Biopure

Case Study
Analysis
 OVERVIEW
Biopure Corporation Context Problem Statement

● Founded in 1984 by ● Oxyglobin - for The corporation needs to

CARL RAUSCH AND veterinary use and has decide between -
DAVID JUDELSON gained FDA Approval
● Private ● Hemopure - for Human a) What is the best
PHARMACEUTICAL use and would soon time to launch
COMPANY specializing enter Phase 3 of oxyglobin in the
in ultra-purification of clinical trials. Expected market?
proteins to gain FDA approval in b) Whether to launch
● Two bovine sourced the next two years oxyglobin after
blood substitutes - ● Interested in making hemopure is well
Oxyglobin and company PUBLIC established in the
Hemopure market?
 Analysing Oxyglobin and its Market Potential
● Total no. of Veterinary Practices = 15,000
● No. of Primary Care Practices = 95% of 15,000 = 14,250
● No. of Emergency Care Practices = 5%2of 15,000 = 750 Challenge 3
Challenge

● Units of blood consumed by one Primary Care Practice = 17 units

● Units of blood consumed by one Emergency Care Practice = 150 units
● Total units of blood consumed by Primary Care Practices = 14,250 x 17 = 2,42,250
units
● Total units of blood consumed by Emergency Care Practices = 150 x 750 = 1,12,500
units

● Total units consumed by all Veterinary Practices = 2,42,250 + 1,12,500 = 3,54,750 units of
blood

This 3,54,750 units of blood required by all veterinary practices is the Potential Market
Demand for Oxyglobin.
● Production capacity of Oxyglobin = 3,00,000 units per year (maximum)
● Manufacturing Cost spent by Biopure = $200 million
(For setting up a manufacturing facility and developing Oxyglobin and Hemopure)

Challenge 2 Challenge 3
● Production cost for a year = $15 million
● Cost of Raw Material = $1.50 per unit of bovine blood

● Distributor’s Price = 30% of Selling Price

● Additional cost of distribution channel = $10 to $15 per unit
(in case Oxyglobin decides to directly sell their product to veterinary practices through
manufacturer salesforce)
Data collected through surveys by Biopure
Determining Revenue Potential at Different Prices
for Non-Critical Cases
Sales Price per Unit CASE I - $50 CASE II - $100 CASE III - $150 CASE IV -
(in $) Challenge 2 Challenge 3
$200

Market Potential (
242,250 242,250 242,250 242,250
in units of blood)

Veterinarians
willingness to try 95% 70% 25% 5%
Oxyglobin

Sales Potential (in

230,137 169,575 60,563 12,113
units of blood)

Oxyglobin Revenue
11,506,850 16,957,500 9,084,450 2,422,600
Potential (in $)

Sales Potential = Market Potential x Willingness to try oxyglobin

Determining Revenue Potential at Different Prices
for Critical Cases
Sales Price per Unit CASE I - $50 CASE II - $100 CASE III - $150 CASE IV -
(in $) Challenge 2 Challenge$200
3
Market Potential (
112,500 112,500 112,500 112,500
in units of blood)

Veterinarians
willingness to try 100% 95% 80% 60%
Oxyglobin

Sales Potential (in

112,500 106,875 90,000 67,500
units of blood)

Oxyglobin Revenue
5,625,000 10,687,500 13,500,000 13,500,000
Potential (in $)

Oxyglobin Revenue Potential = Sales Potential x Sales Price

Total Revenue Potential at Different Prices
Sales Price per Unit CASE I - $50 CASE II - $100 CASE III - $150 CASE IV -
(in $) $200
Challenge 2 Challenge 3
Total Sales
Potential (in units 342,637 276,450 150,563 79,613
of blood)

Total Oxyglobin
Revenue Potential 17,131,850 27,645,000 22,584,450 15,922,600
(in $)

Revenue on the
basis of Production 15,000,000 30,000,000 45,000,000 60,000,000
Capacity (in$)

