Biopure Case Study Essay

Oxyglobin and Hemopure be two blood substitutes that Biopure Corporation was developing. Oxyglobin was recently approved by the FDA for vet use while Hemapure is estimated to be approved in two years for tender use. If Oxyglobin is launched it ordain be the first blood substitute for the veterinary market a small and hurt minute market. There is a perceived risk by Ted Jacobs, the VP of Human Clinical Trials at Biopure, that if Oxuglobin, the vet ingathering, is launched beforehand Hemopure and at the scummy determine of $150/unit, that it depart become very challenging to sell Hemopure erst launched at $800/unit.B. Market Analysis a)Human 14 million units of RBCs were donated in the United States in 1995, 12. 9 one million million million from volunteer donors and 1. 1 million from autologous donors (donate to self, few weeks prior to surgery). 50% of the blood supplies are handled by the American Red Cross. Of the 14 million units donated 2. 7 million are discarded due to passing or contamination, 3. 2 million transfused into anemia patients and the remaining 8. 1 million transfused into surgery and trauma patients. melodic line Collection is a struggle as post AIDS blood contamination paying for grant of blood units is prohibited by the law it should be done on volunteer basis. Due to low rates of donation and short shelf-life, shortage of RBC units in medical facilities in not especial(prenominal) and therefore the need for blood substitutes in the human market is high. b) veterinary The veterinary market is smaller than the human race as in 1995 2. 5% of 800 dogs/vet GP suffering from acute blood loss were deemed tiny and received transfusion, for a total of 300,000 dogs (80015,000 vet GPx 0.025), although there is a potential to cover 30% of these pets or somewhat or 3. 6 million dogs.These veterinary GP lack adequate supply of dogtooth blood units lack of tool blood banks. Vets rely on housed donor sensuals which 84% of them are dis please with the current available blood transfusion alternatives. This constitutes a big opportunity for Oxyglobin. C. Competition Biopure has two competitors for the human yield, Baxter and Northfield two of whom are pursuing a Hemoglobin purified from outdated RBC at unit speak to ranging from $8-$26 vs.Biopures haemoglobin purified from cattle at unit cost of $1. 50. Both Northfields and Baxters products are expected to launch 2 years after Oxyglobin and same year as Hemopure. Oxyglobins only emulation is the blood collected from in-house animal donors. One important difference between Hemopure/Oxyglobin and competition is that Biopures products do not require storage at 4C and can be stored at room temperature this is a significant difference because there is no added cost attributed to refrigeration. D. PricingHemopure as Baxters Hem Assist and Northfield is expected to be priced between $600-$800/unit and I suggest that it prices at the highest range of the spectrum becau se it does not require refrigeration and there will be perceived savings by pharmacists and hospital managers. On the other hand Oxyglobin and because of the doubling rule used by the vets meaning they dilute pets owners double the price of the manufacturers ask price), it is arguable and to keep the drug affordable that the price ranges from $80-$100 per unit.Others argued that the price should be set at $ two hundred/unit because of all the advantages, added business and cost savings it brings to the confide and pet owners as well. II. Problem/Decision statement Two related issues need to be turn to by the CEO. Should Oxyglobin be launched before Hemopure? Although Oxyglobin was granted approval by the FDA, few challenges remain to be sorted, much(prenominal) as 1. Reluctance of veterinarians to use the product instead of blood from animal donors 2. Setting the price of the product at a rate that wont affect the future sales of Hemopure 3.Devise a good distribution strategy fo r the product (manufacturer direct vs. distributor) On the other hand Hemopure needs to cover the following obstacles 1. FDA approval 2. Price of hemoglobin vs. blood transfusion ($600 vs. $125) 3. Fierce competition from Human hemoglobin by Baxter and Northfield 4. Uptake by physicians Biopure needs to launch its first product to take over generating revenue enhancement, take the corporation public, raise more funds to support Hemopures Phase 3 trial and launch. Before decision making on launching Oxyglobin ahead of Hemopure, all the challenges mentioned above need to be addressed.III. Strategies for Improvement To overcome Oxyglobins challenges listed above, the following criteria need to be met 1. Target Emergency care vet practices 2. Target large Vet practices (3+) 3. Set the price at $200 (see Appendix 1 for analysis) 4. Focus Marketing efforts on non-critical dogs Biopure should start by targeting emergency care vet practices as blood transfusion are more normal there, 150 transfusion/year as compared to 17 at vet GP, penetration to this market will measured by unit sold per care center and lower reliance on animal donors.To increase the market share further large vet practices with 3+ doctors as according to usher 7 pg 17 of the case, these practices have the highest average monthly case load of about 450 dogs per month, its arrogant to measure a rapid incline in consumption of our product by these practices. Based on the analysis in Appendix 1, it is clear that setting the price at $100 is more compensable but we have to plan for the launch of Hemopure and therefore we should consider setting the price at $200 to justify its launch at $600 to $800 in 2 years.We should reminder the sales of Oxyglobin at this price and monitor if the uptake from vets is increasing from the 5% predicted by the market analysis (table A). Finally, focusing the marketing effort on non-critical dogs is crucial as they are a sizeable market and because although vet erinarians can justify using this product to critical dogs, its hard to justify that for non-critical dogs (price and efficacy should help support that). The cease of using animal donors in these clinics will show that Oxyglobin is successfully replacing this old practice.Alternatively it is important to think about the possibility of setting the price of Oxyglobin at $100 to reap as much benefit from world the first and only vet blood-substitute, in the event that Hemopure doesnt get approval from the FDA. Its passing probable that Hemopure wont be successful in the clinic because its of cattle origin, they changed the formulation to be stable at room temperature (excipients could be toxic) and the concentrations used are much higher than their human counterparts.In this case and to mitigate this risk, lowering the price to a $100 will help the sales and uptake of the product by a larger market. The market research conducted prior to launch (Table A and B) shows that a high numbe r of veterinarians and pet owners will use the product at the $100/$200(x2) price. Based on the calculations in Appendix 1, it is clear that setting the price at $100 is more lucrative to Biopure than pricing it at $150 or 200$ because of the double price rule which affects the uptake by both pet owners and vets.To be cognizant and not to jeopardize the future Hemopure launch, I advise that we set the price at $200, because there is a need for a blood substitute as 84% of the vets are reporting overall dissatisfaction with the blood transfusion alternatives available in the marketplace. Secondly, Oxyglobin provides an alternative for animal blood donated by other animals which incurs the risk of matching and potential transfer of diseases.The storage at room temperature adds value as this will reduce the need to buy expensive refrigerators that need calibration, validation and maintenance. Finally, there no authority that vets will automatically double the price of the product esp ecially if they foresee a high enquire by pet owners, a practice that we should encourage and help the vets appreciate the upside. Although blood transfusions in the veterinary market are infrequent and the market scope is limited, Oxyglobin has the potential to become a lucrative investment funds for Biopure.It is possible that Hemopure will not be licensed by the FDA, that humans will resist purchasing a product of cattle origin especially that human hemoglobins will be available roughly the same time by competitors and that physicians will not prescribe it for the reasons described above. To minimize these risks and to start generating revenue that will help the company grow, become public and raise more funding, I therefore recommend that we sell Oxyglobin first before the launch of Hemopure.