BIOPURE – STRATEGIC MARKETING BA 160 – Marketing Berkeley, 07-17-2002 Lars Eiermann, Eric Hirschberger, Alexander Mantzsch, Carsten Müller, Kristian Radic, Malte von Reden

Biopure Marketing Strategy AGENDA I. Introduction a. Product comparison b. Key issues II. Qualitative points of view a. SWOT analysis b. Value benefit analysis III. Quantitative points of view a. Break even analysis IV. Strategic recommendation 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy INTRODUCTION To February 1998 Biopure had spent over $ 200 million on developing Hemopure During the development process Oxyglobin was discovered Biopure has not brought a product to market yet Funds are sufficient to operate for two more years Hemopure will probably receive approval during 1999 while Oxyglobin is approved and ready to launch 07-17-2002 Biopure Marketing Strategy

GENERAL BENEFITS OF BLOOD SUBSTITUTES Blood substitutes are universal Free of threads like AIDS Storable for up to 2 years Immediately 100% efficient at transporting oxygen Further benefits due to smaller molecules 07-17-2002 Biopure Marketing Strategy

PRODUCT COMPARISON - HEMOPURE REGULAR BLOOD BIOPURE Hemopure NORTHFIELD PolyHeme BAXTER HemAssist Criterion 2 - 4° C 2 - 30° C < 4° C storage temperature human blood cattle blood Outdated human blood Origin Seasonal variations None Outdated blood containers potential bottlenecks medium low high procurement costs of basis $ 125 - 425 $ 600 - 800 Price 07-17-2002 Biopure Marketing Strategy

PRODUCT COMPARISON - OXYGLOBIN Criterion Regular Blood Oxyglobin Storage temperature 2 - 4° C 2 - 30° C Origin Donator animals Cattle blood Price $ 50 - 100 $ 100 - 200 Many advantages of Oxyglobin compared to regular blood Oxyglobin is ready to launch 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy KEY ISSUES I Should BIOPURE introduce Oxyglobin at all? Reasons for the introduction of products in general Ability to spread risk Opportunities in market Revenues Experience / Best practice Conclusion Oxyglobin should be introduced! 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy KEY ISSUES II When would be the best point of time to introduce Oxyglobin? February 1998 late 1999 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy AGENDA I. Introduction a. Product comparison b. Key issues II. Qualitative points of view a. SWOT analysis b. Value benefit analysis III. Quantitative points of view a. Break even analysis IV. Strategic recommendation 07-17-2002 Biopure Marketing Strategy

SWOT ANALYSIS - BIOPURE Strengths Weaknesses Opportunities Threads 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy STRENGTHS Time & development advantage on animal market Both products are nearly identical in terms of production processes Funds are sufficient for 2 years S T O W 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy WEAKNESSES Dissension within BIOPURE’ s top management No distribution network No experience in going to market Stockholders with high expectations Enlargement of production plant needed for expansion S T O W 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy OPPORTUNITIES S T O W Innovative product Demand on blood that cannot be satisfied due to periodic shortage and anemia High benefits for autologous donators 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy THREADS S T O W Uncertain market price Hemopure’s market entry depends on the FDA approval process Competitor with production capacity three times larger, established distribution network and additional products in other markets 07-17-2002 Biopure Marketing Strategy

VALUE BENEFIT ANALYSIS 100 4 8 25 26 Rating ∑ Flexibility of production plant & administrative effort Usage of production capacity Customer Awareness Position in Market Pricing of Hemopure Generate revenues / profit Gain of experience Criterion 171 4 8 16 25 50 2 x 26 = 52 Oxyglobin ASAP 129 8 4 50 25 1 x 26 = 26 Oxyglobin later 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy AGENDA I. Introduction a. Product comparison b. Key issues II. Qualitative points of view a. SWOT analysis Value of benefit III. Quantitative points of view a. Break even analysis IV. Strategic recommendation 07-17-2002 Biopure Marketing Strategy

BREAK EVEN POINTS FOR DIFFERENT PRICES Assumption : Marketing costs = 5% of max. revenue 07-17-2002 Biopure Marketing Strategy

„BREAK-EVEN PERCENTAGE“ 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy PRICING OF OXYGLOBIN Oxyglobin should be introduced at a price of $ 200 per unit Demand exceeds break-even point Pet Owners are willing to pay even more Price Range of Oxyglobin - Hemopure Assuming maximum sales, profit turns out to be $ 37.050.000 p.a. Influence of Oxyglobin’s price on Hemopure is questionable 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy AGENDA I. Introduction a. Product comparison b. Key issues II. Qualitative points of view a. SWOT analysis b. Aspects of different options III. Quantitative points of view a. Break even analysis b. Nutzwertanalyse IV. Strategic recommendation 07-17-2002 Biopure Marketing Strategy

STRATEGIC RECOMMENDATIONS Introduce Oxyglobin as soon as possible at $ 200 Launch a market research to receive more detailed information on the Hemopure market Marketing department should distinguish Oxyglobin and Hemopure as two independent products Advertisement for Oxyglobin should consist of adds in veterinary journals and practices as well as of attendance at veterinary trade shows 07-17-2002 Biopure Marketing Strategy

Biopure Marketing Strategy DISCUSSION KRISTIAN.RADIC@GMX.DE 07-17-2002 Biopure Marketing Strategy