Wednesday, February 27, 2019
Biopure Case Study Essay
Oxyglobin and Hemopure be two prodigal substitutes that Biopure Corporation was developing. Oxyglobin was recently approved by the FDA for veterinary use spell Hemapure is estimated to be approved in two years for kind-hearted use. If Oxyglobin is diveed it pull up stakes be the introductory rip substitute for the veterinary mart a sm all told and monetary value sensitive market. There is a perceived hazard by Ted Jacobs, the VP of compassionate Clinical Trials at Biopure, that if Oxuglobin, the vet crossway, is launched before Hemopure and at the low terms of $150/unit, that it pull up stakes induce very contend to divvy up Hemopure once launched at $800/unit.B. Market Analysis a)Human 14 meg units of RBCs were donated in the United States in 1995, 12. 9 Million from volunteer bestowers and 1. 1 meg from autologous donors (donate to self, hardly a(prenominal) weeks precedent to surgery). 50% of the store supplies ar handled by the American Red Cross. Of the 14 jillion units donated 2. 7 million atomic number 18 discarded due to expiration or contamination, 3. 2 million transfused into anemia patients and the remaining 8. 1 million transfused into surgery and trauma patients. race Collection is a struggle as post AIDS countercurrent contamination paying for donation of blood units is prohibited by the law it should be done on volunteer basis. Due to low rank of donation and short shelf-life, shortage of RBC units in medical facilities in non uncommon and then the need for blood substitutes in the human market is high. b)Veterinary The veterinary market is smaller than the humans as in 1995 2. 5% of 800 dogs/vet GP suffering from acute blood going away were deemed critical and received blood transfusion, for a total of 300,000 dogs (80015,000 vet GPx 0.025), although there is a potential to cover 30% of these pets or about or 3. 6 million dogs.These veterinary GP lack adequate supply of canine blood units lack of animal blood ban ks. Vets rely on housed donor animals which 84% of them ar dissatisfied with the current available blood transfusion alternatives. This constitutes a big opportunity for Oxyglobin. C. Competition Biopure has two competitors for the human point of intersection, Baxter and Northfield some(prenominal) of whom are pursuing a Hemoglobin purified from outdated RBC at unit cost ranging from $8-$26 vs.Biopures hemoglobin purified from kine at unit cost of $1. 50. Both Northfields and Baxters products are evaluate to launch 2 years after Oxyglobin and same year as Hemopure. Oxyglobins only competition is the blood collected from in-house animal donors. bingle important difference between Hemopure/Oxyglobin and competition is that Biopures products do not require storage at 4C and can be stored at room temperature this is a significant difference because there is no added cost attributed to refrigeration. D. PricingHemopure as Baxters Hem Assist and Northfield is anticipate to be price d between $600-$800/unit and I suggest that it prices at the highest get down of the spectrum because it does not require refrigeration and there pass on be perceived savings by pharmacists and hospital managers. On the other hand Oxyglobin and because of the stunt woman rule used by the vets meaning they charge pets owners in two ways the price of the manufacturers ask price), it is arguable and to keep the drug affordable that the price ranges from $80-$ carbon per unit.Others argued that the price should be delimit at $200/unit because of all the advantages, added business and cost savings it brings to the practice and pet owners as well. II. riddle/Decision statement Two related issues need to be communicate by the CEO. Should Oxyglobin be launched before Hemopure? Although Oxyglobin was granted approbation by the FDA, few challenges remain to be sorted, such as 1. Reluctance of veterinarians to use the product instead of blood from animal donors 2. solidifyingting the price of the product at a rate that wont affect the future gross sales of Hemopure 3.Devise a good distribution strategy for the product (manufacturer call vs. distributor) On the other hand Hemopure needs to overcome the following obstacles 1. FDA approval 2. Price of hemoglobin vs. blood transfusion ($600 vs. $125) 3. Fierce competition from Human hemoglobin by Baxter and Northfield 4. Uptake by physicians Biopure needs to launch its first product to start generating revenue, take the company public, raise more than cash to subscribe to Hemopures Phase 3 trial and launch. Before decision making on launching Oxyglobin ahead of Hemopure, all the challenges mentioned above need to be addressed.III. Strategies for Improvement To overcome Oxyglobins challenges listed above, the following criteria need to be met 1. order Emergency care vet practices 2. Target large Vet practices (3+) 3. Set the price at $200 (see Appendix 1 for epitome) 4. Focus marketing efforts on non-critica l dogs Biopure should start by targeting emergency care vet practices as blood transfusion are more common there, 150 transfusion/year as compared to 17 at vet GP, penetration to this market will measured by unit sold per care revolve about and lower reliance on animal donors.To increase the market parcel out further large vet practices with 3+ doctors as according to manifest 7 pg 17 of the case, these practices have the highest average monthly case payload of about 450 dogs per month, its imperative to measure a rapid shift in inspiration of our product by these practices. Based on the compend in Appendix 1, it is clear that setting the price at $ coulomb is more remunerative but we have to plan for the launch of Hemopure and therefore we should consider setting the price at $200 to justify its launch at $600 to $800 in 2 years.We should monitor the sales of Oxyglobin at this price and monitor if the uptake from vets is increasing from the 5% predicted by the market analys is (table A). Finally, focusing the marketing effort on non-critical dogs is crucial as they are a sizeable market and because although veterinarians can justify using this product to critical dogs, its hard to justify that for non-critical dogs (pricing and efficacy should help support that). The cease of using animal donors in these clinics will show that Oxyglobin is successfully replacing this old practice.Alternatively it is important to think about the surmise of setting the price of Oxyglobin at $100 to reap as often benefit from being the first and only vet blood-substitute, in the emergence that Hemopure doesnt get approval from the FDA. Its highly probable that Hemopure wont be successful in the clinic because its of cattle origin, they changed the readying to be stable at room temperature (excipients could be toxic) and the concentrations used are much higher than their human counterparts.In this case and to mitigate this risk, great(p) the price to a $100 will help the sales and uptake of the product by a larger market. The market research conducted prior to launch (Table A and B) shows that a high number of veterinarians and pet owners will use the product at the $100/$200(x2) price. Based on the calculations in Appendix 1, it is clear that setting the price at $100 is more lucrative to Biopure than pricing it at $150 or 200$ because of the double price rule which affects the uptake by both pet owners and vets.To be cognizant and not to jeopardize the future Hemopure launch, I recommend that we set the price at $200, because there is a need for a blood substitute as 84% of the vets are reporting overall dissatisfaction with the blood transfusion alternatives available in the marketplace. Secondly, Oxyglobin provides an alternative for animal blood donated by other animals which incurs the risk of matching and potential transfer of diseases.The storage at room temperature adds value as this will reduce the need to vitiate expensive refrigerat ors that need calibration, validation and maintenance. Finally, there no assurance that vets will automatically double the price of the product especially if they foresee a high demand by pet owners, a practice that we should sanction and help the vets appreciate the upside. Although blood transfusions in the veterinary market are infrequent and the market scope is limited, Oxyglobin has the potential to become a lucrative investment for Biopure.It is possible that Hemopure will not be licensed by the FDA, that humans will resist buying a product of cattle origin especially that human hemoglobins will be available most the same time by competitors and that physicians will not prescribe it for the reasons draw above. To minimize these risks and to start generating revenue that will help the company grow, become public and raise more funding, I therefore recommend that we sell Oxyglobin first before the launch of Hemopure.