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Biopure Case Study
Biopure Corporation
Case Analysis
Issues
A.How do we best market Oxyglobin?(promotion)
Alternatives
1.Go with an independent distributor with their own sales force
·Pos infrastructure already in place (database contacts, etc)
·Neg They also distribute for other manufacturers(what's to stop them from distributing directly competitive product?
·Neg15 minute visit per salesperson- focus is divided among all the other products they sell
·Pos They are able to set up a centralized training session for distributors (?? Time/money, etc)
·Pos Experienced salespeople- if it's a good product, they can/will want to sell them
.Manufacturer sells products directly
·Control over sales practices
·Cost of maintaining the sales force
·Cost to physically distribute ($10-$15 more) per unit (should go under distribution?)
.Use trade publications 4. Market Trade Shows (could be combined or separated)
·Taken seriously by attendees
·Only 5 publications, easy to advertise to
·Journals are effective vehicles to communicate the product
·Taken seriously by attendees (6 TS/year)
B.Whether and when do we launch Oxyglobin?(Product)
1.Launch Oxyglobin first
·Get immediate revenue
·Will add value to the public release of company because they already have a working profitable product
·There is currently a need for veterinary use (it will help save animals' lives)
·Spent almost nothing to develop Oxyglobin
·Lower manuf cost, can make more for the same resources
·Large capacity
·Already have a C.S,, Tech team to support it
·Studies on $$ and
·No foreseable competition ( years behind)
·They can learn from potential mistakes
·May find additional benefits
·Will be good for Hemopure later on because people would already be comfortable with the idea of using a substitute
·There was already a press release from The Boston Glove in /5/8
·Pricing structure of Oxyglobin will make customers question Hemopure pricing structure later
.Launch Oxyglobin after Hemopure
·Won't jeopardize Hemopure
·Need will still be there
·Low price will be explained by the application (psychological aspects)
·There was already a press release from The Boston Glove in /5/8
·Will open room for competitors to start doing clinical trials for veterinary usage
·Production infrastructure already in place
·Will give available capacity to Hemopure which is more expensive
·Oxyglobin release will be easier (less cost to market) because people will already be more familiar and hopefully trust the idea of a blood substitute
.Do not launch Oxyglobin
·Idle capacity not being used
·Spent $00 million to make Hemopure- can't take the chance
·Spent $00 million to develop the product- get some of the up front cost first
·Idea of a company with no released product- harder to sell to the public
·Launching Hemopure would be the first time people will be universally exposed to the idea of substitutes
·People will be hesitant to the idea if it wasn't sufficiently tried on animals first
·If people find out- they will be enraged that the launch was delayed (i.e. not be able to save lives of animals) for the sake of marketing
·Press has already been informed- anticipation is out there
C.How do we launch Oxyglobin without jeopardizing the potential for Hemopure (Promotion)
D.How do we best distribute Oxyglobin?(Place)
1.National Distributors
.Regional Distributors
.Trade Shows
4.Publications
E.How much should we sell Oxyglobin for given that it is similar to Hemopure?(Price)
1.$00Higher than donor blood
.$100 same as donor blood
.Lower than animal blood
F.When introduced, should Hemopures price be equivalent to its competitors, or should it be reduced in consideration of the price paid of Oxyglobin?
G.What promotional tools should Oxyglobin use to reach the veterinary markets?
H.What promotional tools should Hemopure use to distinguish itself from its competitors?
Strengths and Weaknesses
StrengthsWeaknesses
Sales Organization already in place for Oxyglobin HRBiopure is going public in the near future
Biopure is going public in the near future$00 million dollars in development (high compared to competitors) FINANCIAL
The public has already been informed (Boston Globe Article)Short half life
Oxyglobin and Hemoglobin are bovine sourced- more abundant and less expensive resource COSTPotential for higher toxicity
Already has a manufacturing facility MANUFACTURINGInternal strife (sales vs VP) and discussion regarding whether of not product should be released
Oxyglobin has just received final FDA ApprovalThey have to price Oxi on the low end due to the therapeutic use
Oxyglobin is shelf stableInternal arguments re pricing (value vs therapeutic use)
Oxi eliminates the shortcomings associated with transfused bloodDoes not have pricing data on Hemopure
Oxi is the FIRST blood substitute approved for any useProduct will be completely new and revolutionary, will have to spend more to educate the public
Oxi has a shelf life at room temperatureThey already have a sales team ready, cost has already been incurred- whether they decide to scrap the project or not
Universal substitute- decreasing the risk of rejectionWill be going Public soon and records will be open to the public
Northfield is susceptible to competitive pressure. COMPETITIVENorthfield is looking to specialize. COMPETITIVE
Easily accessible and administered to dying animalsPrivately held firm
Oxi requires less purification- thus it costs less to manufactureHas to rely on outside sources for financing FINANCIAL
Conducted surveys on pricing for OxiglobinMARKETING, exhibit Can only produce 00,000 of Oxyglobin
Privately held firm with no debtCan only produce100,000 of Hemopure
List advantages of HemopureHas not conducted surveys on pricing for Hemopure MARKETING, exhibit
First to market position for Biopure MARKETINGStruggle between Oxiglobin and Hemopure within the organization. ORGANIZATIONAL COMPETENCIES
Organizational Chart - ORGANIZATIONAL COMPETENCIESHemopure and Oxiglobin are made from animal (cow) blood.
