BIOPURE CASE-STUDY

Group 8

Contents

•The Product

•Case Facts

•Biopure SWOT

•The Dilemma

•Oxyglobin

•Conclusion

Contents

The Product

Case Facts

Biopure SWOT

The Dilemma

Oxyglobin

Conclusion

What is the need?

Solution?

Hemopure

Contents

The Product

Case Facts

Biopure SWOT

The Dilemma

Oxyglobin

Conclusion

Hemopure in Phase 3 FDA TrialsHuman Blood Market

– Approx $6.7 billion.Competitors also in Phase 3 Trials

– Baxter and NorthfieldOxyglobin – The canine blood

substitute - ready for Market Launch

Contents

The Product

Case Facts

Biopure SWOT

The Dilemma

Oxyglobin

Conclusion

Strengths• Immediate Revenue Generations possibilities.• Product shelf life of 2 years.• No cold storage requirements.• Leader for canine blood substitute.• Free of infectious agents.

Weaknesses• No previous market experience. (No brand)• No Distribution network.• Production Capacity is less.• Internal rifts.• Short Product Half Life.

Opportunities• Build Brand Awareness.• First-mover advantage (Oxyglobin)• Learning from Oxyglobin launch.• Market Dissatisfaction with current blood tranfusion soln.• Acute demand for a niche product.

Threats• Vets may be reluctant to shift to new expensive product.• Phase 3 Trial failure for Hemopure.• Competitors with previous market experience and higher production capacity.• Perception of Hemopure having Bovine blood.

Contents

The Product

Case Facts

Biopure SWOT

The Dilemma

Oxyglobin

Conclusion

Whether or not to go ahead with the launch of OXYGLOBIN ?

Which segment and on what basis to select the target market?

Contents

The Product

Case Facts

Biopure SWOT

The Dilemma

Oxyglobin Why now? Benefits Target Market Distribution Pricing

Conclusion

Price justification:• Additional stage of processing.• FDA approval takes 3 times longer (2-5 yrs vs 10-

12yrs)• Patent rights will expiring soon (Less period of

exclusive right)• Universal Blood substitute• Perpetual Demand• Human life – Can not be measured!

Presently the FDA approval of Hemopure is in 3rd stage.

Hemopure Approval Oxyglobin Launched Oxyglobin Not

Launched

Success Gained entry in market.Brand Cognizance

No Learning to cash on

Failure Existing product in the market generating revenue

Opportunity Lost

Postpone There will be an existing product

OpportunityLost

Impact

• Total Market Size - $357 million• Total Market Size capture for Oxyglobin with current

capacity - $52.5 Mn• One unit of Oxyglobin to be priced at $175 per unit as

shown later.• Company is profitable from second year reaching max

profitability in the 4th year.

• Investors will like to see some profit before investing in some company.

• Company should be profitable for the last 2 years for launching an IPO.

Blood substitute market Baxter Northfield Biopure

Market leader X X √

Existing facilities √ √ √

Learning √ X √

First mover X X √

Contents

The Product

Case Facts

The Dilemma

Biopure SWOT

Oxyglobin Why now? Target Market Distribution Pricing

Conclusion

Practices

Practice Type Units Used No.of Practices Cases HandledPrimary 1 Doctor 63750 3750 200Primary 2 Doctor 76500 4500 300

Primary 3+ Doctor 102000 6000 450Emergency 112500 750 400

Focus on Emergency

Contents

The Product

Case Facts

The Dilemma

Biopure SWOT

Oxyglobin Why now? Target Market Distribution Pricing

Conclusion

Marketing•Advertisement in Journals (5 Trade Journals have comprehensive coverage)•Trade Shows (6 Trade shows have about 25% coverage) •Websites

Distribution•Established Distributors•Economies of Scale.•Charge 30% of price/unit.

Contents

The Product

Case Facts

The Dilemma

Biopure SWOT

Oxyglobin Why now? Target Market Distribution Pricing

Conclusion

y = -5E-17x3 + 1E-10x2 - 0.0002x + 225.65

0

50

100

150

200

250

Price

per U

nit

Units of Oxyglobin Thousands

Demand & Supply of Oxyglobin

Demand Production Capacity

175

300

Contents

The Product

Case Facts

The Dilemma

Biopure SWOT

Oxyglobin Why now? Target Market Distribution Pricing

Conclusion

Market Value

Total No. of vet Practices: 15,000…………………………….. (A)

No. Of Emergency Centers: 750 (5 % of A)

Avg. Units used in Emergency: 150………………………...…(B)

Multiplier factor (due to increased demand) =(0.09*97.5%+0.60*2.5%)/2.5%= 5.75………..…………...(C)

Total Demand for blood (Emergency): 750 x (B) x (C) = 646,875 units (D)

The demand for blood transfusion in Emergency Care exceeds the Biopure’s production capacity of 300,000 units. Therfore, we should target just the Emergency care till the production capacity is enhanced.

Net Market Value : 300,000unitsx$175/unit = $52.5Mn

Contents

The Product

Case Facts

The Dilemma

Biopure SWOT

Oxyglobin Why now? Benefits Target Market Distribution Pricing

Conclusion

Contents

The Product

Case Facts

The Dilemma

Biopure SWOT

Oxyglobin

Conclusion Launch Oxyglobin Now

FDA Trial 3 Results

Launch Hemopure

Expand Production Facility

Thank You

Appendix – OxyGlobin Market

Vet Clinics Share Units/Vet Clinic Multiplication Factor Units (in millions)15000 0.95 17 5.75 1.392937515000 0.05 150 5.75 0.646875

Total Units 2.0398125

Price 175Total Market 356.9671875

Appendix – Hemopure Market

Medical Reasons Units(million) Price ($) Total Market ($ million)Anemia 3.2

Acute Blood Loss 8.1Total Units 11.3 600 6780