Biopure Case Study

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But, we will be producing Oxyglobin for 1 year, so that we can launch both the products simultaneously. Considering the fact that, Oxyglobin has a shelf life upto 2 years and keeping in mind that the company won’t be producing anything significant over that period we can use Oxyglobin to recover the losses. So, if we produce Oxyglobin for one year then we won’t be incurring any losses from the same.

$100 x 300,000 units = $ 30,000,000

However, the profit we make from producing Hemopure at a premium price will be beneficial in the long term.

3. According to our inferences from the Biopure Case Study, we have eventually reached a plausible result for the existing dilemma the company faced. Oxyglobin, the FDA approved blood substitute needs to be shelved for now. Although, the immediate release of Oxyglobin might bring along an opportunity for Hemopure to take advantage of a brand image built by the former, we will have to consider the fact that Oxyglobin and Hemopure are 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. The hospitals and insurance firms will definitely claim for justification for the 500% price difference between two similar products.

Biopure will be making huge profits with Hemapure because the blood transfusion process, which requires exact blood typing and cross-matching and has limited shelf life, is at odds of 1/5 (approx) and only 5% of the people in the whole world end up giving blood, so with the lack of blood transfusion Biopure can increase the price of Hemapure exponentially for the human market. But this cannot be achieved if the world has already seen a similar product, Oxyglobin being sold for a very less price by the same company. Moreover, even a proven success with Oxyglobin might not have a greater impact on an IPO than the promise of a success with Hemopure.

The animal market, although attractive is relatively a smaller market. Moreover, the company cannot risk Hemapure’s sales having spent $200 million developing it for the human market. Therefore, we will have to prioritize the bigger human market over thinking about the immediate profits obtained from launching Oxyglobin. It is also quite evident from the available statistics that no other company is, literally, even close enough to launch a blood substitute. Since obtaining FDA approval is a time consuming process, the first player to catch hold of the market, which will remain to be Biopure for the next three years, will have an edge over the others. Thus, there will be no difference in the profits obtained by Oxyglobin even if it is launched along with Hemapure.

Thus, it is quite evident from the above points, that the best strategy for Biopure Corporation would be to store Oxyglobin for now and launch it along with Hemapure in 1999-2000.

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