Blood Transfusion

BIOPURE INDUSTRIESA Marketing Analysis ground on the data from the case study by Jonn Gourville, Biopure Corporation , HBS, 1998April 20, cc5By speed considerably Stepanova ExecutiveSummary 2 Situation AnalysisI. HumanMarket.. 3II. puppetMarket.. 5 Marketing Planfor oxyglobin. 6 Final finale 7 Appendix 1 A (Excel documents, separate attachment) Appendix 1 B Executive Summary Many opportunities ar available in the humanity slant market due to several disadvantages of thecurrently available alternatives. stock-still much opportunities exist in the sentient being breed line market. Oxyglobin should be positioned as a high-quality ingathering designed for middle- to upper-classbudgets. The price for Oxyglobin should be somewhat $200 for the consumer and around $100 for the supplier(animal hospital) to account for distri exception markups and another(prenominal)carrying follow. Distri andion should be oriented in the regionalvicinity of the operation and implement largerclin ics.In addition, save want clinics are to be driveed. Current opportunities are favorable for Oxyglobins effect. Situation Analysis I. Human telephone line market. Patients with acute gillyflower freeing fromtraumaand surgery 40% individuals aged 65+. Chronic anemiapatients (any age) 1. 5 million for the year 1995. Blood loss, resulting from trauma (e. g. car accident) and surpass 2-3 units (1 unit = 10% oftotal blood content of human bole) call for immediateblood transfusion. Price is largely cost-based (storage, implementation) blood donation is free. live options. crimsonblood cellsand their components (hemoglobin, platelets, and plasma) arecollected viadonations, organized by blood army centers andthen transfused into patients. Current options allow for storage for 6weeks in refrigerate conditions, consequently disposed ofif unused. Hemoglobin uses oxygen-carrying efficiency by 50% if non usedwithin the first few weeks. Blood transfusion is number to blood typin g (A, B,AB, O, positive, negative) andreception/rejection by the body. Incorrect matching whitethorn be fatalfor the patient. Infection risks slow down the process oftesting blood prior to its use and aregreater if blood isnot separated into components. Infections overwhelm the risks of AIDS, hepatitis B,and contamination. Blood transfusion is available on-site unaccompanied (hospital or want room) as aresult, 30% traumapatients die prior to operation. Blood deliver is lower than hold, especially during peak periods (summermonths and winterholidays, during which car and other travel increases ? fewer donors and more patients). Blood rilievos. 3 companies in final stages awaiting FDAapproval (clinical testing). doorway into market is difficult (all current processes patented) andtime-consuming may takeup to 17 long time (See case Exhibit 3). Potential to replace current blood picture process bycomponent separation and purification, aswell as chemical fitting and stabilizati on of hemoglobin. Reduced risk of contamination and increased storage potential of 2 years. Added benefits for patients with constricted or restricted blood vessels (smaller size improvedaccessibility to organs). first step of adapting animal blood cells for use inhumans. Risk of toxicity and body rejection (sped upexcretion). Competitors/industry players .A. Baxter &Northfield Laboratories. Both rely on human blood supply toderive hemoglobin. Red blood cells obtained from expired banks. Require refrigeration. Baxter drawing card in schooling and manufacturing of blood-oriented medical equipment. Large facility doing content of 1 million units/year, fagged $250million on R&D. yield HemAssist to bepriced between $600-$800. Northfield Small facility 10,000-unit production capability but possible expansion into300,000 units/year. Focus on single product (PolyHeme), $70 million spent on development. B. Biopure Corporation. Specializes in protein purification for pharmaceutical use. Hemopure 2 years away from final approval. Derived from the blood of cattle. Production capacity of 150,000 butpossible production limitations due to expected concurrentusage of production equipment for animal version. read for removal ofhemoglobin clusters from product? excess process inproduction ability. Cost for Biopure at $1. 50 per unit of animal blood, but pattern to match Baxters price for finalconsumer product.II. wight blood market. Mainly cats (35%) and dogs (50%). 800 dogs were brought to fatetreatment due to acute blood loss in 1995,2. 5% severe. Existing options. 15,000 veterinary clinics. 5% of vet clinics perform emergency vex, with a 75% referral rate from primary careclinics. Current blood banks insufficient, demand greatly exceeds supply 2. 5 out of 30cases treated. 93% blood drawn from donor animals (78%in emergencies) an ethically questionable practice. 150 units of blood transfused per emergency care, 17 perprimary care center (Appendix A). No roug h-and-ready blood typing or cross-matching systems. Blood collection, storage, and transfusion too d early(a)-won for proper operation. Current cost of clinical careto animal owners relatively high, un coveted. ? 