Biopure Harvard Business Case Essay

737 Words Apr 8th, 2014 3 Pages
To: Carl Rausch
From: Sukhada Kulkarni
RE: Release of Oxyglobin
Date: October 30, 2013

The intent of this document is to provide suggestion for the timeline to release Oxyglobin. I would recommend releasing Oxyglobin to the market as soon as possible.

Situation Analysis:
There has been a debate if Oxyglobin release should be delayed by two years as it might jeopardize the sales of Hemopure. The concern here is that the estimated price of Oxyglobin ($150 per unit) might not allow Hemopure to be released at a higher estimated price as $600 per unit. As per my analysis this should not be a major concern as the advantages of releasing outweighs this concern. Here are the reasons why Oxyglobin should be released soon in the market:
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* According to the breakeven analysis, the market share needed to achieve breakeven profits is 38.2% for unit price $200 as compared to 48.7% with the unit price of $150. This will help us to generate higher revenues (Refer appendix). * The market demand for blood is very high. According to pet owner’s survey, the customers are willing to pay for the product with higher price with increasing criticality.

Marketing Strategy:
The product should be advertised in vet journals and trade shows as these are taken seriously and are treated as valued source of information. A strong network should be formed with the distributors with a mindset that Hemopure is the main target for release.

Finally, I would conclude that Oxyglobin should be released soon to the market by distinguishing Oxyglobin and Hemopure as two independent products. Hemopure should be marketed on the brand established by Oxyglobin and should be compared with other human blood substitutes for pricing.

Appendix

Assumptions: * Here we are doing analysis for price per unit as $150 and $200. * We are considering distribution cost as 15% of Total Sales (Table C of case description, considering only local distributors). * Additional distribution cost due to “Manufacturer Direct”= $15 per unit (optional)

Total Revenue: Estimated price per unit | $150 | $200 | Maximum number of units per year | 300,000 | 300,000 |

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