Biopure Launch Oxyglobin Case Analysis
Q1. Should Biopure launch Oxyglobin? Why? Support your arguments with quantitative analysis (ie. calc. of market potential).
We believe that Biopure should launch Oxyglobin now. First of all, the potential market demand is huge. While current annual demand is 354,750 units (95% primary care practices x 17 units canine blood/primary care practice + 5% specialty care practices x 150 units canine blood/specialty care practice)i accounting for only 2.5% of the cases, potential market demand including unmet need is 4,257,000 units (354,750 units x 30%/2.5%, since 30%i of the cases would have benefited significantly from blood transfusion) or 3,575,880 units (even if accounting for 84% dissatisfaction rate of currently available blood transfusion alternatives)i. And the fact that blood typing is no longer needed is a catalyst to creating such market demand. This is a lucrative demand in which Biopure can enjoy monopoly for at least 2 to 5 years, even if potential entrants, Baxter and Northfield, decide to enter the market right awayii. There’s also a first-move advantage for price-setting, brand-building and distribution channel establishment purposes. Secondly, launching Oxyglobin now is advantageous for risk-diversification. There’s a 30% chanceiii that Hemopure may never pass through Clinical Phase 3 and even if it does, …show more content…
Given the challenges in cross-matching blood groups and rejection volumes at 1.2m unitsvi for transfusion, the combined production capacity for blood substitutes at 1.45m units, across all companies, is likely to have considerable demand. Since the industry is in the introduction/ growth stage of the lifecycle, the pricing decision for both Hemopure and Oxyglobin will be geared more towards value delivery to consumers rather than pricing for market share growth or stealing share from
We believe that Biopure should launch Oxyglobin now. First of all, the potential market demand is huge. While current annual demand is 354,750 units (95% primary care practices x 17 units canine blood/primary care practice + 5% specialty care practices x 150 units canine blood/specialty care practice)i accounting for only 2.5% of the cases, potential market demand including unmet need is 4,257,000 units (354,750 units x 30%/2.5%, since 30%i of the cases would have benefited significantly from blood transfusion) or 3,575,880 units (even if accounting for 84% dissatisfaction rate of currently available blood transfusion alternatives)i. And the fact that blood typing is no longer needed is a catalyst to creating such market demand. This is a lucrative demand in which Biopure can enjoy monopoly for at least 2 to 5 years, even if potential entrants, Baxter and Northfield, decide to enter the market right awayii. There’s also a first-move advantage for price-setting, brand-building and distribution channel establishment purposes. Secondly, launching Oxyglobin now is advantageous for risk-diversification. There’s a 30% chanceiii that Hemopure may never pass through Clinical Phase 3 and even if it does, …show more content…
Given the challenges in cross-matching blood groups and rejection volumes at 1.2m unitsvi for transfusion, the combined production capacity for blood substitutes at 1.45m units, across all companies, is likely to have considerable demand. Since the industry is in the introduction/ growth stage of the lifecycle, the pricing decision for both Hemopure and Oxyglobin will be geared more towards value delivery to consumers rather than pricing for market share growth or stealing share from