Biopure Corporation
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Biopure Corporation
Read the case to get an idea of the issues facing Biopure, highlighting aspects you believe are relevant. Question: In 1-3 sentences describe the main problem facing Biopure. (10 points)
Answer
Oxyglobin, a blood substitute meant for the veterinary market is almost ready to be sold at a reasonable price of ~$100 and can bring the company small but steady income until Hemopure, the version meant for humans, launches within the next 2 years and establishes itself. There is a high chance Oxyglabin’s low price point can set unrealistic consumer expectations of the entry price of Hemopure which is nearly identical, leading to significantly less profits.
The dilemma lies in the fact that should Biopure launch Oxyglobin after the launch of Hemopure, enabling them to cash in on the high profit margins of Hemopure? Or take the safer and less profitable way out mentioned above?
2. In 1-3 sentences describe your recommendation to move the company forward. (10 points)
Answer
I would recommend Biopure to proceed with a calculated risk of delaying the launch of Oxyglobin until Hemopure is launched 2 years later. The lack of competitive products being launched within 2 years is very small. This will enable the company to stick with a plan of action which promises high returns on investments while avoiding getting involved in justifying its pricing model.
3. In this case there are 2 main paths forward. Launch Oxyglobin now, OR wait until Hemopure is approved by the FDA and ready for launch. Think about the following:
What are the strengths and weaknesses of Oxyglobin as a product? What is Biopure’s potential in the animal market? What are the biggest obstacles to Biopure’s potential success in the animal market? Consider developing a statement of Oxyglobin’s value proposition.
What are the strengths and weaknesses of Hemopure as a product? What is Biopure’s potential in the human blood substitute market? What are the biggest obstacles to Biopure’s potential success in the human market?
Summarize the situation by identifying (internal) strengths and weaknesses of Oxyglobin as well as opportunities and threats in the (external) environment.
Question in 2 or 3 paragraphs summarize the strengths and weaknesses of the two options. (50 points) Also, develop a SWOT analysis as an exhibit and refer to it in the body of the memo. Be sure to recognize that some S, W, O, Ts are specific to each of Biopure’s two different products (and markets). Be sure to reference such an exhibit in the written part of your memo (e.g., “see Table 1: SWOT Analysis for Oxyglobin”).
Answer
Oxyglobin on its own is an impressive product. Since there is no competition for blood substitutes in the veterinary market, it can tap into the entire market share, giving Biopure a strategic advantage and leaving very little scope of competition to enter this niche. This will bring in a steady stream of funds into the company though not as much as the firm would like to see. The biggest obstacle to Biopure’s success in the animal market is the success of its own human blood substitute, Hemopure. If Oxyglobin is launched prior to Hemopure, the overall potential revenue will be much lower than otherwise.
Hemopure’s biggest strength is the choice of raw material, i.e. Cattle blood. Biopure can tap into the large number meat industries to acquire blood at a relatively minimal price. This adds a sustainable element to the manufacturing process, generating positive public relations. It has a few weaknesses which include a short half-life of 2 to 7 days and a potential for higher toxicity limiting transfusion levels to 5 to 10 units only. One of the biggest obstacles to Hemopure’s success is a high price point as it is going to raise a lot of questions, though to an extent the additional processing step and lower yield can justify the pricing to some extent.
Besides the above-mentioned strengths of Oxyglobin, some of threats comprise of competitors launching similar products and reducing Biopure’s market share. Also, veterinarians and pet owners might not be willing