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Draft Marketing Stratey Oxy
Draft Marketing Stratey Oxy
Recommendation Summary
Pros - Launching Oxyglobin:
1. Capture complete market share of animal blood substitute as a first mover into the
market.
2. Reduced risks of go to market strategy of Hemopure.
3. Build awareness of Biopure in the marketplace.
4. Opportunity to understand the dominant category label chosen by the customers and
the dynamics of the industry.
5. Gain market experience
6. Opportunity to develop a good reputation through Oxyglobin’s successful
establishment. Utilise the previous success to better strategize the launch of
Hemopure into a new industry under the correct dominant category label and shape
customer understanding (avoid go to market mistakes).
7. Manufacturing and distribution overlaps
8. Establish a revenue stream as capital venture financing can support operations for
only nest two years.
9. More interest from investors in IPO after successful product in market.
10. Reduces possibility of FDA rejecting Hemopure in Phase 3 trails.
11. Establishes trust within the market for blood substitutes, although other competitors
may receive FDA approval and launch their products around the same time as
Hemopure.
Benefits of launching Oxyglobin outweigh the risks of creating unrealistic price
expectations of Hemopure and provides competitive advantage for the future.
BRENDAN DRAFT
Biopure will introduce the first and only blood substitute/oxygen therapeutic for animals. In addition
to the benefits of being a first mover, these sales will generate revenue and increase the company’s
value for its anticipated IPO. If other companies wanted to follow suit, Biopure would still have a 2-5
year head start (Gourville, p.9).
We recommend that Oxyglobin be priced at $200 per unit. The premium pricing certainly has its
disadvantages, but we believe a high veterinary price will also enable Biopure to retain its price
premium when it finalizes FDA testing and moves into sales for human use. While this price point
would limit Oxyglobin’s usage among non-critical veterinary cases, a majority of vets (60%) would
still be interested in using it to treat critical situations in animals. 65% of per owners would consider
this price point for emergency situations, and 30% would consider it for non-critical cases.
Additionally, we believe that if pet owners were informed about the existence of this product, they
would also urge their vets to use it more often.
Looking forward, Biopure can overcome the price skepticism by emphasizing the enhanced
manufacturing processes needed to make bovine blood safe for human use be removing smaller
hemoglobin clusters.
Distribution Network
Biopure will have to rely extensively on existing distributor networks to inform vets about Oxyglobin
and inform them of its benefits. Through a mix of national, regional, and local distributors, Oxyglobin
can reach large-scale practices. We do not recommend that Biopure engages in manufacturer direct
marketing; not only will the raise the per unit cost to $10-15, but it will also incur additional HR costs
for Biopure.
Other marketing resources include 5 prominent medical journals and the 6 annual veterinary trade
shows, drawing between 2,000-10,000 attendees at each.
Target Groups
Primary care vets with 2 or more doctors and emergency care vets, representing 75% of the total
American veterinary market. Marketing materials that appeal directly to consumers can also inquire
whether pet owners carry pet insurance, which would then lessen the burden that individual owners
must carry when purchasing the product. Biopure should also contact veterinary schools, such as
Tufts University School of Veterinary Medicine, to ensure that vets are familiarized with the product
before starting private practices.
Positioning
Oxyglobin will be marketing with heavy emphasis on its shelf-stable attributes: vets can now finally
carry life-saving treatments with no need to maintain a cruel system of donor animals. With
Oxyglobin, vets will have peace of mine for 2 years that life-saving treatment is already on hand in
their very own stock room. Just one bag is sufficient for small to medium-size dogs, and this has
broad usage: not only can it be used in trauma surgery for animals, but it can also help with parasitic
infections or anemia.
Emergency care vets perform 150 blood transfusions per year on average; primary care vets perform
17 blood transfusions per year on average (2.5% or market)
Market Potential of Oxyglobin Target market = emergency care vets + largest primary care
vets = 750 + 6000 = 6750
Average vet practice gets 800 dogs with acute blood loss, 30% would benefit from a blood
transfusion 6750 x (800 x .30) = 6750 x 240 = 1,620,000 dogs
If Biopure delays launch of Oxyglobin and sells Hemopure at premium price of $800
(assuming full production capacity since demand far exceeds this): $800 x 150,000 units =
$120,000,000
If Biopure launches Oxyglobin immediately, but sells Hemopure at $600 to decrease the price
difference between the two products (assuming full production capacity since demand far
exceeds this):
$600 x 150,000 units = $90,000,000
Biopure loses $30,000,000 by decreasing the price of Hemopure. However, this revenue lost
is more than compensated for by the revenue associated with sales of Oxyglobin priced at
$200 (See Appendix 3).
Fixed costs: it is unclear how much was spent on Oxyglobin alone. However we do know that
over $200 million was spend on the development of both Oxyglobin and Hemopure and the
construction of a production facility. Since Oxyglobin was an ancillary product and created in
the course of developing Hemopure, I will assume $25 million in development/facility costs
for Oxyglobin. Additionally, bovine blood is purchased at $1.50 per unit and 10,000 cows are
needed for full production. Distribution costs will be 30% of sales (assuming sales of full
production of 300,000).
Variable costs: Production costs are $15 million. Though this does not vary by production
volume, I will assume full production of 300,000 units of Oxyglobin for this analysis.
Selling price: $200
Break even = fixed cost / (selling price – variable cost) = ($25($1.50 x 10,000) + (300,000 x
$200 x .30) / ($200 – ($15 million/300,000 units)) = $43,015,000 / $150 = 286,766 units
Since Biopure can product 300,000 units of Oxyglobin in 1 year, Biopure will break even in
less than a year