In addressing the issue, the following were considered: a sensitivity analysis for potential consumption of different price series, associated revenues and costs, and gross profit from different distribution methods.
It is recommended that Biopure:
1. Introduce Oxyglobin immediately at a price of $100 to veterinarians. 2. Have an independent sales force distribute the product 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 advertised
Based on other Massachusetts companies’ initiatives that have not gotten FDA approval in the last few years, it is safe to assume 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 dip in the stock price if Hemopure were rejected can be avoided if the company acts quickly and takes advantage of a market that currently has no competition: the animal blood substitute market. Obtaining market share is critical now that Biopure’s Oxyglobin has been approved. Biopure has a chance to be the first player to enter this market and recover its research and development costs within two years.
Even when Biopure was primarily focused on developing a human blood substitute, the opportunistic development and later approval of Oxyglobin, an animal blood substitute, is a valuable opportunity that has to be considered. Exhibits A and B place potential demand (1995) at 3.9 million units for noncritical cases and 0.35 million units for critical ones. Further, Exhibit C shows the probability of consumption in units after factoring in the probability that veterinarians and pet owners would try Oxyglobin at different price series. The table shows that at $100...