Biopure Corporation

...

Expected profits of Hemopure:

For $600: $2,832,000,000 x 0.3 x 1 = $849,600,000

Oxyglobin

Number of Veterinary Hospitals

Primary Care (95%)

Emergency Care (5%)

15000

14250

750

We recommend the rate of Oxyglobin to be $200 instead of $160 or less. This is keeping in mind the maximum reasonable rates that is agreeable to vets and pet owners. Secondly, it would help in reducing the price gap between Oxyglobin and Hemopure. Further, as per Table A and Table B in Case study, at $200, 40% of the owners would want to use Oxyglobin for their pets in primary care and 85% of them would use it in emergency care. Also, it is difficult to increase the price, once the product is launched. And Biopure does not have any big competitors in this market.

Primary Care

Emergency Care

Total

Total units of blood required

242250

112500

354750

Unit of Oxyglobin required

96900

(40%)

95625

(85%)

192525

Revenue through Oxyglobin

(Market Potential)

-

-

$38,505,000

Cost of Bovine blood ($1.5/unit)

-

-

$288787.5

Cost of distributers (30%*)

-

-

$11551500

Profit

$26,664,712.5

*The calculation is based on the consideration that Oxyglobin was released after approval from FDA, prior to Hemopure.

Hence, the potential profits through Hemopure is around 50 times that through Oxyglobin.

Introduction strategy for oxyglobin

Our assessment of the case study led us to believe that introducing Oxyglobin earlier than Hemopure would be beneficial to the company.

- There is approximately a loss of $346,905,000 if Hemopure ($600) is introduced after Oxyglobin because, it would take the market profits of Oxyglobin, which could have been earned during the two years of waiting.

- Through Oxyglobin, the company would learn how to enter the market and hence could do so in a much better manner and thereby reducing the risks to an extent while introducing its primary product: Hemopure.

- Distribution networks will already be in place before the launch of Hemopure. Otherwise, it would have to be developed from start for Hemopure, which is riskier and more time taking.

Profits (Hemopure: $600/unit)

Profits (Hemopure: $800/unit)

Oxyglobin introduced first

$2,881,132,875

$3,825,132,875

Hemopure introduced first

$2,421,772,125

$3,247,772,125