Biopure

Oxyglobin to be priced at 200$ then end user value of 400$. Should be done gradually. Table A trialability is high.

Oxyglobin sales 300,000*100=30,000,000. For 2 yrs= 60 mil+additional output while hemopure not produced.  

Vs.

Hemopure 150,000*600=90,000,000 if oxy shelved.

If not shelved: 150,00*400=60mil ;  loss of 30 mil

The FDA Approval process is a complicated one and there is absolutely no guarantee that Hemopure would be fully approved by the FDA despite being in the final stage (iii) of the approval process. Over 200 mil had been spent for the development of Hemopure. Biopure officials were expecting it to be approved within 2 years but it could definitely take much longer “acknowledging the potential pitfalls of any clinical trials” (case pg 9, bottom para)  By shelving oxyglobin not only will we forgo the 60 million + that can be earned for the next two years but even more if there are any delays in the release of Hemopure. The production processes of Oxyglobin and Hemopure werre nearly similar except with the difference of an added step required to producee Hemopure. Success of oxyglobin in the animal market would not only lend credibility to itself but also to Hemopure ( case pg 9, 3rd para from bottom) SHELVING OXYGLOBIN WOULD PROVE TO BE COSTLY IF HEMOPURE DOES NOT GAIN APPROVAL.  

Competitors:

While Biopure was in the final stages of approval of Hemopure so were two other companies ( Baxter and Northfield) with a albeit different formula but similar usage.  The only advantage Biopure’s Hemopure had was that it could be shelved at human temperatures while the others had to be refrigerated/frozen. Sale of oxyglobin, if done correctly, would lend Biopure a solid brand image which would be another deciding factor when it came to selling their product to the human market against their competitors. Ted Jacobs, VP of Human Trials at Biopure was afraid that the small and price sensitive vet market may influence the human market negatively ( pg 1 para 3). His main concern was how will they be able to justify the 500% price difference for what their customers ( Hospitals and Insurance Firms) thought was the same product. To argue this, we have to consider the fact that Baxter and Northfield were developing a human substitute as well and these two along wit6h Biopure would drive the price of the product. Since the FDA approval process creates major barriers to entry for other firms and with Biopure having an edge over their competitors due to the two aforementioned reasons, pricing may not be a big issue. Even if Biopure can’t justify the price and has to bring it down, the upside here will be that it will also be driving all the customers towards its way. And also to consider that it wont hurt its profit margin since production costs annual for biopure were 15 mil compared to 50mil and 30 mil for the competitors.  Usually in a market like this, which can be considered as an oligopoly, firms are price setters and not price takers. In this type of market the actions of one firm affects the actions of the others as well. Most probably, the price of Hemopure and the other blood substitutes will be converge at a fixed price. At this point,  Non- price competition is a HUGE part and oligopolies tend to compete on other factors like loyalty schemes, advertisments, and product differentiation. When it comes to product differentiation, another difference between biopure’s blood substitute was that it was bovine sourced rather than human sourced. Selling oxyglobin will fuel this non-price competition very well while THE SALE AND MARKETING OF OXYGLOBIN WILL NOT AFFECT THE PRICING, SALES ETC OF HEMOPURE and it will have no problems conquering a fair share of market. Pg 7 middle para power of hemopure.