84% reinstate dissatisfaction with current alternatives. Blood substitutes. Biopures Oxyglobin currently the only existingFDA-approved substitute ready for launch. No evident chemical disagreement in theproduction process between animal and human supplement. Animal supplement approved sooner than human equivalent due to less-strict regulations in theanimal consumer market. Production capacity of 300,000 units, $200 million spent on development (combined withHemopure) Marketing Plan for OxyglobinPositioning strategy. Most animal owners (enthusiasts) can be fake to be within the middle toupperincome class, based on the extraneous cost of owning an animal (refer to case Exhibit 8 for a summary of number be of keeping apet). However, many consumers proved to beprice-consci ous about spendingadditional funds on optional services (this will be canvas further in thepricing strategy) therefore, nopremium strategy should be used.The product should be positioned asa high-quality supplement forblood transfusion, available to (affordable by) most animal owners. determine strategy. As cited, animalowners expect to spend limited amounts of money onanimal care thisis slightly different for emergency situations, where customers are impulsive to spend more,as demonstratedby the survey results (Exhibit 8 Table B). The typical cost of ablood transfusion to the customer iscurrently $100 for the traditional manner however, this price wassaid to have been cost-unjustified.Still, ex-servicemans were cited as thetrusted source for find out a patients treatment selection, which putspressure on the new substitute segment to seta competitive price standard. While bring in margins mayprove higher on a higher-priced item, theproducts sensitivity to story for being a su pposedlybetter, cheaper alternative to currently available options, which would fulfill the currently largely-unfulfilled demand for blood transfusion, would pressure Biopure to price its Oxyglobin according tocustomer expectations (See Existing options, page 5 of this report).Those expectations, aswe can seefrom the attached appendix (Appendix 1 A and B), are that the price to the consumer be about $200 ($100to the veterinarian keeping the50% markup), which would give the company the largestmarginal gainin revenues (higher prices are in truth marginallosses ), while still retaining the major demand (weconsider emergency care centers more important here,since they have, proportionally, a much largerdemand than primary care centers).In equipment casualty of theprice difference between Oxyglobin and its competitorin the human segment, Baxter, the latter spent $50 million more on R&D than Biopure, so the pricepremium on Baxter can bejustified by higher costs in addition, Biopures pe r-unit costs are significantlysmaller because it uses cattle blood. In addition, Biopure may price Hemopure slightly higher because ofthe extra processing that goes into making it,as well as the variation inthe segment and target audience(people are willing to spend more onthemselves than on animals). Distribution.Biopure should only target emergency carepractices. Although those only make up 5% ofthe boilers suit industry, 75% primary care specialists will referan acute blood loss case (such as a trauma)toone of these centers. Furthermore, Biopure should target large practices (3+ doctors) done regionaldistributors, both of which account for the largest sales inthe industry. Considering the limited volume ofsupplies Biopure is button to have, anational distribution may not be desirable right away, until thecompany at least increases its production capabilities.A regional distributor would be local enough tounderstand the specific needs of its market (e. g. , New England), and a larger vet practice could provemore efficient (and less costly) interms of the availability of materials andthe reduction of transfers,thereby also reducing the consumers costs and increase the rateof success by providing a quickerservice (in other words, it would have morecases, but more doctors available tohelp overall, fewercases per doctor see Exhibit 7).Of course, the drawback is that a large clinic would not be as personal. The 1 million dollar question Should Oxyglobin be launched? Yes. Launching early allows for an audience test? Achieve acclaim/recognition for a break-through baring that is beneficial because it-Fulfills an unsatisfied/dissatisfied need (better quality bloodtransfusion, availability)-Reduces costs to both suppliers and consumers.? Easier entry into secondary (human) market tested on animals more trustedthan untestedcompetitors.?Potential to utilize production to full potential (instead of dissever up with Hemopure) later on, dividebased on larger per-u nit profit (andnot needs the stated 150300 ratio).? If fails or doesnt test well Would aid in the decision about improving current human version (complete discontinuation notan option due tothe immense initial investing in R&D)- Reduce the shock of having to change both formulas (processes) at the same time longer timespan gives better flexibility and more time for testing and forward motion less drastic. Hemopure and Oxyglobin,although similar in purposes, are meant for two completelydifferent segments they should not be compared based on price because price expectations aredifferent for humans than they arefor animal needs the demand for Oxyglobinis clear andsignificant, while the demand for the same product in the human market is questionable. Therefore, stick with Oxyglobin which already has the approval and launch it.