top-rated free essay

Biopure Case Study

By Yingni-Chang Sep 22, 2013 902 Words
Biopure Market Potential Exercise
Suggested Solution

Question 1) How would you revise the market potential for Hemopure?

The best four-segment solution to the usage problem includes these categories: elective surgery; emergency surgery; in field trauma; and chronic anemia.

Current UsageChangePotential Usage
Trauma (in field)200,000*102,000,000

Currently only 10% of trauma cases get blood transfusions in the field. With better storage potential and no need for blood typing this could be increased to 100% (a factor of 10!).

This is the potential usage in 1995. In order to project the numbers forward to 2000 (the date of product release), we must estimate population growth. The elderly population (65 and older), which currently receives 40% of all acute blood loss transfusions, is expected to double by 2030. Assuming linear growth, we can expect this age group to grow 14% by 2000. Similarly, the remaining adult population (under 65), which currently receives 60% of all acute blood loss transfusions, is expected to grow 5.9% by 2030 ((6 – 5.67) / 5.67 = 5.9%).

# over 65# under 65
1995x5.67x (85% / 15% = 5.67)
20302x3 * 2x (75% / 25% = 3)

Assuming linear growth, we expect this age group to grow .84% by 2000.

The revised estimates of usage for the year 2000 are as follows:

Potential usage (1995)ChangePotential Usage (2000)
Under 651,200,000*1.0841,300,800
Over 65800,000*1.14912,000

Current UsageChangePotential Usage
Emergency Surgery1,000,000*.5500,000

Due to the fact that many more units will be used in the field, the usage in this category will decline. On the other hand, many more of the trauma victims will survive increasing probability of having emergency surgery. We estimate that the net of those two changes will mean a 50% decline in potential.

Revised estimates of usage for the year 2000 are as follows:

Potential usage (1995)ChangePotential Usage (2000)
Under 65300,000*1.084325,200
Over 65200,000*1.14228,000

Current UsageChangePotential Usage
Elective Surgery6,900,000*.05345,000

Evaluating the attractiveness of the Biopure offer compared to that of the generic human RBC competitor is essential to appropriately forecasting demand in the elective surgery segment. A simple analysis of the benefits demanded by elective surgery, the benefits provided by human RBC’s, and the benefits provided by Hemopure would lead one to conclude that Hemopure is poorly suited to elective surgery. In particular, donated human blood is:

Well entrenched and widely-accepted in modern medicine,
Readily available through a well-established network of blood collection groups Relatively inexpensive, at $125-$225 per unit (vs. the proposed $600-$800 for Hemopure) Relatively safe, with little chance of infection (e.g., 1 in 5,000,000 chance of AIDS).

Consequently, Hemopure is probably only appropriate for applications where donated blood is not readily available and where the loss of blood is life threatening. Elective surgery certainly does not fall into this category.

Revised estimates of usage for the year 2000 are as follows:

Potential usage (1995)ChangePotential Usage (2000)
Under 65207,000*1.084224,388
Over 65138,000*1.14157,320

Current UsageChangePotential Usage
Chronic Anemia3,200,000*00

Hemopure is ill-suited for chronic anemia applications because of the short half-life, potential for toxicity, and very high price (would you/your HMO want to spend $600-$800 per unit for the rest of you life if you were afflicted with this condition?).

Finally, there are 1 million “borderline” transfusion surgeries each year, where doctors avoid transfusions for fear of disease transmission or negative reaction. Hemopure could eliminate these fears, resulting in an additional potential of 1.5 million units.

Grand total: 4.65 million units

Question 2) Given Baxter and Northfield’s relative strength in the market, to what would you revise the forecast?

Baxter’s Hemassist and Northfield’s PolyHeme would both take market-share when they are introduced. Both of these products are made with human blood, which may prove an advantage. In addition, Baxter’s history of product success may make it a formidable competitor. The best responses to this question account for the relative strength of the competing organizations and offers. Here is a suggested solution:

Biopure’s real competitive advantages are its shelf life and storage requirements. Baxter and Northfield’s products, since they are made with human blood, do not have these advantages. Therefore, while Baxter and Northfield will probably take the emergency and elective surgery segments, Biopure can be expected to win the trauma segment. Our market potential is therefore 2,212,800 units. At $600.00 per unit our market potential is $1.33 billion.

A table such as follows could help with this:

Potential pre-competition Market

Revised Potential Market

Units (in 000's)
Biopure
Baxter
Northfield

Anemia transfusions

$0

Elective surgery patients

Anonymous donated
$382

NO
YES
YES

Autologous donated
$0

NO
NO
NO

Emergency surgery patients
$553

NO
YES
YES

Borderline transfusion cases
$1,500

NO
YES
YES

Trauma Field administration
$2,213

YES
NO
NO
$2,213

$4,648

$2,213

Note that answers that rely strictly on production capacity ignore the likelihood that forward-looking organizations will choose to invest in additional production facilities if demand, which can be profitably served, is believed to exist. Supply is not an unreasonable way to look at satisfying demand, but alone does not answer the DEMAND or potential question.