Oxiglobin and Hemopure is not made from human blood. Sales are limited by production capacity and can only manufacture one product at a time. MANUFACTURING
Well defined target market for animal uses. EDUCATIONAL GROUPS
Durable product makes product readily available Baxter has deep pockets. COMPETITIVE
Lower fixed costs than competitors
Patents.
IPO will increase cash for infrastructure and other expansion.
Immediate revenue generation for OxiglobinImposing pressure of IPO may cause bad or poorly considered decisions.
Just received extra $50 million in fundingOrganizational Chart - ORGANIZATIONAL COMPETENCIES
Opportunities and Threats
OpportunitiesThreats
Human Blood Transfusions have major shortcomingsFDA Approval process is long and uncertain
Human blood has a limited shelf lifeChanges to the Sources/Development have to be resubmitted to the FDA
Autologous Transfusions are expensive Human blood actually costs less
Potential market exists for non-trauma cases (loss of 1- pints of blood)There is not a way at the moment to determine the price of keeping donor animals
Potential market for trauma cases that can now be transfused on site No cost tracking of animal donor system but blood itself costs less ($50-$100) than Oxyglobin
Availability and transfusion of blood is more constrained in the vet marketAvailability and transfusion of blood is more constrained in the vet market
System in place for Veterinary Blood donation is not very efficientVeterinarians tend to always offer the "low cost" alternatives
Lack of adequate blood supply for animal useVet market is relatively small (5% are emergency care)
Veterinarians consider transfusion as a last resort due to fear of complicationsBaxter Int and Northfield Labs
Baxter and Northfield products use human blood as the sourceStrict FDA regulation for Human consumption products
Only one in the vet marketBaxter and Northfield products use rejected human blood as the source
Northfield high raw material cost ($6 for rejected blood vs Baxter's $8) COMPETITIVEBaxter is an established leader in the field of blood related medical products
Northfield and Baxter are bound to compete against each other (not against Biopure) COMPETITIVEHas a $100 million dollar facility that can produce 1 million units (more capacity than Biopure) COMPETITIVE
Baxter and Northfield are susceptible to the public's perceptions (stock fluctuations)Distributors have an established and experienced sales force
Delays in the approval process for Baxter COMPETITIVEDistributors already have an established market for other products
Vets are gatekeepers- educate them and the product will be usedDistributors are not exclusive- they also market other competitors' products
Distributors already have an established market for other productsInforming the public made them a target for competition in the vet market
Raw materials readily available and stable. SUPPLIERSNo formalized supply process for mass production SUPPLIERS
Population increase NATURALLack of data on costs associated with donor puppies. ACCOUNTING
Excellent PR opportunity by saving the dogs and cats that would normally have died. POLITICALSuppliers may increase price of supplies once they realize there is a market for their product. SUPPLIERS/ECONOMIC
Inelastic demand ECONOMICPETA POLITICAL
Socially responsible use of product that is normally thrown out. SOCIALTechnological advances may allow competitors to catch up. TECHNOLIGICAL
Technological advances in blood storage may decrease competitors raw materials supplies. Technological advances in blood storage may decrease demand.
Increasing demand from aging population DEMOGRAPHICS, page 650Undetermined approval date by FDA, LEGAL
Northfield doesnt have a facility. COMPETITIVE.Baxter is strongest player. COMPETITIVE
Baxters R&D budget is dependent upon stock price. VARYING R&D BUDGETS
Baxter has more net losses to recoup.
Offer growth capability for investors. FINANCIAL MARKETSSome segments of population may oppose and refuse the use of animal (cow) products. DEMOGRAPHICS
Seasonal cycles of shortage in blood supplies increases demand for this product.Negative public reaction if we decide to withhold blood substitue for animals for reasons of profit. SOCIAL
Competitior products require refrigeration. TRANSPORTATIONMad cow disease. NATURAL
Competitor products have shorter shelf-lifes. COMPETITION
Perpetual market demand.
5 journals to choose
6 Trade shows a year-valued source of info
Immediate revenue generation for Oxiglobin
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