Biopure Corporation is one of the pioneers in the development of oxygen therapeutics using “Hemoglobin”, a new class of pharmaceuticals that deliver oxygen to the body’s tissues. Biopure developed two main products under years of research and development, “Hemopure” for human use, and “Oxyglobin” for animal veterinary use, both represented a new oxygen based treatment approach for managing patients’ oxygen requirements. Biopure’s two products differ from other blood substitute products being developed by two main rivals, Baxter International and Northfield Laboratories, in a way that its hemoglobin based source is bovine rather than human. Both of Biopure’s blood substitute products were in the final stages of the approval process of the Food and Drug Administration (FDA) in 1998. Oxyglobin had just received the FDA's approval for commercial release declaring it safe and effective for medical use. Hemopure on the other hand was entering final Phase 3 clinical trials and was optimistically expected to see final FDA approval for release in 1999. FDA approval of Oxyglobin and its possible subsequent release into the veterinary market caused concern over whether the early release of Oxyglobin would reduce BioPure's ability to price Hemopure when the product finally received approval. The animal supplement was approved sooner than its human equivalent due to less-strict regulations in the animal consumer market. There is a production capacity of 300,000 units, with $200 million spent on research and development for both Oxyglobin and Hemopure. Given that the two products were almost identical in properties and function, it was thought by the vice president for Human Clinical Trials at Biopure that the early release of Oxyglobin would create an unrealistic price expectation for Hemopure. This paper thoroughly examines and analyzes the potential benefits for launching Oxyglobin right away and compares them to the drawbacks that are concerned by the Human Clinical Trials. After concluding that the early launch of Oxyglobin would be more beneficial, we prepare a marketing strategy most suitable for the Oxyglobin launch and end our report with the financial projections.
Before discussing the potential for animal and human markets, we first analyze the cost structure of Biopure. * Research and Development cost so far:
$200.00M * Production Cost (Fixed cost):
$15.00M/year * Distribution Cost:
* Cost/unit ($1.5)* Annual Capacity (300,000units):
$0.45M * Total Cost before launching Oxyglobin:
$215.00M * Total Cost after launching Oxyglobin (1 year):
Human Blood Market
The annual available demand for human blood is 14M units. The 14M units can be categorized into uses of red blood cells, which include Acute Blood Loss (8.1M units), Chronic Anemia (3.2M units), and Not Transfused (2.7M units). Under Acute Blood Loss, the blood is allocated into elective surgery anonymous donations (5.8M units), elective surgery autologous donations (1.1M units), emergency surgery in hospital (1.0M units), and trauma in field administration (0.2M units). Under Not Transfused is divided into rejection (1.2M units) and expiration (1.5M units). With the increasing costs and struggles to collect blood from qualified donors due to misconceptions of contracting diseases, lack of time, or even fear of needles, the market segments that presents the most promising opportunity for Biopure’s Hemopure is trauma in field administration (0.2M). The article mentioned, “only 10% of trauma victims received RBCs ‘in the field’ or at the site of the accident. Blood transfusions for the remaining 90% of victims were delayed until the victim arrived at a hospital emergency room”. This delay is the main reason for the 30% fatality rate in the trauma cases where the patients end up...
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