Biopure Case Study

During the late 1990s Biopure Corporation was caught in an ominous predicament. Since 1984, Biopure spent over $200 million developing a blood substitute called Hemopure, a product with the oxygen-carrying capacity of blood except without many of the disadvantages that are part of donated blood. However, midway into research they also discovered Oxyglobin (Oxy), a derivative of their main product that was applicable in animals. A few years later, the FDA approved Oxy and thus making the drug available in the veterinarian market while Hemopure still required at least 2 more years to market. Although the production of Oxy seemed like a positive outcome, Biopure was concerned that the immediate release of Oxyglobin will negatively affect the acceptable

This price is feasible for a number of reasons. According to two surveys conducted by Biopure in 1997 consisting of 285 Veterinarians and 200 dog owners, customers and vets are more willing to try Oxy with the increasing criticality of the case. Although only 5% of vets would use Oxyglobin at $200 in a non-critical situation, vets are passing the cost and choice to pet owners. A far larger amount of pet owners (30%) reported they were willing to use Oxyglobin for their pet at a price of $400. This shows that generally, despite the cost, pet owners are willing to spend more money to help their pets. Appendix B evaluates the total revenue based on the market potential. Although a $200 sale price (Case III) creates lower total revenue, Biopure will need to produce less units thus less production costs. Furthermore, Appendix C demonstrates that there is higher

The ultimate goal for the cooperation is to become a successful and trusted company, thus Biopure needs its first product launch, no matter which one they decide to market first, to be successful. A successful product will enhance its reputation, provide a source of revenue, and eventually allow them to take the company public. The immediate launch of Oxy will increase awareness among customers. This is essentially important because Biopure has not yet launched any products and is not a public company in contrast to their competitors. The success of Hemopure will largely depend on the awareness and image built by Oxyglobin. An up-and-coming brand image will not only help with future sales of Hemopure, but can also later generate more income by increasing investor interest in an initial public offering (IPO). Stockholders were also expecting a good product from Biopure; if they did not meet expectations there could be a dip in their stock. Moreover, launching Oxy first provides the company with experience needed to manufacture and market a product incorporating immense R&D. Their lack of prior experience could lead to oversights and thus should not be waited on till the launch of