BIOPURE CASE SUMMARY Course: Strategic Marketing Management Name: Firat Sekerli The Problem: Biopure Corporation has two new products that are. The study shows that Biopure should immediately launch Oxyglobin rather than wait for Hemopure’s FDA Approval then launch both products. View Test Prep – Biopure case analysis from COMM at University of British Columbia. Biopurecaseanalysis SizingthemarketforHemopure Analysis Launch.
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With this set price of immediate launch, Biopure will reach breakeven point for Oxyglobin in year with the amount of 2. Targeting market for Oxyglobin is emergency care practices as a higher price of blood substitute is more acceptable amongst pet owners. Direct sales method to emergency care practices in big city area is preferable to maximize profit while emergency care practices in medium-to-small city area will be approached by distributors to increase sales.
SWOT analysis has been used with product offering attributes in order to suggest the appropriate strategy relating to the targeting market, which is introduced in the last section.
The recommended market strategy is analyzed in accordance with the market objectives, caee objectives, and the 4Ps marketing mix. Marketing Recommendation for Biopure. In regarding to the decision of which product should Biopure launch first, there are two scenarios that Biopure could take: In order to evaluate and make a decision, we analyze the blood substitute markets along with the analysis of the two scenarios.
According to five forces analysis of human and animal blood market [Exhibit 1], we have summarized key points biopuge market attractiveness as follows: Higher demands than supplies — Because the demands of bloods are over the supplies, there are still many rooms of opportunities.
For example, the company can charge higher price along with launching many more products to fill the gap of needs. It can be very challenging to the new comers to compete with the big other existing firms, not only due to their larger resource, but also from reputation caze professional trust. The FDA approval for the blood substitutes — The process of approval for medical is very complicated and time consuming.
The company must biopur the supporting data to FDA to prove their product condition and quality to ensure that their products can use as the blood for medical treatment and this process may take in years.
Specific regulations on medical products vary locally and the process also may take long. Although Oxyglobin has been placed on a number of clinical trial for FDA approval, its long term side effect has never been investigated.
These two products need to prove themselves of their effectiveness in blood transfusion market. Moreover, allergy to blood substitute have to be considered. If the products are sold nationwide and severe allergic cases are discovered, this will drastically affect sales of Oxyglobin and Hemopure. Besides, the bovine source can be skeptical for compatibility of usage in human and other animals.
Is there any effect of using bovine red blood cells in human? Uncertainty of market acceptance of blood substitute as they confront deeply rooted blood transfusion treatment, which is proved to be very effective. Pricing strategy is also essential to the success of products.
Normally in animal blood transfusion market, the price a customer buys blood substitute from veterinary practice is double the price that the manufacturer sells to that veterinary practice. So if prices are set too high, a lot of customers will not be interested in trying blood substitute. They will still use blood transfusion. Without strong establishment of effective result of using blood substitute instead of blood transfusion, the firm cannot go for premium prices in these markets.
Furthermore, how well the firm is able to segment the market, target and tackle it, e. Which distribution channel the firm will use also play a significant role in determining the firm success in introducing new products to market.
Being the first mover in animal blood substitute imply that the firm has to take a risk on uninformed customer behavior.
These products have to penetrate into blood market where a strong competitor, blood donation and transfusion system, still exist. So the firm needs to develop a strategy as well as alliance to emerge its products to the market. The firm has to persuade hospitals and practices to use blood substitute instead of blood transfusion which will be the hardest step since customers may resist to a huge change. Even though blood substitute provide more benefits than blood transfusion, its effects still be skeptical and unconvincing.
Currently, the demand for animal blood substitute is large while the supply of animal blood is relatively small; therefore, there are plenty of opportunities for the company to explore. The company can enjoy a period of being a monopoly in the market.
Since Biopure will be the first to penetrate the animal blood substitute market, Biopure owns the first mover-advantage. In addition to that, Oxyglobin is an innovative product in which Biopure has the power to position Oxyglobin as a premium product, therefore, can charge at a higher price.
If the company wish the launch both products simultaneously, the uncertainty of FDA approval for Hemopure may cause delays and prevent the company to capture the current opportunities in the animal blood substitute market.
There are several competitors in the human blood substitute market in which they are all in the process of FDA approval. The competitors are as follows: Currently under phase 3. Blood substitute produced from human blood. From the sets of pros and cons above, we can see that there are more advantages from immediately launching Oxyglobin. Though the company will earn higher profit margin from selling Hemopure in the human blood substitute market, however, there are other uncertainties from Hemopure that affect the timing of product launch, thus, preventing the company to generate revenue.
In conclusion, since the FDA approval for human blood substitute is still uncertain, Biopure should immediately launch Oxyglobin. Biopure will be the first one to break through the animal blood substitution market given that Biopure currently is the only company who attains the FDA approval for animal blood substitute. We see that it is crucial for Biopure to seize this opportunity immediately by launching Oxyglobin. Biopure can enjoy low level of competition and gain first mover advantages.
