[TYPE THE COMPANY NAME]

CASE ANALYSIS OF BIOPURE

CORPORATION

Situation Analysis � Oxyglobin and Hemobpure were Biopure’s entries in the field of blood substitutes, Hemopure

targeting the Human Market and Oxyglobin, the animal market.

� Biopure’s primary goal was the development of a Human Blood Substitute and its entry into the

animal market was somewhat opportunistic. However Oxyglobin had received the final FDA

approval while Hemopure was about to enter phase III clinical trails.

� Oxyglobin and Hemopure were almost identical in physical properties and appearance, hence it

was possible that launching Oxyglobin, that too at a low price would create an unrealistic price

expectation for Hemopure eventually.

Problem Identification

1. Identify SWOT (more focus is likely to be on strengths and weaknesses) of Oxyglobin as a blood

substitute for animals.

2. Identify SWOT (more focus is likely to be on strengths and weaknesses) of Hemopure as a blood

substitute for humans.

3. What are the reasons to launc

4. Assess the market potential/demand for Oxyglobin and for the Hemopure (this question may

take space due to calculations).

Q1. SWOT Analysis (Oxyglobin

Threats

There was little to prevent Biopure’s competitor

Baxter is the Leader in innovation and development, manufacture and sale of blood related medical products.

Oxyglobin was likely to create an unrealistic price expectation for hemopure.

Competitor with production capacity three times larger, established distribution network and additional products in other markets.

Weakness

•No distribution channel.

•Lack of prior experience in launching a product incorporating immense R&D.

•Stockholders were expecting a good product from Biopure if it resulted, otherwise there could be a dip in the stock.

•Enlargement of production plant needed for expansion

Oxyglobin and Hemobpure were Biopure’s entries in the field of blood substitutes, Hemopure

targeting the Human Market and Oxyglobin, the animal market.

Biopure’s primary goal was the development of a Human Blood Substitute and its entry into the

animal market was somewhat opportunistic. However Oxyglobin had received the final FDA

approval while Hemopure was about to enter phase III clinical trails.

lobin and Hemopure were almost identical in physical properties and appearance, hence it

was possible that launching Oxyglobin, that too at a low price would create an unrealistic price

expectation for Hemopure eventually.

SWOT (more focus is likely to be on strengths and weaknesses) of Oxyglobin as a blood

Identify SWOT (more focus is likely to be on strengths and weaknesses) of Hemopure as a blood

What are the reasons to launch and the reasons not to launch Oxyglobin in the market?

Assess the market potential/demand for Oxyglobin and for the Hemopure (this question may

take space due to calculations).

Oxyglobin)

There was little to prevent Biopure’s competitor

Baxter is the Leader in innovation and development, manufacture and sale of blood related medical products.

Oxyglobin was likely to create an unrealistic price

Competitor with production capacity three times larger, established distribution network and additional products in

Opportunity

•The possibility of success of Oxyglobin will bring along an opportunity for Hemopure to take advantage of aimage built by the former.

•Any company trying to enter the veterinary blood substitute market would have to wait for 2an FDA approval.

Lack of prior experience in launching a product

Stockholders were expecting a good product from Biopure if it resulted, otherwise there could be a dip in

Enlargement of production plant needed for expansion.

Strengths

•Since obtaining FDA approval was a time consuming process, the first player to catch hold of the market had an edge.

•Time & development advantage on animal market.

•Lack of adequate blood supply.

•Biopure was the only company that was actively engaged in the development of a blood substitute for the smallanimal veterinary market.

Oxyglobin

Oxyglobin and Hemobpure were Biopure’s entries in the field of blood substitutes, Hemopure

Biopure’s primary goal was the development of a Human Blood Substitute and its entry into the

animal market was somewhat opportunistic. However Oxyglobin had received the final FDA

lobin and Hemopure were almost identical in physical properties and appearance, hence it

was possible that launching Oxyglobin, that too at a low price would create an unrealistic price

SWOT (more focus is likely to be on strengths and weaknesses) of Oxyglobin as a blood

Identify SWOT (more focus is likely to be on strengths and weaknesses) of Hemopure as a blood

h and the reasons not to launch Oxyglobin in the market?

Assess the market potential/demand for Oxyglobin and for the Hemopure (this question may

The possibility of success of Oxyglobin will bring along an opportunity for Hemopure to take advantage of a brand

Any company trying to enter the veterinary blood substitute market would have to wait for 2-5 years to get

Since obtaining FDA approval was a time consuming process, the first player to catch hold of the market had

Time & development advantage on animal market.

Lack of adequate blood supply.

