Mba 690 Marketing Management Biopure Case Study

Alex Sobaleu

MBA 690 – Marketing Management

Dr Swee-Lim Chia         

02-09-2019

Biopure Corporation and its CEO Carl Rausch are announcing that its “blood substitute” for animals, Oxyglobin, was approved by the US government and its analogue for humans, Hemopure, is yet to be approved. VP of Veterinary Products Andy Wright is ready to start selling Oxyglobin that in his opinion could generate revenues to help finish launching Hemopure. However, Ted Jacobs, VP of Human Clinical Trials is arguing that Biopure should wait until Hemopure is approved by FDA because early launch of Oxyglobin at $150 per unit could create expectations by the consumers for Hemopure having identical price (human market was much larger and was expected to pay for Hemopure $500-800 per unit).

At the time blood substitutes were needed to satisfy the demand. There was a lack of human donors with human blood having a short shelf life (donated blood was normally deemed as useless after 5-10 days). Also, some blood types are rare and blood transfusion can also transmit diseases (AIDS, Hepatitis B, C).  Unlike for humans there existed few animal blood banks with animal donors serving as primary supply of blood (%93 in 1995). Doctor had different opinions on blood substitutes. Some doctors were convinced that blood substitutes are more safe and efficient (no need for blood types, free of infections, much longer shelf life up to 2 years, transmitting oxygen faster). Other doctors argue that safety and practical use of blood substitutes is in question (human blood for the most part is safe and effective, substitutes have short half-life and excreted from human body much faster 2-7 days, substitutes have potential higher toxicity and anything more than 10 units was considered to be dangerous)

Analyzing the Biopure’s case it becomes apparent that the company should ask themselves some questions in order for them to continue as an organization. Should Biopure start producing and marketing Oxyglobin before or after potential approval of Hemopure? What is the strategy of lunching of Oxyglobin without material losses in revenues of Hemopure? Are veterinary blood substitutes prices even comparable to the prices of human blood substitutes?  

In my opinion Biopure should start producing blood substitutes for animal as soon as possible and for several reasons. In order for me to understand why Oxyglobin should be entering market before Hemopure approval, I chose to look at Biopure’s 5 C’s in order for me to make that decision. First of all, Biopure is the only company that had their blood substitutes approved by FDA for that segment at the time (small dogs, cats) and if competitors wanted to enter and start producing similar products it would take them 2-5 years (5C’s – Company and Competitors). Even though veterinary market is much smaller than human, society has a tendency towards “shrinking” of the family size with less kids or no kids at all (at least in countries as they being called “developed” societies), so demand for pets and small animals, the segment that Oxyglobin is targeting, will grow in the future (5’s – Customers’ needs and preferences are changing more towards having pets). It’s clear too that our world is becoming more ecofriendly with peoples’ high emotional attachment to their pets and increased cost of ownership in the future.

 Also, Biopure is relatively small firm compared to its certain rivals (like Baxter with billions of sales) and can’t afford failure because that could mean going out of business. At the same time, it seems like FDA is the way more strict when it comes to approval of blood substitutes for humans with a history of Government rejecting these products in stage III, so there is a very high risk that Hemopure is going to be rejected as well (Climate – regulatory environment) . The fact that Biopure is using animal blood (cows) unlike its competitors (Baxter and Northfield Laboratories), in my opinion, is going to have negative reaction by patients and administration of public health. Also, based on consumers’ and regulatory decision makers’ religious beliefs all blood substitutes have a long way to go until fully accepted by the society (5 C’s –   medical and general Climate). It’s been long said in religion that human were created by God and the idea of transhumanism that people are actually “imperfect” and could be transformed to a “better organism” is not solidified in human mind and many times is perceived in a negative way (If I were to analyze how human blood substitutes produced from cattle are influencing human body and organs, I would ask for observations for many years if not for the whole life).      

Another great benefit to start marketing and distributing Oxyglobin is the fact that Biopure is a startup business and it lacks experience in how to market and distribute its products in general. So, launching Oxyglobin could be sort of a “trial run” for Biopure to accumulate knowledge and experience that could be used to distribute Hemopure when it’s approved. But the question is how Biopure could start marketing and distributing Oxyglobin? In my opinion strong marketing benefit for Biopure is that Oxyglobin is “the only blood substitute” that is approved by FDA and that can also be safely stored for up to 2 years.  As I read from the case, veterinary blood substitutes could be very beneficial for clinics since a lot of them had to use “donor animals” that were housed to make a transfusion since animal “blood bank” is very insufficient. In my opinion  Bioipure could hire  sales teams to distribute product directly to veterinarians (veterinarians are target group and they are “experts” on what is needed) explaining the benefits of the product itself for animals (it’s universal and more efficient, with longer shelf life and without infections) and veterinary clinics as a business ( cost savings on housing animals for transfusions, increased demand for animal medical products in the future; some clinics could start making animal blood transfusions that they didn’t do before due to safety and universality of the product). Surveys could be used to come up with optimal pricing for emergency clinics with more critical cases with animals that lost blood in large quantities after accidents, wounds and etc. (charge a higher price because customers are willing to pay more in critical cases, also, it’s clear from the case that surveys are showing that pet owners would consider all options so Biopure should not be afraid to charge higher price of $200) and for primary clinics with less need like cure of certain diseases over a long term period of time (lower prices).