AUNG ZAN, MKT 9703

Biopure, Market Potential

10/6/14

Biopure is a biopharmaceutical company that is trying to market two new blood

substitute products called Oxyglobin and Hemopure. The former is for use in animals and the
latter is for use in humans. For animal use, Oxyglobin recently received FDAs final approval for
commercial release. On the other hand, Hemopure, for use in human, is still two years away
from FDA approval.
Biopure CEO is trying to decide whether to launch Oxyglobin for veterinary market right
away or to wait until Hemopure is approved by FDA and is released to human market first. Ted
Jacobs, Biopure VP of Human Clinical Trials, contends that launching Oxyglobin at this moment
could negatively impact the launch of Hemopure when it is finally approved in two years. He
believes that the launch of Oxyglobin at the price point around $150 could create an unrealistic
price expectation for Hemopure which could be priced around $800 per unit, and thus impact
the sale. However, Andy Wright, VP of Veterinary Products, argues against Teds idea of holding
off the sale of Oxyglobin. He points out that benefits of launching Oxyglobin at this moment
outweigh the risks involved. He believes the revenue and product launch experience of
Oxyglobin can ultimately help the launch of Hemopure.
I agree with Andy Wrights reasoning to launch Oxyglobin as early as possible. While
Oxyglobin could be priced around $150 based on animal market supply and demand, it does not
necessarily mean Hemopures price cannot be priced five times more. Since the estimate price
of $800 for Hemopure is based on market supply and demand, it should not come as a shock
when it is finally released to the human blood substitute market. Moreover, according to the
case study, there is no other competitor making blood substitute for animal market. It is a great
opportunity for Biopure to enter the Veterinary market at this time. At worst case scenario, if
Oxyglobin fails to succeed in the market, Biopure can at least learn from its mistakes with their
first launch ever.
To support my reasoning behind early launch of Oxyglobin, I will calculate Market
Potentials for Veterinary market based on Bulidup model. Based on 1995 Veterinary blood
demand data from the case,
Calculation based Biopure case studys Veterinary blood demand data in 1995:

15,000 practices: 95% primary care and 5% emergency.

Average 17 units of blood by each primary care:
Total units of blood-A = 0.95*15,000*17= 242,250

Average 150 units of blood by each emergency care:

Total units of blood-B = 0.05*15,000*150= 112,500

Market Potential= (242,250+112,500) * $150 per unit = $ 53,212,500 (53 millions) in

revenue.