Biopure Case Anlysis
MBA505: Strategic Innovation Management Group A8 Case Memo: BiopureThe estimates for market potential for both the products are shown in exhibit 1. Estimate1 quantifies the total potential market for Oxyglobin at $532,125,000, using a mid-level price of$125. Estimate 2 is likely a more accurate representation of Oxyglobin’s sales potential, as itutilized data from consumer surveys. Using a reasonable price of $150 per, it is likely annualsales will be $306,855,200. Hemopure, on the other hand, has a market potential in excess of$10.5 billion using a price of $700 per unit.Launching Oxyglobin before Hemopure would generate very first revenue for Biopurewhich they can use to launch Hemopure successfully. Further, reports of actual sales ofOxyglobin in the market would be a better indicator of Hemopure’s potential compared toforecasts based on unsupported assumptions. The company also stands to gain valuableinformation about how the market perceives blood substitutes by testing an effective blood-substitute product, Oxyglobin, in a small segment – the veterinary health care industry. This datacould help make more accurate and strategic decisions pertaining to the launch of Hemopure.Moreover, if Oxyglobin creates enough brand awareness among physicians and healthcareproviders, Biopure could utilize this brand image for its Hemopure launch.In contrast, Biopure should be aware of the challenges and repercussions of launchingOxyglobin immediately. When Hemopure is launched, customers will likely use the market priceof Oxyglobin as the reference point for the value of Hemopure. Customers will fail to
comprehend the superiority of Hemopure relative to Oxyglobin, resulting in lower Hemopuresales. Due to its size and price sensitivity, the veterinary market will be slow to replace donoranimals with a costly blood substitute. Another challenge for Biopure will be the status quo bias– veterinarians have preferred using blood from a donor animal or blood from the animal bloodbank for the estimated cost of $50-$100. This is the reference point for veterinarians as theyMBA505: Strategic Innovation Management Group A8 Case Memo: Biopureevaluate the price of Oxyglobin. Prices above that range would be perceived as a loss and wouldoffset any additional benefits offered by Oxyglobin. Furthermore, launching Oxyglobin mightnot have that big of an impact on IPO as Hemopure might.For successful adoption of Oxyglobin, Biopure must show that using Oxyglobin requireszero or minimal behavioral change. It is used in exactly the same way a pack of RBC is used butwith greater positive effects for the patient – immediate transportation of oxygen in the