Biopure cooperation a biopharmaceutical firm that is privately owned. It deals with the purification of red blood cells to come up with blood substitutes. Its main products are Oxyglobin, blood substitutes for animals and Hemopure, blood substitutes for humans. The company has invested millions of dollars in the production of its two products (Gourville 1). Both of the products have to undergo approval under the United States government’s Food and Drug Administration (FDA) before they are released and made public for use. One of the organization’s products, Oxyglobin has already been approved by FDA and is ready to be used launched. Hemopure has two more years until the government finally approves it.
The main issue facing the organization is whether to launch Oxyglobin following its final approval by the FDA or wait for the final approval of Hemopure, two years away then launch the Oxyglobin. The vice president of Veterinary products, Andy Wright, argues that there is no risk in releasing Oxyglobin in the present. A team is already in place to market the product. He adds that this will create the first revenue for the organization that could even be used to launch Hemopure in the human market. On the other hand, the vice president for Human Clinical trials, Ted Jacobs argues that launching Oxyglobin in the present will make the organization incapable of setting their desired prices in the futures. Jacob states that the veterinary market is small, so are the prices for Oxyglobin. Releasing Oxyglobin at these low prices will intrigue the public to anticipate such low prices for the human blood substitute, Hemopure too. Their target institutions will complain of a large price difference between their two products that they, the target institutions, deem same. Carl Rausch, Bio pure organization’s Chief Executive Officer has to make a decision on when to release Oxyglobin, should be now, immediately after its approval or two years later after the approval of Hemopure.
The sub issue facing the organization is on the marketing strategy of Oxyglobin, if it to be released in the present. The marketing strategy includes the advertisement method of the product and the pricing figure and mechanisms of the product. On the pricing figure, some of the members under Andy Wright team feel that it should be low as, 80 to 100 dollars following the sensitivity of the veterinary market, while others feel that the prices should be at 200 dollars following the many advantages of the animal blood substitute, Oxyglobin.
Biopure Cooperation is among the three top organizations that are investing in the production of blood substitutes and are awaiting approval from FDA. The three organizations have invested in this area following the disadvantages of red blood cell transfusion. The organizations have also invested in this area following the high demand for human blood and the less supply of it. The blood substitutes produced by these organizations counter the shortcomings of red blood cells, such as the limited or short shelf life of red blood cells. Baxter International and Northfield laboratories both use expired red blood cells in the production of their human blood substitutes. On the other hand, Biopure Corporation uses blood from cattle. Baxter International is a well-established organization that is known for the production of blood-related products whereas Northfield laboratories are a small organization. The two firms that are competitors with Biopure cooperation have similar ranging production costs. The production costs of Biopure Cooperation are slightly lower than those of the two firms. The target pricing of the human blood substitute of Biopure Cooperation and that of Baxter International range between similar figures of 600 and 800 dollars (Gourville 8).
The advice to the company is that it should not overcharge its products, nor should it undercharge its products. Overcharging its products will chase away the customers and undercharging the products will make the company undergo a loss. The company should therefore incorporate in its costs all the additional costs that they have incurred such as distribution costs. The company has the potential of making more sales once it releases its products in the present. Releasing the products in the present will enable its customers in the veterinary market to rate their products. Best rating of Oxyglobin will open up sales for Hemopure. This will place the company in a better position to compete with the well-established company Baxter International. Since all the three companies have the same target price for the human blood substitutes, the company will not face much complaining from the public. The company should however make sure that they explain to the public that the Hemopure undergoes an additional process as opposed to Oxyglobin, explaining its high prices.
The company has invested much on the production of the two products. The production of its products is different from the production of the other two companies thus lowering its costs. The company should therefore release its products so that they enjoy the revenue now, time value of money, which could not only help them in the launching of Hemopure but also expand its operations. The action that the company should undertake is engaging in a pre-advertisement of Hemopure to prepare for its launch and its sales.
Works Cited
Gourville, John T. Biopure Corporation. Boston, Mass.: Harvard Business School Pub., 1999. Print.