Biopure was the only company that was actively engaged in the development of a blood substitute for the small-

Q2. SWOT Analysis (Hemopure)

Q3. Reasons to launch and the reasons not to launch Oxyglobin in the market

Reasons to launch

Hemopure is at least 2 years away from

approval

Biopure could make a small profit rather

sit idle during FDA approval process

money could be used to launch Hemopure.

Failure of other drugs makes introduction

Hemopure a financial risk

Blood substitute competitors have a more

established brand and more money; success

Oxyglobin would help Biopure compete

these factors

Strengths

Both products are nearly identicalprocesses.

Funds are sufficient for 2 years.

Innovative product

The products of Baxter and NorthfieldReferigerated until used, while hemopureroom temperature.

Threats

Uncertain market price, Oxyglobin wasprice expectation for hemopure.

Hemopure’s market entry depends on the

Stockholders were expecting a goodresulted, otherwise there could be a dip

Competitor with production capacity threedistribution network and additional products

Baxter is the torchbearer in innovationmanufacture and sale of blood related medical

Hemopure)

Reasons to launch and the reasons not to launch Oxyglobin in the market

Reasons not to launch at least 2 years away from FDA Small, price-sensitive market

Biopure could make a small profit rather than

during FDA approval process. This

money could be used to launch Hemopure.

Cost of Oxyglobin at $150 per unit may

price of Hemopure by raising low cost

expectations.

Failure of other drugs makes introduction of

Hemopure a financial risk

Manufacturing two products would limit

production if facilities aren’t expanded

Blood substitute competitors have a more

established brand and more money; success of

Oxyglobin would help Biopure compete against

Spent $200 million to make Hem

take the chance

identical in terms of production

Northfield needed to be frozen orhemopure was Self-stable at

Weakness

Dissension within BIOPURE’ s

Had a single manufacturing facilitybeing used for either product,produced at a time.

If Oxyglobin is not launchedalso be present while launching

No distribution network

No experience in going to market

Stockholders with high expectations

Enlargement of production plant

likely to create an unrealistic

the FDA approval process.

product from Biopure if itin the stock.

three times larger, establishedproducts in other markets

innovation and development,medical products.

Opportunity

•Demand on blood that cannotshortage and anemia.

•High benefits for autologous

•The possibility of success ofopportunity for Hemopureimage built by the former.

Hemopure)

Reasons to launch and the reasons not to launch Oxyglobin in the market

sensitive market

Cost of Oxyglobin at $150 per unit may affect

by raising low cost

Manufacturing two products would limit

production if facilities aren’t expanded

Spent $200 million to make Hemopure- can’t

top management.

facility with the same equipmentproduct, thus only product could be

first the following weakness willlaunching Hemopure :

market

expectations

plant needed for expansion

cannot be satisfied due to periodic

autologous donators.

of Oxyglobin will bring along anto take advantage of a brand

Q-4 The Break Even analysis for $100, $150 and $200 and profit margin for high price and low price is

shown below. This shows Biopure should launch as soon as possible and with the price of $200 as the

market demand is so high that break even will be achieved early on.

Assumption: Marketing costs = 10% of max. revenue

Biopure- Oxyglobin calculations

Price 100 150 200

Capacity Veterinary per yr 300,000 300,000 300,000

Marketing cost Vet (10%) 3,000,000 4,500,000 6,000,000

Fixed costs

Production Cost 15,000,000.00 15,000,000.00 15,000,000.00

Total Fixed Costs 18,000,000.00 19,500,000.00 21,000,000.00

Contribution

Blood cost per unit 1.5 1.5 1.5

Distribution Cost 15 15 15

Total Contribution 83.5 133.5 183.5

Break Even Volume 215,569 146,067 114,441

Breakeven Percentage of Capacity 71.86% 48.69% 38.15%

Profit= Contribution* Capacity - (Production Cost+Marketing Cost)

Total Profit 7,050,000 20,550,000 34,050,000

Recommendations : 1. As the success of Hemopure largely depends on the image built by Oxyglobin, emphasis should be laid on

establishing the latter as a successful brand.

2. As soon as FDA approval is received, Hemopure should be lunched at price tag of $ 600-800, production of Oxyglobin to be reduced to free the production capcity and to increase the production of Hemopure

3. Advertisement of Hemopure to start with the selling of Oxyglobin so as to setup a brand image of Biopure.

“To sum it up, we recommend that Biopure introduce Oxyglobin into the veterinary blood substitute market at a price of $150 per unit in order to gain respect and brand awareness in the blood substitute market and to provide a source of income for Biopure while they await FDA approval for Hemopure."Upon approval of Hemopure, the price of Oxyglobin can be increased to $200, this will free the production capacity as breakeven volume reduces(from 146,067 to 114,441). Later, as the demand further increases for hemopure, the production of Oxyglobin can be completely stopped”.