Biopure Case Summary

SITUATION ANALYSIS Biopure Corp. is a small biopharmaceutical company founded in 1984 with the main goal of developing an innovative human blood substitute that would be easier to administer and safer than a donated blood. While working on the human blood substitute Hemopure, Biopure Corp. also developed an ancillary product, a veterinary blood substitute Oxyglobin, aimed for blood transfusions in dogs. Both products are bovine sourced. In 1998, the company receives a government approval for commercial release of Oxyglobin and Hemopure is about to enter phase III clinical trials with expectation to receive government approval in about two years. Biopure has one manufacturing facility, using the same equipment to produce both products.

From the ethical perspective, Biopure must take into account that delaying the release of Oxyglobin will take away a chance to survive from millions of pets who suffer because of a very low supply of blood on veterinary market. With a huge deficiency in the blood supply in the veterinary market and with annual production capacity of 300,000 (much lower than demand for this type of product - see Appendix 1), Biopure can offer Oxyglobin at a higher price and maximize its sales revenue. Even with a smaller percentage of veterinarians willing to try the product at $200, Biopure is likely to sell the entire annual Oxyglobin production of 300,000 units (see Appendix 1). The company is likely to break even in less than a year and will be able to recover costs associated with the construction of its facility and developing its blood substitute products in a shorter time. Also, launch of Oxyglobin will generate revenue stream that will be necessary while preparing for release of Hemopure in two years. Right now, Biopure has no sales revenue and only $50 million in reserve, enough to cover expenses for up to two years. If Biopure postpones launching Oxyglobin until Hemopure gets approved, it is likely that Bioure will not have enough money to successfully launch Hemopure. With no competition in the veterinary

These two types of veterinary practices have the highest amount of potential candidates for blood transfusion and they perform most of the blood transfusions. Also, with the higher gross revenues, these practices can afford to buy Oxyglobin for future use. Since, Biopure has no competition for Oxyglobin, the company should promote it as the only animal blood substitute on the market which can save your pet’s life. Another advantage of Oxyglobin that needs to be promoted is more convenient storage (longer shelf life that the blood from the donor animals) and administration (no need to type and match blood