Question 3)

Current usage of blood transfusions=
5% of 15,000 vets use average of 150 units/year
.05*15,000*150=112,500

95% of 15,000 vets use average of 17 units/year
.95*15,000*17=242,250

Total current usage = 354,750

In calculation of potential market it is important to note that 2.5% of animals treated get transfusions while 30% could have benefited from them. Assuming 2.5% is built into the current usage numbers:

354,750 * .3/.025 = 4,257,000 potential market in units

At $100 per unit:
CriticalNoncriticalTotal
Owner willingness90%60%
Percentage of cases8.3%91.7%
Potential recipients317,9982,342,2012,660,199$266,019,900

At $200 per unit:
CriticalNoncriticalTotal
Owner willingness85%40%
Percentage of cases8.3%91.7%
Potential recipients300,3311,561,4681,861,799$372,359,800

At $300 per unit:
CriticalNoncriticalTotal
Owner willingness75%35%
Percentage of cases8.3%91.7%
Potential recipients264,9981,366,2841,631,282$489,384,600

At $400 per unit:
CriticalNoncriticalTotal
Owner willingness65%30%
Percentage of cases8.3%91.7%
Potential recipients229,6651,171,1011,400,766$560,306,400

(Note: The 8.3% of cases that are considered critical comes from the original 2.5% of cases that actually received transfusions – 2.5% / 30% = 8.3%.)

Cite This Document

Related Documents

  • Case Study

    ...Case Study Analysis Diana Hamilton Comm/215 April 16, 2012 Lyn Wolf Title of Paper Carl Robins, began working for ABC, Incorporated, about six months ago as a campus recruiter. This is considered a tough job, which involves many responsible. Carl had only been with the company for six months, but expressed he was read...

    Read More
  • CASE STUDY

    ...1. CASE STUDY:NATIONAL INSTITUTE OF FASHION TECHNOLOGY, NEW DELHI 2. ACME_PortlandCountyard 3. american resource centre 4. Architectural Photography 5. Bamboo Connections & constructions 6. BRTdesignsum 7. case study city walk 8. CHANDIGARH COLLEGE OF ARCHITECTURE 9. CII_Sohrabji_bussiness centre Hyderabad 10. city centre rohini 11. civic cen...

    Read More
  • Case Study

    ...CASE STUDY SOLUTION The Carter Cleaning Company Ahmed Ali ID: 11901 Chapter 4: Job Analysis Continuing Case: The carter cleaning company: The job description 1. What should be the format and final form of the store manager’s job description? Answer: The format noted in figure 4-6 could be a reasonable format to use. Students may recommend t...

    Read More
  • Case Study

    ...Case Study Case study methods involve   Systematically gathering enough information about a particular person, social setting, event, or group to permit the researcher to effectively understand how it operates or functions. Case studies may focus on an individual, a group, or an entire community and may utilize a number of data technol...

    Read More
  • case study

    ...CASE STUDY A DAY IN THE LIFE QUESTION: 1. How effectively do you think Rachel spent her day? 2. What does the case tell you ask what it is like to be a project manager? Project is a complex, non-routine, one time effort that is limited by time, budget, resources and performance specifications and it’s implemented to meet the customer...

    Read More
  • Case Studies

    ...Associate Level Material Final Project Case Studies Case Study One Pat and Chris are medical billing specialists who have been in the same department for 2 years. They are both well qualified and do a good job. They have always been competitive, each believing that they are the biggest contributors to team success. There is also an ongoin...

    Read More
  • CASE STUDIES

    ...Case Analysis 6 MoneyGram International Questions 1. Identify how predictive analytics was used to solve the business problem. Explain how the predictive analytics solution works. 2. What are the data used to make the predictive analytics solution work? Case Analysis 6 MoneyGram International Answers Case Analysis 7 Hamilt...

    Read More
  • Case Study

    ...Introduction To Human Resource Management Case Application 4-B: Off The Job Behaviors October 3, 2013 1. Do you believe Oiler’s employee rights were violated? Explain your position. a) After reading this case yes I believe that Mr. Oiler’s employee rights were violated for a number of reasons. For starters the case did not provide any ...

    Read More

Discover the Best Free Essays on StudyMode

Conquer writer's block once and for all.

High Quality Essays

Our library contains thousands of carefully selected free research papers and essays.

Popular Topics

No matter the topic you're researching, chances are we have it covered.