Biopure Corporation
Course: Biopure Corporation
1. Decision:
Biopure should launch Oxyglobin at a price of $200 immediately in the market. The early introduction of Oxyglobin may jeopardize the ability to set a high price for Hemopure, but the benefits of introduction will outweigh the risks.
2. Recommendation:
Biopure should price Oxyglobin at $200 per unit. At the same time, it should enlarge the production capacity as soon as possible to satisfy the potential market demand for Hempure. As for the distribution, the company should choose the manufacturer direct as the way of selling the product.
3. Basic for recommendations:
a) The potential market Biopure can win is “trauma in the field”, the demand of which is 2,124,370 units (see calculation 2 in next page). Reasons as followings:
i. Human blood substitute is not suitable for chronic anemia market for its short half-life, potential for toxicity and high price. ii. HemAssist and PolyHeme are both made from human blood, which is an advantage over Hempure. Baxter has already built up a brand image in the industry. Therefore, these two competitors will probably take the market of elective, emergency surgery market and borderline transfusion. iii. Hemopure has a competitive advantage of shelf life and storage temperature requirement, which is suitable for trauma application.
b) The potential market for Hemopure is larger than Biopure’s annual capacity (150,000 units). To maximize the revenue, Biopure should enlarge its capacity. However, the company currently has only $50 million for its operation. Therefore, the revenue generated from Oxyglobin can be invested in constructing facilities to satisfy the market demand for Hemopure, which will lead to a better profit.
c) Oxyglobin has no competitive products at least in the next 2 years (Other companies would take 2-5 years to bring a similar product to the market). Additionally, the potential demand for Oxyglobin is 407,182 units when the product is priced at $200
1. Decision:
Biopure should launch Oxyglobin at a price of $200 immediately in the market. The early introduction of Oxyglobin may jeopardize the ability to set a high price for Hemopure, but the benefits of introduction will outweigh the risks.
2. Recommendation:
Biopure should price Oxyglobin at $200 per unit. At the same time, it should enlarge the production capacity as soon as possible to satisfy the potential market demand for Hempure. As for the distribution, the company should choose the manufacturer direct as the way of selling the product.
3. Basic for recommendations:
a) The potential market Biopure can win is “trauma in the field”, the demand of which is 2,124,370 units (see calculation 2 in next page). Reasons as followings:
i. Human blood substitute is not suitable for chronic anemia market for its short half-life, potential for toxicity and high price. ii. HemAssist and PolyHeme are both made from human blood, which is an advantage over Hempure. Baxter has already built up a brand image in the industry. Therefore, these two competitors will probably take the market of elective, emergency surgery market and borderline transfusion. iii. Hemopure has a competitive advantage of shelf life and storage temperature requirement, which is suitable for trauma application.
b) The potential market for Hemopure is larger than Biopure’s annual capacity (150,000 units). To maximize the revenue, Biopure should enlarge its capacity. However, the company currently has only $50 million for its operation. Therefore, the revenue generated from Oxyglobin can be invested in constructing facilities to satisfy the market demand for Hemopure, which will lead to a better profit.
c) Oxyglobin has no competitive products at least in the next 2 years (Other companies would take 2-5 years to bring a similar product to the market). Additionally, the potential demand for Oxyglobin is 407,182 units when the product is priced at $200