BIOPURE

CORPORATION
PARTHENON GROUP
KUMAR SHRINGAR SAH
MANISH RAJ
MAYANK KHANDELWAL
NAND BHUSHAN
VINAMRA NANAVATI
SURBHIT SHARMA
BACKGROUND

 Biopure enters the field of blood substitutes :

- Human Market
- Veterinary Market- Oxyglobin
 Oxyglobin already received final FDA approval and is ready to for
launch.
 Hemopure is about to enter phase III of the human clinical trials
(approx. 2 years away from final FDA approval)

 DEBATE within Biopure on timing of introduction of Oxyglobin on the

market.
 PROBLEM STATEMENT

 To Launch Oxyglobin separately or with

Hemopure ?
 How to launch Oxyglobin without impacting the
success factors of Hemopure
 DECISION ANALYSIS
• Launch Oxyglobin Now Launch Oxyglobin with Hemapure
• Pros Pros
• FDA final Approval Done • Estimated Price is at higher levels($600-$800 per
unit)

• First mover advantage for any blood substitute • Market size in 1995 14 million units

• Input cost per unit of blood much lower than Baxter and
Northfield Labs.
• Cons Cons
• Launching now would set price expectation for Hemopure ($200 • Uncertainty of FDA Approval timeline
million invested)

• Market Size significantly lower than that of Hemopure(3.6 million • First Mover Advantage odds are likely to be with
units) Baxter(HemAssist)
• Available alternatives of donated human blood at
lower price
 SITUATION ANALYSIS
Attribute / Factor / Biopure Baxter Northfield
Situation
Product OXYGLOBIN HEMOPURE HEMASSIST POLYHEME
FDA STATUS Oxyglobin : APPROVED Expected by late 1999 or early 2000 – Expected by late 1999 or early 2000 –
Hemopure : EXPECTED BY END OF 1999 (Phase at phase 3 clinical trials at phase 3 clinical trials
3 clinical trials)

Source of RBC’s Cattle Blood Outdated Human blood Outdated Human blood

Variable Cost 1.5$ Per Unit 8$ Per Unit 26$ Per Unit
Storage Requirements At room temparature Needs refrigeration upto 4 degrees Needs refrigeration upto 4 degrees

Installed Capacities Ready Man facility with a capacity of 3 lac Single Manfr facility with annual No manufacturing facility yet they
Units of Oxyglobin or 1.5 lac Units of capacity of 1 million units plan to build a unit with annual
Hemopure or any linear combination capacity of 3 lac units.
Production cost fixed 15 million per yr 50 million per yr 30 million per yr
Variable Cost 1.5$ Per Unit 8$ Per Unit 26$ Per Unit
Expected Pricing 100 – 200 $ 600 – 800 $ 600 – 800 $
600 – 800 $
Annexure:- Calculation
Numerical Analysis
Assumption: Marketing costs = 10% of max. revenue
Biopure- Oxyglobin calculations

Price 100
150 200
Capacity Veterinary per yr
300,000 300,000 300,000
Marketing cost Vet (10%)
3,000,000 4,500,000 6,000,000
Fixed costsProduction Cost
15,000,000.00 15,000,000.00 15,000,000.00
Total Fixed Costs
18,000,000.00 19,500,000.00 21,000,000.00
Contribution

Blood cost per unit

1.5 1.5 1.5
Distribution Cost
15 15 15
Total Contribution
83.5 133.5 183.5
Break Even (Fixed Cost/contribution)
215,569 146,067 114,441
Percentage
71.86% 48.69% 38.15%
Profit= Contribution* Capacity - (Production Cost+Marketing Cost)

Profit
7,050,000 20,550,000 34,050,000
Difference high- low
27000000
 RECOMENDATION

 Launch Oxyglobin right away with a initial price offering of $200 per
unit and proceed with phase 3 clinical trials for Hemopure
 Keep the development details and price of Hemopure confidential
with a view of future launch price. Also Biopure is best positioned to
offer the most competitive price for Hemopure if it comes to price.