[TYPE THE COMPANY NAME]

CASE ANALYSIS OF BIOPURE CORPORATION

Situation Analysis Oxyglobin and Hemobpure were Biopures entries in the field of blood substitutes, Hemopure targeting the Human Market and Oxyglobin, the animal market. Biopures primary goal was the development of a Human Blood Substitute and its entry into the animal market was somewhat opportunistic. However Oxyglobin had received the final FDA approval while Hemopure was about to enter phase III clinical trails. Oxyglobin and Hemopure were almost identical in physical properties and appearance, hence it lobin was possible that launching Oxyglobin, that too at a low price would create an unrealistic price expectation for Hemopure eventually. Problem Identification 1. Identify SWOT (more focus is likely to be on strengths and weaknesses) of Oxyglobin as a blood substitute for animals. 2. Identify SWOT (more focus is likely to be on strengths and weaknesses) of Hemopure as a blood substitute for humans. 3. What are the reasons to launch and the reasons not to launch Oxyglobin in the market? launch 4. Assess the market potential/demand for Oxyglobin and for the Hemopure (this question may take space due to calculations). Oxyglobin) Q1. SWOT Analysis (Oxyglobin
Threats There was little to prevent Biopures competitor Baxter is the Leader in innovation and development, manufacture and sale of blood related medical products. Oxyglobin was likely to create an unrealistic price expectation for hemopure. Competitor with production capacity three times larger, established distribution network and additional products in other markets. Opportunity The possibility of success of Oxyglobin will bring along an The opportunity for Hemopure to take advantage of a brand image built by the former. Any company trying to enter the veterinary blood Any substitute market would have to wait for 2 years to get 2-5 an FDA approval.

Oxyglobin

Weakness No distribution channel. Lack Lack of prior experience in launching a product incorporating immense R&D. Stockholders were expecting a good product from Stockholders Biopure if it resulted, otherwise there could be a dip in the stock. Enlargement of production plant needed for expansion Enlargement expansion.

Strengths Since obtaining FDA approval was a time consuming Since process, the first player to catch hold of the market had an edge. Time & development advantage on animal market. Time Lack of adequate blood supply. Lack Biopure was the only company that was actively engaged Biopure in the development of a blood substitute for the small smallanimal veterinary market.

Q2. SWOT Analysis (Hemopure) Hemopure)

Strengths Both products are nearly identical in terms of production processes. Funds are sufficient for 2 years. Innovative product The products of Baxter and Northfield needed to be frozen or Referigerated until used, while hemopure was Self-stable at room temperature. Weakness Dissension within BIOPURE s top management. Had a single manufacturing facility with the same equipment being used for either product, thus only product could be produced at a time. If Oxyglobin is not launched first the following weakness will also be present while launching Hemopure : No distribution network No experience in going to market Stockholders with high expectations Enlargement of production plant needed for expansion

Hemopure)

Threats Uncertain market price, Oxyglobin was likely to create an unrealistic price expectation for hemopure. Hemopures market entry depends on the FDA approval process. Stockholders were expecting a good product from Biopure if it resulted, otherwise there could be a dip in the stock. Competitor with production capacity three times larger, established distribution network and additional products in other markets Baxter is the torchbearer in innovation and development, manufacture and sale of blood related medical products.

Opportunity Demand on blood that cannot be satisfied due to periodic shortage and anemia. High benefits for autologous donators. The possibility of success of Oxyglobin will bring along an opportunity for Hemopure to take advantage of a brand image built by the former.

Q3. Reasons to launch and the reasons not to launch Oxyglobin in the market
Reasons to launch Hemopure is at least 2 years away from FDA approval Biopure could make a small profit rather than sit idle during FDA approval process This process. money could be used to launch Hemopure. Failure of other drugs makes introduction of Hemopure a financial risk Blood substitute competitors have a more established brand and more money; success of Oxyglobin would help Biopure compete against these factors Reasons not to launch Small, price-sensitive market sensitive Cost of Oxyglobin at $150 per unit may affect price of Hemopure by raising low cost expectations. Manufacturing two products would limit production if facilities arent expanded Spent $200 million to make Hemopure- cant Hem take the chance

Q-4 The Break Even analysis for $100, $150 and $200 and profit margin for high price and low price is shown below. This shows Biopure should launch as soon as possible and with the price of $200 as the market demand is so high that break even will be achieved early on.
Assumption: Marketing costs = 10% of max. revenue Biopure- Oxyglobin calculations Price Capacity Veterinary per yr Marketing cost Vet (10%) Fixed costs Production Cost Total Fixed Costs Contribution Blood cost per unit Distribution Cost Total Contribution Break Even Volume Breakeven Percentage of Capacity Profit= Contribution* Capacity - (Production Cost+Marketing Cost) Total Profit 7,050,000 20,550,000 34,050,000 1.5 15 83.5 215,569 71.86% 1.5 15 133.5 146,067 48.69% 1.5 15 183.5 114,441 38.15% 15,000,000.00 18,000,000.00 15,000,000.00 19,500,000.00 15,000,000.00 21,000,000.00 100 300,000 3,000,000 150 300,000 4,500,000 200 300,000 6,000,000

Recommendations : 1. As the success of Hemopure largely depends on the image built by Oxyglobin, emphasis should be laid on establishing the latter as a successful brand. 2. As soon as FDA approval is received, Hemopure should be lunched at price tag of $ 600-800, production of Oxyglobin to be reduced to free the production capcity and to increase the production of Hemopure 3. Advertisement of Hemopure to start with the selling of Oxyglobin so as to setup a brand image of Biopure.

To sum it up, we recommend that Biopure introduce Oxyglobin into the veterinary blood substitute market at a price of $150 per unit in order to gain respect and brand awareness in the blood substitute market and to provide a source of income for Biopure while they await FDA approval for Hemopure."Upon approval of Hemopure, the price of Oxyglobin can be increased to $200, this will free the production capacity as breakeven volume reduces(from 146,067 to 114,441). Later, as the demand further increases for hemopure, the production of Oxyglobin can be completely stopped.