Situation Analysis:: Baxter International: Their Product Hemassist Was The First Human Blood Substitute

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SITUATION ANALYSIS:

Biopure Corporation was ready with Oxyglobin, blood substitute for Veterinary
market, whereas Hemopure, a blood substitute for human market, is still two years
away from final government approval. Oxyglobin had received the final FDA
approval.

Biopure has never come up with a product. So future is stake with the launch of
Oxyglobin. Company has already spent $200 million in development of Hemopure.

Biopures primary goal was the development of a Human Blood Substitute, which is
many times larger and is expected to achieve price points of $600-$800.

Its entry into the animal market was somewhat opportunistic. However while
Hemopure was about to enter phase III of clinical trials.

With Oxyglobin at price of $150 & Hemopure at price in the range of $800 (price
difference of 500%), Biopure expecting resistance from customers/authorities, as
both the product were almost identical in physical properties and appearance. It was
possible that launching Oxyglobin, that too at a low price would create an unrealistic
price expectation for Hemopure eventually.

The primary source of both the products is the blood of cattle.

Had a single manufacturing facility with the same equipment being used for either
product, thus only product could be produced at a time.

Annual capacity 300,000 units of Oxyglobin or 150,000 units of Hemopure or some


linear combination.

COMPETITORS:

As of 1998, Baxter international and Northfield Laboratories were the only other
companies in the later stages of development of blood substitutes, which are
dependent on human blood as their source of haemoglobin from outdated human
RBCs.

The products of Baxter and Northfield needed to be frozen unrefrigerated until used,
while hemopure was Shelf-stable at room temperature.

Baxter International: Their product HemAssist was the first Human blood substitute
with anticipated price between $600 and $800.

Northfield Laboratories: Northfield was a small 45-person firm founded in 1985.


Their entire focus on developing a human blood substitute. Their product PolyHeme
was similar to Baxters HemeAssist in production and usage profile. They had spent
$70,000,000 in development of PolyHeme and construction of a production facility
with output capacity of 10,000 units per year.

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