BIOPURE STRATEGIC MARKETING

BA 160 Marketing Berkeley, 07-17-2002

Lars Eiermann, Eric Hirschberger, Alexander Mantzsch, Carsten Mller, Kristian Radic, Malte von Reden

AGENDA I. Introduction
a. Product comparison

b.

Key issues
SWOT analysis

II.

Qualitative points of view

a.

b. Value benefit analysis III. Quantitative points of view a. Break even analysis IV. Strategic recommendation

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Biopure Marketing Strategy

INTRODUCTION

To February 1998 Biopure had spent over $ 200 million on developing Hemopure During the development process Oxyglobin was discovered Biopure has not brought a product to market yet Funds are sufficient to operate for two more years Hemopure will probably receive approval during 1999 while Oxyglobin is approved and ready to launch

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Biopure Marketing Strategy

GENERAL BENEFITS OF BLOOD SUBSTITUTES

Blood substitutes are universal Free of threads like AIDS Storable for up to 2 years Immediately 100% efficient at transporting oxygen Further benefits due to smaller molecules

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Biopure Marketing Strategy

PRODUCT COMPARISON - HEMOPURE

REGULAR BLOOD 2 - 4 C human blood Seasonal variations medium $ 125 - 425 BAXTER HemAssist < 4 C Outdated human blood Outdated blood containers medium $ 600 - 800 NORTHFIELD PolyHeme < 4 C Outdated human blood Outdated blood containers high $ 600 - 800

Criterion

BIOPURE Hemopure 2 - 30 C cattle blood None low $ 600 - 800

storage temperature
Origin potential bottlenecks procurement costs of basis Price

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Biopure Marketing Strategy

PRODUCT COMPARISON - OXYGLOBIN

Criterion Storage temperature Origin Price

Regular Blood
2 - 4 C
Donator animals $ 50 - 100

Oxyglobin

2 - 30 C
Cattle blood
$ 100 - 200

Many advantages of Oxyglobin compared to regular blood Oxyglobin is ready to launch

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Biopure Marketing Strategy

KEY ISSUES I

Should BIOPURE introduce Oxyglobin at all?

Reasons for the introduction of products in general

Opportunities Conclusion in market

Revenues

Ability to Experience / Oxyglobin should be spread risk Best practice

introduced!

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Biopure Marketing Strategy

KEY ISSUES II

When would be the best point of time to introduce Oxyglobin?

February 1998

late 1999

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Biopure Marketing Strategy

AGENDA I. Introduction
a. Product comparison

b.

Key issues
SWOT analysis

II.

Qualitative points of view

a.

b. Value benefit analysis III. Quantitative points of view a. Break even analysis IV. Strategic recommendation

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Biopure Marketing Strategy

SWOT ANALYSIS - BIOPURE

Strengths

Weaknesses

Opportunities

Threads

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STRENGTHS

+ Time & development

advantage on animal market + Both products are nearly identical in terms of production processes + Funds are sufficient for 2 years S

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WEAKNESSES

-Dissension within S

BIOPURE s top management No distribution network No experience in going to market Stockholders with high expectations Enlargement of production plant needed for expansion

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OPPORTUNITIES

S O

W T

+ Innovative product + Demand on blood that

cannot be satisfied due to periodic shortage and anemia + High benefits for autologous donators

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THREADS

S O

W T Uncertain market price Hemopures market entry depends on the FDA approval process Competitor with production capacity three times larger, established distribution network and additional products in other markets

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VALUE BENEFIT ANALYSIS

Criterion Gain of experience Generate revenues / profit Pricing of Hemopure Position in Market Rating 26 25 25 8 Oxyglobin ASAP 2 x 26 = 52 50 25 16 16 8 Oxyglobin later 1 x 26 = 26 25 50 8

Customer Awareness
Usage of production capacity Flexibility of production plant & administrative effort

8
4 4 100

8
4 8 129

4
171

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AGENDA I. Introduction
a. Product comparison

b.

Key issues
SWOT analysis

II.

Qualitative points of view

a.
b.

Value of benefit III. Quantitative points of view a. Break even analysis IV. Strategic recommendation

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BREAK EVEN POINTS FOR DIFFERENT PRICES

Assumption : Marketing costs = 5% of max. revenue
25 20 15 10 5 0 0 30 60 90 120 150 180 210 240 270 Units [1000]
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Contribution $100 Fix Costs Contribution $150 Fix Costs Contribution $200 Fix Costs

Costs [M]

BREAK-EVEN PERCENTAGE

70% 60%

Use of Capacity

50% 40% 30% 20% 10% 0% 100 150 Selling Price in $ 200

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PRICING OF OXYGLOBIN

Oxyglobin should be introduced at a price of $ 200 per unit

Demand exceeds break-even point

Pet Owners are willing to pay even more

Price Range of Oxyglobin - Hemopure

Assuming maximum sales, profit turns out to be $ 37.050.000 p.a.

Influence of Oxyglobins price on Hemopure is questionable

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AGENDA I. Introduction
a. Product comparison

b.

Key issues
SWOT analysis

II.

Qualitative points of view

a.

b. Aspects of different options III. Quantitative points of view a. Break even analysis b. Nutzwertanalyse IV. Strategic recommendation

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STRATEGIC RECOMMENDATIONS

Introduce Oxyglobin as soon as possible at $ 200

Launch a market research to receive more detailed information on the Hemopure market
Marketing department should distinguish Oxyglobin and Hemopure as two independent products Advertisement for Oxyglobin should consist of adds in veterinary journals and practices as well as of attendance at veterinary trade shows

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DISCUSSION

KRISTIAN.RADIC@GMX.DE

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