Biopure Corporation
Essay by Maulik Goyal • September 7, 2017 • Case Study • 1,148 Words (5 Pages) • 2,620 Views
BIOPURE CORPORATION
PGP 53rd Batch - Section E Group 6
Biopure Corporation, with its two new blood substitute products Oxyglobin and Hemopure, is facing a dilemma as to whether it should launch its veterinary product Oxyglobin immediately, because it already has a government approval, or whether it should launch it after 2 years when the main product Hemopure gets its approval and is ready for market launch.
Oxyglobin – Market Potential
Small animal vet Practices | No. of Primary care | Volume of Blood units used | Emergency Care | Volume of Blood units used | Total current usage |
| Potential Market in units |
15,000 | 14,250 | 242,250 (17 units/primary care) | 750 | 112,500 (150 units/emergency care) | 354750 |
| 4,257,000 |
It is known that 2.5% of animals treated get transfusions while 30% could have benefited from them. Therefore:
354,750 * .3/.025 = 4,257,000 potential market in units
Demand at different Cost
100$ per unit | 200$ per unit | 300$ per unit | 400$ per unit | |
Owner’s Willingness | ||||
Critical | 90% | 85% | 75% | 65% |
Non Critical | 60% | 40% | 35% | 30% |
% of cases* | ||||
Critical | 8.30% | 8.30% | 8.30% | 8.30% |
Non Critical | 91.70% | 91.70% | 91.70% | 91.70% |
Total Units (Market Size * Owner's Willingness * % of cases) | ||||
Critical | 318k | 300k | 265k | 230k |
Non Critical | 2.3 million | 1.56 million | 1.3 million | 1.17 million |
Total Demand | 2.6 Million | 1.86 million | 1.54 million | 1.4 million |
*this figure is calculated as 2.5%/30% = 8.3%
- Assessing the market potential for Hemopure:
Use of Red Blood Cells | 1995 (in '000) | 1999 (Human Blood Substitute) (in '000) | Accounting for population growth (@2% for over 65 years &0.16% for below 65 years) (in '000) | |
Elective Surgery |
| 6900 | 345 | 345 |
Emergency Surgery |
| 1000 | 500 | 518.4110449 |
| Population over 65 (40% of all acute blood loss transfusions) | 200 | 216.486432 | |
| Population under 65 (40% of all acute blood loss transfusions) | 300 | 301.9246129 | |
Trauma (In-field Administration) |
| 200 | 2000 | 2073.64418 |
| Population over 65 (40% of all acute blood loss transfusions) | 800 | 865.945728 | |
| Population under 65 (40% of all acute blood loss transfusions) | 1200 | 1207.698452 | |
Chronic Anaemia |
| 3200 | 0 | 0 |
Borderline Cases* |
| 1000 | 1500 | 1527.18 |
Total Market Potential (000’s Units) |
| 4464.235225 | ||
*Average population growth rate of 0.045% has been used to calculate market potential in 1999 |
Assumptions:
- CAGR Calculations:
Adult Population | ||
Above 65 yrs | Below 65 yrs. | |
1995 | 15 | 85 |
2030(given that the population above 65 doubles in 2030) | 30 | 90 |
CAGR for 35 years | 2% | 0.16% |
Avg Growth Rate of Adult population(120/100) ^(1/35) | 0.45 |
- Elective Surgery: Hemopure is poorly suited to elective surgery. In particular, donated human blood is:
- Cheaper as compared to Hemopure ($125-$225 vs $600-$800)
- Widely accepted and available through a network of blood collection groups
Thus, we can conclude that Hemopure is only suited for applications where donated blood is not readily available. Elective surgery does not fall into this category. Thus, Hemopure will be used rarely and we have assumed 5% of the original demand.
- Emergency Surgery: There are 2 factors which can affect usage in this category, both having opposite effects:
- More units will be used in the field resulting in a decline in usage in this category
- But, the number of trauma victims surviving will grow resulting in an increased probability of having emergency surgery.
We have assumed there will be a net 50% decline in potential.
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