Biopure Case Study

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Biopure Corporation Case Study

Richard Addington
PHD

Table of Contents
1. Executive Summary
2. Situation Analysis
a. Human Blood Demand
b. Human Blood Pricing
c. RBC limitations
3. Internal Environment
d. Strengths and weaknesses of Oxyglobin
e. Strengths and weaknesses of Hemopure
4. External/Competitive Environment
f. Baxter
g. Northfield
h. Biopure
5. Animal Blood Market
6. Marketing Plan
i. Positioning
j. Pricing
k. Communication
7. Way Forward for Hemopure

Executive Summary

In 1998, Biopure Corporation is one of the three legitimate contenders in the emerging field of “blood substitutes” along with Baxter International and Northfield Laboratories. Many opportunities are available in the human blood market due to several disadvantages of the currently available alternatives. Biopure has invested $200M on the R&D of blood substitutes with its primary goal being the development of a human blood substitute, Hemopure. It has recently received FDA approval for Oxyglobin, a blood substitute for the veterinary market, whereas Hemopure will enter phase 3 clinical trials and is expected to get FDA approval by late 1999. Biopure is now faced with the big decision on whether to launch Oxyglobin now and reap the near-term benefits or wait till Hemopure is approved and established in the market. The following analysis examines the current market demand for the human and veterinary blood substitutes, the competitive environment, the pricing strategy for Oxyglobin and how it will impact the future launch of Hemopure.

Situation Analysis

Human blood supply
8 million people donated blood in 1995. Although 75% of adults qualify as a donor, fewer than 5% actually donate blood in a given year. Given the low rate of donation and short shelf life of RBCs several medical facilities suffered a shortage in RBCs

Human blood demand
2.5 million patients suffered from acute blood loss from trauma and surgery in 1995. An additional 1.5million patients suffer from chronic anemia and also require blood transfusions. Blood loss resulting from trauma and exceeding 2 units needs immediate blood transfusion. A total of 1 million “borderline transfusions” (blood loss was between 1 to 2 units) occur each year. Despite the potential benefit of a blood transfusion, the majority of these cases are avoided due to the fear of diseases or negative reactions caused by RBCs

The demand for RBC’s to treat acute blood loss expected to rise with the ageing US population – 40% of all acute blood loss transfusions occur in individuals over 65 years of age. They comprised 15% of adult population in 1995 and are expected to double in absolute numbers to 25% of the adult population by 2030.

Human blood pricing
Since the AIDS crisis it has been illegal to sell blood, as such all blood donations are free The cost of blood ranges from $275 to $425 per unit and covers the cost of collection and administration, storage, handling, cross-matching and documentation

RBC limitations
* Red Blood cells can only be stored for 6 weeks in refrigerated conditions * Blood transfusions are subject to blood type and incorrect matches can be fatal. RBC's can be infectious and include the risk of AIDS among other diseases. * Blood transfusion is only available in hospitals which results in over 30% of trauma patients dying prior to the operation * Blood supply is lower than demand especially during peak periods (summer and winter)

Internal Environment

Oxyglobin as a blood substitute for animals

Strengths
* No competitors – Sole approved product in the market
* High supply of raw materials from cattle - Blood obtained at $1.5/unit * Stored at room temperature
* Disease Free
* Longer shelf life
* Immediately 100% effective
Weaknesses & Threats
* Short Half Life
* 5-10 units max dosage
*...
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