Biopure
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Biopure Market Potential Exercise
Suggested Solution
Question 1) How would you revise the market potential for Hemopure?
The best four-segment solution to the usage problem includes these categories: elective surgery; emergency surgery; in field trauma; and chronic anemia.
Current Usage
Change
Potential Usage
Trauma (in field)
200,000
2,000,000
Currently only 10% of trauma cases get blood transfusions in the field. With better storage potential and no need for blood typing this could be increased to 100% (a factor of 10!).
This is the potential usage in 1995. In order to project the numbers forward to 2000 (the date of product release), we must estimate population growth. The elderly population (65 and older), which currently receives 40% of all acute blood loss transfusions, is expected to double by 2030. Assuming linear growth, we can expect this age group to grow 14% by 2000.
Similarly, the remaining adult population (under 65), which currently receives 60% of all acute blood loss transfusions, is expected to grow 5.9% by 2030 ((6 – 5.67) / 5.67 = 5.9%).
# over 65
# under 65
5.67x (85% / 15% = 5.67)
3 * 2x (75% / 25% = 3)
Assuming linear growth, we expect this age group to grow .84% by 2000.
The revised estimates of usage for the year 2000 are as follows:
Potential usage (1995)
Change
Potential Usage (2000)
Under 65
1,200,000
*1.084
1,300,800
Over 65
800,000
*1.14
912,000
Current Usage
Change
Potential Usage
Emergency Surgery
1,000,000
500,000
Due to the fact that many more units will be used in the field, the usage in this category will decline. On the other hand, many more of the trauma victims will survive increasing probability of having emergency surgery. We estimate that the net of those two changes will mean a 50% decline in potential.
Revised estimates of usage for the year 2000 are as follows:
Potential usage (1995)
Change
Potential Usage (2000)
Under 65
300,000
*1.084
325,200
Over 65
200,000
*1.14
228,000
Current Usage
Change
Potential Usage
Elective Surgery
6,900,000
345,000
Evaluating the attractiveness of the Biopure offer compared to that of the generic human RBC competitor is essential to appropriately forecasting demand in the elective surgery segment. A simple analysis of the benefits demanded by elective surgery, the benefits provided by human RBCs, and the benefits provided by Hemopure would lead one to conclude that Hemopure is poorly suited to elective surgery. In particular, donated human blood is:
Well entrenched and widely-accepted in modern medicine,
Readily available through a well-established network of blood collection groups
Relatively inexpensive, at $125-$225 per unit (vs. the proposed $600-$800 for Hemopure)
Relatively safe, with little chance of infection (e.g., 1 in 5,000,000 chance of AIDS).
Consequently, Hemopure is probably only appropriate for applications where donated blood is not readily available and where the loss of blood is life threatening. Elective surgery certainly does not fall into this category.
Revised estimates of usage for the year 2000 are as follows:
Potential usage (1995)
Change
Potential Usage (2000)
Under 65
207,000
*1.084
224,388
Over 65
138,000
*1.14
157,320
Current Usage
Change
Potential Usage
Chronic Anemia
3,200,000
Hemopure is ill-suited for chronic anemia applications because of the short half-life, potential for toxicity, and very high price (would you/your HMO want to spend $600-$800 per unit for the rest of you life if you were afflicted with this condition?).
Finally, there are 1 million “borderline” transfusion surgeries each year, where doctors avoid transfusions for fear of disease transmission or negative reaction. Hemopure could eliminate these fears, resulting in an additional potential of 1.5 million units.
Grand total: 4.65 million units
Question 2) Given Baxter and Northfields relative strength in the market, to what would you revise the forecast?
Baxters Hemassist and Northfields PolyHeme would both take market-share when they are introduced. Both of these products are made with human blood, which may prove an advantage. In addition, Baxters history of product success may make it a formidable competitor. The best responses to this question account for the relative strength of the competing organizations and offers. Here is a suggested solution:
Biopures real competitive advantages are its shelf life and storage requirements. Baxter and Northfields products, since they are made with