Biopure can gain a good reputation from Oxyglobin, which can then create a positive impact on Hemopure when launched in the future.
Biopure Case | Case Study Template
From the analysis, if Oxyglobin is launched first, the price of Oxyglobin will affect Hemopure proportionally. In case Oxyglobin succeed in animal blood market, Biopure can use some aspects of the success model to apply in the human market.
Without having a real and wide use in animal, labs product cannot be proved of its effectiveness. If Oxyglobin works well on animal, not only the firm actually builds its product reputation and trust amongst new users but also establish a solid evidence of effectiveness.
Besides, Biopure will set up a cxse justification of price differentiation between Oxyglobin and Hemopure for clinics, hospitals and insurance firms. On the other hands, if Oxyglobin does not work well in animal or drawback is founded, Biopure will have a chance caee improve Oxyglobin and delay a biopute of Hemopure.
Hemopure is very similar to Oxyglobin, therefore, a drawback of Oxyglobin will directly affect the price of Hemopure and it will definitely increase possibility of product failure.
Market plan for Oxyglobin: Thus, We considered that the animal blood substitute market should categorized into two segments, i. However, the clinic that located in big city, especially in the area of rich people lived i. Thus, all practices can sub-segment into two segments base on demographic as follow: Thus, the company could have a better chance to emerge its product to this area since prospect customers in this area can afford a biopuree price for animal blood substitute. Because the blood substitute is the standard product that have to be concurrent with FDA conditions and cannot be differentiated, so the company can sell this item to every customer at the same quality stuey the same price.
However, emergencies care practice mainly accepted only critical cases, which required a huge amount of blood. Thus, offering more benefits than traditional blood transfusion would be more preferable alternative for pet owners. Longer shelf life is also an advantage for veterinary practices since donor animals are rare and ztudy unit expires in short period. This will make practices keep blood substitute for longer period of time.
Then we should target each sub-segment with different distribution channels in order to maximize profit. This approach would help firm to save 30 percent of distribution cost charged by distributors. The company should posit itself as a provider of the best animal blood substitute quality and product differentiation. This was due to the two main reasons as follows: This animal blood substitute offer better benefits when compare with real blood.
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Firstly, the substitute blood is free of infectious agents bioprue contamination. Secondly, substitute blood has a longer shelf-life, which is two years. Because the company was a first provider of animal blood substitute, so we offer consumers the product that different from the one that existing in the market. To ensure that our product would be succeed, the company should create brand awareness of our product by launched Oxyglobin at the time that FDA approved.
The company has to rely on distributors also. Hence, parts of revenue will be shared. Veterinary blood supply is in lack since it requires blood donation.
Hence, the demand in animal blood transfusion is still high. They can replicate to make similar or even better product development. The limitation is from FDA approval process.
Since this is the very first product of this technology, long term consequence when applied to various animals may still be unclear. This can be one of the attack point Biopure may receive from rivalries and protagonists. This blood substitution protein is extracted from bovine source and chemically modified to eliminate the infectious agents, purified, and stabilized to be applicable to other animals. Major attributes of the Oxyglobin include two-year durability, no potential contamination, flexibility in applying to all blood type, and consistency of usage.
As we are the only player in the animal blood substitute industry, or Blue Ocean, we can set the price as high as we desire because of no competition in price. By introducing this, Biopure will reach breakeven point at year with net profit of positive 2. Although, net profit from Alternative 2 will be negative in year andthis is only because the discounted price of Oxyglobin is introduced to attract more potential customers.
When — Biopure should launch Oxyglobin into the market as soon as it is ready, given that the product has already been approved by the FDA. Moreover, as of right now, there will be no potential competitors for the next years, since there is no one engaging in animal blood substitute practices.
The opportunity cost of not entering the market as a monopoly with Oxyglobin outweighed the risk of jeopardizing pricing opportunity when launching with Hemopure. As a result Biopure should launch itself into the market with Oxyglobin, not only because the market is small and still attractive, but also can generate revenue and possibly profit for further investment. Moreover, though it is true that Hemopure is in the last process of FDA, anything could happen and the company should not make any projection or plan based on uncertain prospects.
Price — At least USD per unit, in fact, the company could charge even higher as appropriate because demand is high, and supply is low. The Oxyglobin blood substitute is a newly innovated product, which just had been approved by the FDA.
Assuming that Biopure launches Oxyglobin right away, where there is no competitor existing in the market yet, the company will automatically become a monopoly. Our recommendation is at least dollars per unit, because the company cannot effort any lower price, in order to recoup the investment cost eg. At the same time, cannot risk mispricing by charging too high either, given that there is a close substitute like donor blood available in the market, charging at 80 to dollars per unit for noncritical, and to dollars for critical cases.