Biopure Case Study
In addressing the issue, the following were considered: a sensitivity analysis for potential consumption of different price series, associated revenues and costs, and gross profit from different distribution methods.
It is recommended that Biopure: 1. Introduce Oxyglobin immediately at a price of $100 to veterinarians. 2. Have an independent sales force distribute the product to maximize profits. 3. Advertise Oxyglobin in both veterinarian journals and trade shows. 4. Establish a successful brand to launch Hemopure in the future. 5. Oxyglobin should be …show more content…
This makes Biopure’s products more advantageous because buyers can save money on refrigeration costs as the company makes a higher profit because of their raw material’s lower price.
In terms of production, Biopure has capacity to produce only one product at a time, namely, an annual capacity of 300,000 units of Oxyglobin or 150,000 units of Hemopure or some linear combination of the two. On the other hand, Baxter has a production capacity of 1,000,000 Northfield’s capacity is at 10,000 units per year, which is considerably less than Biopure. According to Exhibit D, potential demand for Oxyglobin alone priced at $100 is 1.3 million. Biopure does not have any competition but cannot supply that level of output presently, which would potentially raise prices as demand skyrockets once the product is introduced in the market.
Biopure conducted two surveys that showed customers’ willingness to try the product at a higher price depends on the gravity of the emergency. Exhibit E shows that by selling the product at $100 a unit, $137 million can be generated in revenue, which is more than the revenue that can be obtained when selling it at any other price. This has to do with the probability of consumption and its correlation to the gravity of pets situations in general.
Veterinarians have expressed their frustration with current animal blood distribution. Biopure has two options