BIOPURE Corporation. 1.

Give your best estimate of the sizes of Biopures market, potential market, and what you recommend as the target market in the animal market? Do the same for the human blood market? Who are these people (or animals)? Since the definitions of these different markets can be vague, it may be useful to operationalize these concepts in terms of circles on a target which represent the likelihood of being a customer and when they should be targeted by the company. Thus, the target market (center) would be those customers whom the company should try to attract now since the product could/should have strong appeal at the present time. Or, another useful way might be to describe each group, its size, and the probability that that group will be a prospect (and then explain why). The discussion of target market selection on pp. 48, 72-74, & 231 in the textbook may help. The market would include the target market but would also include those who are either less likely to benefit now from the product and/or should not be targeted at this time for some reasons (e.g., the amount of resources available). The potential market would include the above but also other segments that would have much less need or ability to recognize their need at some time. Note that there are likely multiple segments with decreasing likelihoods of adopting the product at any time, depicted in outer rings of the target. Potential Market Set of consumers who have a sufficient level of interest in a market offer, interest is not enough to define a market. Potential consumers must have enough income and have access to the product offer. Available Market Set of consumers who have interest, income and access to a particular offer. Target Market The part of the qualified available market (those with the interest, income, access, and qualifications for a particular offer) that the company decides to pursue. Penetrated Market Set of consumers who are buying the companys product.

Available Low Potential High Potential Target

Give your best estimate of the sizes of Biopures market, potential market, and what you recommend as the target market in the animal market? 1. Available 5,400,000 units a. 15,000 clinics * 800 cases per clinic * 1.5 units per dog (on average) * 30% of patients who would benefit from a transfusion. 2. Potential 1,749,375 units a. Set price at $100, lower prices would result in a loss to Biopure b. Percentage of Vets willing to use * Percentage of Owners willing to use * number of dogs that would benefit * 1.5 units per dog 3. Target 249,750 units a. Set price at $200 i. Maximize profit ii. Stay high, for release of Hemopure b. Percentage of Vets willing to use * Percentage of Owners willing to use * number of dogs that would benefit * 1.5 units per dog Note used 1.5 units per dog to estimate large dogs = 2 units and small dogs = 1 unit
Available 5,400,000 units

Potential 1,749,375 units

Target 249,750

Do the same for the human blood market?

Hemopure market segments

Available 14 million units donated in 1995. 2.7 million were discarded. 3.2 million units were used on 1.5 million anemia patients. 8.1 units used on 2.5 million patients with acute blood loss (surgery). Additionally, there are approximately 1 million borderline transfusion situations each year. Typically, doctors avoid doing a transfusion in these borderline situations because of the risk of disease and/or rejection. Also, there are approximately 500,000 annual trauma cases that require blood transfusions. Only about 10% of trauma victims receive transfusions in the field. The other 90% of trauma cases represent 450,000 patients that would benefit from a field transfusion. Using current data that shows 200,000 units of blood used in 10% of trauma cases (50,000 cases), the average number of units needed per trauma case is 4. That leads to a 1,800,000 units needed for the 450,000 trauma cases which have not received transfusions in the past. Donated units in 1995 (in thousands) Acute Blood Loss Elective Surgery (Anonymous) Elective Surgery (Autologous) Emergency Surgery (hosp) Trauma (in field) Chronic Anemia Not Transfused Rejected Expired Transfusions not done Borderline Trauma

5800 1100 1000 200 3200 1200 1500 1000 1800

Therefore, the total available human market is 16.8 million units per year. Low Potential Elective Surgery (Autologous) Chronic Anemia High Potential Elective Surgery (Anonymous) Emergency Surgery (hosp) Target Trauma (in field) Rejected Expired Borderline (not done) Trauma (not done)

1100 3200

5800 1000

200 1200 1500 1000 1800

Available 16,800 units (thousands) Low Potential Elective Surgery (Autologous) 1100 Chronic Anemia 3200 TOTAL: 4300 High Potential Elective Surgery (Anonymous) 5800 Emer Surgery (hosp) 1000 TOTAL: 6800 Target Trauma (in field) Rejected Expired Borderline (not done) Trauma (not done) TOTAL: 200 1200 1500 1000 1800 5700

2. What are the biggest obstacles to Biopures success in the human market? Similarly analyze the animal market. How might Oxyglobin be a threat to Hemopure? How might it be an asset to Hemopure? (SWOT analyses might be helpful here.) Obstacles to success in the human market: 1. FDA final approval 2. Acceptance of use by medical professionals 3. Competitor(s) garnering market share (Baxter & Northfield) 4. Negative Public perception of injecting cow blood 5. The current price of donated blood (125-225) a. Recommend Hemopure price at $400 Obstacles to success in the animal market: 1. Proclivity of vets to not perform blood transfusions 2. Price of Oxyglobin (due to future release of Hemopure) 3. When Hemopure is introduced, production capacity of Oxyglobin will be constrained a. Use profits from Oxyglobin in first two years to increase production capacity

Oxyglobin threats to Hemopure: Pricing deferential Negative public perception of injecting dog blood Strengths how does Oxyglobin help Hemopure strengths of the company SWOT Analysis Strengths - Larger of Supply of production material - Stored at room temperature - Disease Free - Longer shelf life

Weaknesses

Internal Environment

Threats External Environment

Opportunities

3. What should Biopure do regarding the commercial release of Oxyglobin? Regardless of whether you recommend that Biopure go ahead and market Oxyglobin at the present time, give a complete marketing plan for marketing Biopure. What price should they set (and why)? How should Biopure be positioned, distributed, advertised, and promoted, etc.? Be as specific as possible in what you propose. Discuss the pros and cons of all alternatives you seriously considered for each element of your marketing plan and tell the reasons for your recommendation and why any serious alternative was rejected even if it had some merits. Customers to be targeted: Distributors (National, Regional, Local) Large Primary Care Vets Small Primary Care Vets Emergency Care Vets General Public Advantage: Disadvantage:

For [target market] Oxyglobin is [key differentiating claim] because [rationale for claim] Positioning Statement 1 For Oxyglobin is because Positioning Statement 2 For Oxyglobin is because our Positioning Statement 3 For Oxyglobin is because

Positioning Statement 4? For Oxyglobin is because

Lecture Notes Highlights on Case Preparation: Pg 15 in lecture notes: The four Ps, The five Cs, Michael Porters Five Forces Model. SWOT analysis (pg 16-17 of lecture notes)? Question attitudes and opinions of individuals in the case. Question decisions that have be made or proposed. Develop a specific strategy.

How is the plan implemented? Discuss the pros and cons of our plan. Profitability Projection: For a 3 year look-ahead, estimate the following: Sales, Expenses, contribution to fixed cost and overhead.