Total = Non-Critical Cases + Critical Cases

 Total Expense at Different Prices
Sales Price per Unit (in $) CASE I - $50 CASE II - $100 CASE III - $150 CASE IV - $200

Total Units Demand 342,637 276,450 150,563 79,613

Challenge 2 Challenge 3
Total Production Cost 15,000,000 15,000,000 15,000,000 15,000,000

Cattle Blood Cost (per unit in $) 1.50 1.50 1.50 1.50

Total Variable Cost (in $) 513,955 414,675 225,844 119,419

Distributor’s Channel Cost (per unit

15 15 15 15
in $)

Distributor’s Price (per unit in $) 15 30 45 60

Total Marketing Cost (in $) 1,500,000 3,000,000 4,500,000 6,000,000

Total Cost of Expenses (in $)

 Total Potential Revenue at Different Prices
Sales Price per Unit (in $) CASE I - $50 CASE II - $100 CASE III - $150 CASE IV - $200

Total Cost of Expenses (in $)

Challenge 2 Challenge 3
Total Oxyglobin Revenue Potential
17,131,850 27,645,000 22,584,450 15,922,600
(in $)

Profits ( in $)

Variable Cost = Cattle Blood Cost x Total Units Demand

Total Marketing Cost = 10% of Revenue on the basis of Production Capacity
Total Cost of Expenses = Production Cost + Variable Cost + Marketing Cost
Profits = Total Oxyglobin Revenue Potential - Total Cost of Expenses
INTERNAL ENVIRONMENT OF BIOPURE (SWOT ANALYSIS)
STRENGTHS
- FDA approval for Oxyglobin has been
already received
- First blood substitute for the
Challenge
veterinary market
- Stable at room temperature
- Product free of infectious agents and
contamination
- Only cattle based blood substitute
WEAKNESS
- Can build a strong Brand Image
through oxyglobin
- No competitors in the animal market
for at least 2-5 years (MARKET
EXCLUSIVITY)
- Lower production variable costs
- Generated revenue can be used in
launching hemopure
OPPORTUNITY
- High price expectation for Hemopure
- FDA approval of Hemopure is
awaited
2 Challenge 3
- No market experience
- Production capacity low and only one
product can be made at one time
THREATS
- Non-acceptance of Hemopure by
FDA can cause loss to the company
- Strong competition from Baxter and
Northfields for Hemopure
- Oxyglobin is likely to create
unrealistic price expectation
 Oxyglobin Market Strategy
1. MARKET OPPORTUNITY ANALYSIS
● Demand for an alternative blood substitute is present and can be fulfilled by Oxyglobin
● Has first mover advantage by offering something that is in short supply
● No potential competitors for the starting years 2
Challenge Challenge 3
● Can generate revenue and cover the investments made for production

2. SEGMENTATION & TARGETING

● Based on profits calculation, the target market segments can be identified

3. POSITIONING
● Biopure to be the first ever corporation to launch blood substitute in the animal market - will help in
BRAND IMAGE and positioning biopure as an effective source of blood substitutes
● Will help in taking Biopure public and success of oxyglobin can improve the IPO
 4. MARKETING MIX

PRODUCT
● No refrigeration required
● Universal substitute
● Short shelf life

PRICE

● Price should be placed at $150 per unit

● This will ensure business of 80-85% willing veterinarians and pet owners
PLACE

● Distribution through local, regional and national channels

● Target locations - Animal blood banks, Veterinary care units, Pharmaceutical vendors
● Also include manufacturer’s sales force and training of sales representatives

PROMOTION

● For veterinarians through trade publications and journals of the market

● For pet owners, by participating in trade shows as they attract a crowd of 2,000-10,000
● It can also be done through experts and word of mouth
 The Team
NIVEDITA MALIK PUNEET
NIVEDITA MALIKJAIN
23/UMBA/71 23/UMBA/77

RASHIKA AJEET
23/UMBA/81

SHUBHANGI MITTAL
UJJWAL KESARI
23/UMBA/103 23/UMBA/112