We recommend Biopure to launch Oxyglobin.

Not only does the start-up so gain its first

revenues, which can be later re-invested in the Hemopure launch, but also benefit from
learning effects from the veterinary product launch. Since there is nothing more valuable in
the entrepreneurial ecosystem than gaining market experience, making mistakes now and
learning from them is less risky than waiting until the launch of Hemopure, since the
competitive landscape in the human oxygen therapeutics market is developed further. While
Biopure is the only player in the veterinary blood substitute market, it will benefit from the
first mover advantage and might capture the whole market share. The lack of animal blood
banks supports this fact and is proof for the product demand in the veterinarian market.
Biopure should take over the opportunity to develop a good reputation and build up trust in
the market by leveraging Oxyglobin’s success to better strategize the launch of Hemopure
into a new industry under the correct dominant category label. Oxyglobin’s launch might
even reduce the risk of the FDA rejecting Hemopure in Phase 3 trials. Even though one could
argue that the lower price of Oxyglobin threatens the price of Homopure, we are convinced
that this will not be the case since Biopure addresses two totally different target groups.
Oxyglobin targets pet holders while Hemopure targets patients in need of blood substitution.
Moreover, Biopure would benefit from a higher capacity utilization and economies of scale,
since the manufacturing processes are very similar. Through Biopure’s learning process there
might be even new synergies discovered, which then will be applied at Hemoglobin’s launch
and be of great use for Biopure’s future success. Another factor is that the sales team of seven
people has already been hired and is ready to kick-start its operations with the Oxyglobin
launch. Looking forward, a launch of Oxyglobin, the gain of revenues and learning effects
enhance the interest of investors regarding Biopure’s planned IPO and will positively impact
its share price.
In conclusion, the benefits of launching Oxyglobin outweigh the risks of creating unrealistic
price expectations of Hemopure and provide a sustained, competitive advantage for Biopure’s
future.
Marketing Strategy
1. Target Market/ Position: Biopure should target emergency care veterinary practices
and large primary care practices with 3 or more doctors. These target groups have the
highest average monthly caseload and gross revenues (Exhibit7, Biopure Corporation
Case Document). Hence, Biopure will be able to reach more potential patients.
Additionally, these two target groups handle the greatest number of canine trauma and
surgery cases. As blood transfusion would be more common in these practices, they
would have more demand for animal blood supply (emergency practices - 150 blood
transfusions per year), which is inadequate. Oxyglobin should be positioned as the
only veterinary blood substitute available that offers convenience in acquisition and
storage over canine blood from animal blood banks and donor animals.
2. Communication/ Promotion: Biopure must utilize trade journals, subscribed by
emergency care and large primary care practices and veterinarians, to educate and
raise awareness about Oxyglobin. Additionally, Biopure should promote Oxyglobin in
geographic areas with high number of emergency and primary practices directly and
through trade shows. Biopure can also consider directly advertising to pet owners
(90% want to be informed about alternative treatments) in these practitioners’ offices.
 3. Distribution/ Place: Biopure should distribute Oxyglobin through distributors as they
sell more product compared to manufacturers (Biopure). Biopure should utilize
regional distributors (majority of sales of 60%) to reach different regions without
overlap and satisfy the requirement of multiple personal visits to the offices to
introduce the product. Moreover, considering the number of target practices, the
commission of 30% claimed by the distributors shall be lower than the cost of
physically distributing the product for $10-15 per unit. The sales and customer
representatives employed by Biopure for veterinary products shall be utilized to
support this strategy and coordinate with the distributors.
4. Price: The price for Oxyglobin should be $xxx. Considering the high number of
advantages of no refrigeration, blood matching, donor animals and limited shelf life
provided by Oxyglobin, Biopure can set a higher price for its new and first of its kind
product, Oxyglobin, compared to animal blood banks ($50-100). Moreover, 84% of
veterinarians are dissatisfied with blood transfusion alternatives available. As per the
target market we have chosen, the practices also have higher revenues to afford the
higher price of Oxyglobin. Moreover, provided that the veterinarians might double the
price of the Oxyglogin, the pet owners show higher willingness to try the product
despite the cost. It may also be unlikely that the veterinarians will blindly double the
price, which may result in higher demand. The higher price of Oxyglobin also helps to
tackle the issue of jeopardising the potential price and market size of Hemopure in the
future, as it will reduce the price gap between the two products.

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.

Cost Breakdown (per unit)

Cattle Blood: $1.50

Distributor Commissions: 30% of $200 = $60*

Total Costs Per Unit: $61.50

Profit Per Unit: $138.50

*Will go down to $40 after product becomes known

Breakeven Calculation: Fixed Costs/Gross Profit Margin

Fixed Costs: $15 million per year

$15m/$138.50 = 108303.249097 = 108,304 units, or just over one-third of the total production
capacity until Hemopure launches.

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)

750 x 150 = 112,500 units

6000 x 17 = 102,000 units

112,500 + 102,000 = 214,500 units

214,500 units x $150 per unit = $42,900,000

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

300,000 units x $150 per unit = Maximum Estimate Revenue

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