Biopure Case Study Report

Topics: Blood, Blood transfusion, Blood substitutes Pages: 8 (2663 words) Published: October 29, 2012
Biopure Case Study
Executive Summary
* Biopure Corporation developed two new products to enter into the field of blood substitutes: Hemopure, directed to the human market and Oxyglobin, for the veterinary market. Through the end of 1997 no blood substitute had received approval for use anywhere in the world. * What distinguishes both products from other “hemoglobin-based” blood substitutes is the fact that they are “bovine-sourced” as opposed to “human-sourced”, i.e. they are derived from the blood of cattle. * Biopure has spent $200 million in the development of Oxyglobin and Hemopure, and the construction of a manufacturing facility. * Oxyglobin is ready for launch while Hemopure is still two years away from final government approval. This situation is a source of concern within the corporation. Ted Jacobs, vice president for Human Clinical Trials at Biopure, argues that the release of Oxyglobin should be done after Hemopure is approved to establish this product in the marketplace. Jacobs’ argument is based on the fact that both products have almost identical and physical properties and appearance that could create an unrealistic price expectation for Hemopure if Oxyglobin is released first. * Andy Wright, vice president for veterinary products argues that the benefits of launching Oxyglobin outweigh the benefits, since the veterinary product could generate useful revenues to launch Hemopure and learning how to market the product before taking any risks with Hemopure.

Case Overview
Biopure, a biopharmaceutical firm founded in1984 specializes in the ultra-purification of proteins for human and veterinary use, had two major “blood substitute” products - Oxyglobin for the veterinary market and Hemopure for the human market. These products were almost identical in physical properties and appearance. While Oxyglobin achieved final government approval in February 1998, Hemopure was still two years away from it.

In the human blood market, the dominant practice was transfusion of donated RBCs that had common limitations and risks. Meanwhile, the use of autologous RBC transfusion had become increasingly common. In general, the human blood supply struggled to meet the demand because of low donation rate and relatively short shelf-life of RBCs. Moreover, the demand for RBCs was expected to rise with the aging US population.

In contrast from the human market, blood transfusions were infrequent in the veterinary blood market, mainly because of the lack of an adequate blood supply – the sole source of blood for most veterinary practices was donor animals. Eighty four percent of veterinarians reported overall dissatisfaction with blood transfusion alternatives currently available in the market. In terms of a competitive environment, Oxyglobin was by then the only blood substitute product in the veterinary market; additionally, it would take 2-5 years to release a product if other companies attempted to enter the market because of the FDA approval process. However, Hemopure was facing two major competitors in the human market: Baxter International and its HemAssist; Northfield Laboratories and its PolyHeme.

Primary Concerns
Carl Rausch, president and CEO of Biopure Corporation, was facing a difficult decision regarding whether and when to launch Oxyglobin.

Ted Jacob, vice president for Human Clinical Trials, argued that the release of Oxyglobin should be delayed until after Hemopure was approved and well established in the market, because: * Oxyglobin would create unrealistic price expectations for Hemopure if released first * The human market is many times larger than animal market. * It is more likely to achieve high price in the human market, which, thus, is more profitable than the animal market.

Meanwhile, Andy Wright, vice president for Veterinary Products, was eager to begin selling Oxyglobin. He argued that the benefits of immediately releasing Oxyblobin outweighed the risks,...
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