MBA505: Strategic Innovation Management Group A8

Case Memo: Biopure

The estimates for market potential for both the products are shown in exhibit 1. Estimate
1 quantifies the total potential market for Oxyglobin at $532,125,000, using a mid-level price of
$125. Estimate 2 is likely a more accurate representation of Oxyglobins sales potential, as it
utilized data from consumer surveys. Using a reasonable price of $150 per, it is likely annual
sales will be $306,855,200. Hemopure, on the other hand, has a market potential in excess of
$10.5 billion using a price of $700 per unit.
Launching Oxyglobin before Hemopure would generate very first revenue for Biopure
which they can use to launch Hemopure successfully. Further, reports of actual sales of
Oxyglobin in the market would be a better indicator of Hemopures potential compared to
forecasts based on unsupported assumptions. The company also stands to gain valuable
information about how the market perceives blood substitutes by testing an effective bloodsubstitute product, Oxyglobin, in a small segment the veterinary health care industry. This data
could help make more accurate and strategic decisions pertaining to the launch of Hemopure.
Moreover, if Oxyglobin creates enough brand awareness among physicians and healthcare
providers, Biopure could utilize this brand image for its Hemopure launch.
In contrast, Biopure should be aware of the challenges and repercussions of launching
Oxyglobin immediately. When Hemopure is launched, customers will likely use the market price
of Oxyglobin as the reference point for the value of Hemopure. Customers will fail to
comprehend the superiority of Hemopure relative to Oxyglobin, resulting in lower Hemopure
sales. Due to its size and price sensitivity, the veterinary market will be slow to replace donor
animals with a costly blood substitute. Another challenge for Biopure will be the status quo bias
veterinarians have preferred using blood from a donor animal or blood from the animal blood
bank for the estimated cost of $50-$100. This is the reference point for veterinarians as they

MBA505: Strategic Innovation Management Group A8

Case Memo: Biopure

evaluate the price of Oxyglobin. Prices above that range would be perceived as a loss and would
offset any additional benefits offered by Oxyglobin. Furthermore, launching Oxyglobin might
not have that big of an impact on IPO as Hemopure might.
For successful adoption of Oxyglobin, Biopure must show that using Oxyglobin requires
zero or minimal behavioral change. It is used in exactly the same way a pack of RBC is used but
with greater positive effects for the patient immediate transportation of oxygen in the
bloodstream at 100% efficiency, a shelf-life of 2 years at room temperature, and zero
contamination. To demand a high price for Oxyglobin, Biopure must market the blood substitute
to pet owners who are concerned for the welfare of their pets instead of targeting veterinary
audiences who are interested in lowering the cost of treatment. With veterinarians, Biopure must
focus on Oxyglobins 2-year shelf-life at room temperature eliminating the need for refrigeration
or freezing and veterinarians can always have a stock of the blood substitute for emergency
situations, minimizing costs incurred in calling the animal blood bank or finding a donor animal.
Biopure must focus its promotion on the number of benefits that vets and pet owners gain from
Oxyglobin at a reasonable additional cost about $50-$80 more than what vets currently pay.
They should also focus on how Oxyglobin eliminates the need for blood typing and cross
matching as it is a universal substitute. Biopure need to clearly state and emphasize on how gains
from using blood substitutes is far greater than any psychological loss associated with using this
over donated blood. They should also provide training and awareness sessions for doctors to
make them more comfortable with the change.

MBA505: Strategic Innovation Management Group A8

Exhibit 1: Market Potential for Oxyglobin and Hemopure

Oxyglobin
15,000 small-animal veterinary practices
14,250 Primary care (avg. 17 units of K9 blood = 242,250 units)
750 Emergency care (avg. 150 units of K9 blood = 112,500 units)
Total Units = 354,750 units of K9 blood transfused.
Total Transfusions = (800 cases * 2.5%) * 15,000 = 300,000
Thus, 354,750/300,000 = 1.1825 units per transfusion.
Now assuming all 240 cases can receive blood transfusion.
Estimate 1: @ $125/unit
Acute Blood Loss units: (240*15,000) * (1.1825 units) = 4,257,000 units
Price: $125
Market Potential: $532,125,000 per year
Estimate 2: Critical vs Non Critical at $100
Percentage of Critical Cases: 2.5% / 30% = 8.33%
Percentage of Non Critical Cases: 91.67%
Total cases: (3,600,000 * 8.33% * 95%) + (3,600,000 * 91.67% * 70%)
Total units used: 2,594,970 * 1.1825 units = 3,068,552 units
Price: $100
Market Potential: $306,855,200 per year

Hemopure (As of 1995 - not taking into account the population growth)
The number of units of blood used in different cases is given by:
Borderline Transfusion: 1,000,000 * 2 units = 2,000,000
Trauma Cases: 500,000 * 4 units = 2,000,000
Chronic Anemia: 1,500,000 * 2.13 units = 3,195,000
Elective and Emergency Surgeries: 2,000,000 * 3.95 units = 7,900,000
Total Units: 15,095,000 units
Price: $700
Market Potential: $10,566,500,000 (~10.5 billion) per year

Case Memo: Biopure