research and development costs within devil years.Even when Biopure was primarily focused on developing a clement product line substitute, the opportunistic development and later approval of Oxyglobin, an animal channel substitute, is a valuable opportunity that has to be considered. Exhibits A and B federal agency potential learn (1995) at 3.9 one million million million units for noncritical cases and 0.35 million units for critical ones. Further, Exhibit C shows the probability of consumption in units after factor in in the probability that veterinarians and pet owners would try Oxyg lobin 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 homo blood substitute, was only about to enter the third phase of the FDA clinical trials. save because Oxyglobin and Hemopure are almost identical in physical properties and appearance, it does not cogitate that they cannot be priced differently. There are currently different medical products and operate for graciouss 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 transfusion is priced above $1500 without insurance according to the Houston Memorial Hospital.Hemopures market consists of people who lose blood in large quantities like in accidents, gunshots. And and aging population (double of what it is today by 2030) in inquire of Red Blood Cells to treat certain conditions like chronic anemia and acute blood loss. Launching Oxyglobin at a low price would not necessarily create an unrealistic price expectation for Hemopure because human health care is far more than expensive than animal care. Additionally, the appear and growing necessity for blood substitutes will yield great demand in the following years which will translate to higher interchange prices for Biopure, all things equal.Despite the fact that Baxter International launched the first human blood substitute, HemAssist (presumably priced between $600 and $800), Baxter Internationals and Northfield Laboratories blood substitutes rely on overaged human blood as a source of hemoglobin which is more expensive than Biopures mad materials (bovine blood) at $1.50 a unit. Moreover, their products need to be frozen until used, while Biopures products are shelf-stable at room temperature. This makes Biopures products more advantageous because buyers can save money on refrigeration costs as the company makes a higher profit beca use of their raw materials lower price.In terms of production, Biopure has aptitude to turn 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 ii. On the other hand, Baxter has a production capacity of 1,000,000 Northfields capacity is at 10,000 units per year, which is advantageously less than Biopure. According to Exhibit D, potential demand for Oxyglobin alone priced at $100 is 1.3 million. Biopure does not have any competition but cannot allow for that level of output presently, which would potentially raise prices as demand skyrockets erstwhile 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 merchandising the product at $100 a unit, $137 million can be generated in revenue, which is more than the revenue that can be obtai ned when selling it at any other price. This has to do with the probability of consumption and its correlativity 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 guide 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 opposed 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 reimburse the $200 million developing costs in only two years.