MM Biopure Corporation

Biopure CorporationGROUP 9

MARKET OVERVIEW

HUMAN MARKET In 1995, 4 million people required blood transfusions 20,000 trauma victims die every year because they don’t receive blood

on timeVETERINARY MARKET In 1995, 800 dogs suffered from acute blood loss but only 2.5% of

these received a transfusion

CURRENT MARKET SUPPLY

HUMAN MARKET Total 14 million units of blood

12.9 million units through voluntary donations to 1000 non-profit blood collection organizations

1.1 million through autologous donations directly to hospital blood centersVETERINARY MARKET Sole source of blood for most practices were in-house donor animals Primary Care – 93% animal donors, 7% blood banks Emergency Care - 78% animal donors, 22% blood banks

NEED GAP

Exact blood typing and cross-matching between donor and recipient Reduced oxygen carrying efficiency of stored RBCs Limited shelf life for stored RBCs Risk of disease transmission 75% people qualify as donors but only 5% actually donate, hence lack

of proper supply. Lack of adequate supply of animal blood (93% comes from donor

animals)

5 C’s

COMPANY Biopure Corporation, founded in 1984, privately owned pharmaceutical

firm Has two blood substitute products – Oxyglobin for the veterinary

market and Hemopure for the human marketCUSTOMERS 4 million patients required around 11.3 million units of RBCs in 1995 800 dogs suffering from acute blood loss

5 C’s

Biopure Corporation Baxter International Northfield LaboratoriesProduct • Oxyglobin (veterinary

market)• Hemopure(human market)

HemAssist PolyHeme

Source of haemoglobin Bovine blood Outdated RBC of Human Blood

Outdated RBC of Human Blood

Fixed Production cost (per year)

$15 million $50million $70 million

Raw Material cost (per unit) $1.5 per unit $8 per unit $26 per unitProduction Capacity (per

year)Oxyglobin + 2*Hemopure = 300,000

1 million 10,000 (expected to expand 300,000)

Storage Stable at room temp Refrigeration required Refrigeration requiredFDA Approval Phase • Oxyglobin- all cleared

• Hemopure- Phase 3 Clinical Trials in 1998

Phase 3 Clinical trial in 1996

Phase 3 Clinical trialIn 1998

Expected Launch • Oxyglobin- ready to launch• Hemopure- late1999

Late 1999 Late 1999 or early 2000

COMPETITORS

5 C’s

COLLABORATORS Bovine(cattle) blood from cattle slaughterhouses 10,000 cattle could supply enough raw material to support production 200 independent distributors in veterinary market – 2 national, 18

regional and 180 localCONTEXT Highly regulated by FDA

2-5 years for veterinary market 9-20 years for human market

75% people qualify as donors but only 5% actually donate

4 P’sPRODUCT Increased shelf life No Refrigeration Required No need of blood typing and cross matching 100% efficient in transporting oxygenPLACE Locations

Animal Blood bank, Veterinary care practices and pharmaceutical vendors for Oxyglobin

Hospitals, blood banks and vendors for Hemopure

4 P’s Continued..

PRICE Reasonable initial price?

Product is new Very difficult to increase later

Based on Table A, Price should be between $100-150 for maximum market penetration

According to the current analysis, expected price of Hemopure would be $600-800 at the time of launch

PROMOTION Devising a strategy to differentiate between Hemopure and Oxyglobin Promotions targeting doctors and hospitals Awareness sessions for doctors

SWOT Analysis

Strength- Only company to get FDA approval for animal blood substitute- Universal substitute- Only company to use bovine blood- Stable at room temperature

Weakness- Inexperience in market- Less market research- No revenues as of date

Opportunities- New to the world product => greater chance to capture market- High demand for blood substitutes- Could price our product slightly lower compared to competitors due to lower costs

Threats- Delay in FDA approval for Hemopure- Competition from established market players- Competitors entering the animal blood substitute market

SWOT

Problem Statement

1. Whether to launch Oxyglobin currently or after FDA approval of Hemopure?

2. Pricing of Oxyglobin, if launched now?3. Whether to go public now?

1. Launch Oxyglobin now or not?

Price difference between Oxyglobin and Hemopure is inevitable. We can use market learnings at the time of Hemopure launch. Training effort of sales representative will be reduced for Hemopure. Will help in recovering $200 Million spent on R&D and Manufacturing facility.

Will be difficult to change customer price perception.

2. Pricing of Oxyglobin, if launched now?

Based upon Veterinarians willingness survey and Pet Owner’s willingness survey, $100 - $150 will be optimum to generate maximum revenue. Assuming all doctors have same number of patients:

Price to Veterinarian

% of Actual sales to person Revenue Non Critical Critical

$50 per unit 57 90 7350$100 per unit 28 80.75 10875$150 per unit 8.75 60 10312.5$200 per unit 1.5 39 8100

3. Whether to go public now? If not, when?

In this year 1998, Oxyglobin will be released. In 2000, Hemopure is expected to be released.

We are proposing to go for IPO within 1 year from now. The public perception of Biopure Corporation will be positive because of: Oxyglobin release – Only product for blood replacement in Veterinarian Market. Hemopure will be in final stage of approval by FDA. Investment of $50 Milion.

Thank You