1. a) Potential market for Humans To accurately calculate the number of units that would be required per year in the human market, we first estimated the total number of patients that would require RBC transfusions divided in three main groups: Elective and emergency surgeries: The current market is of 7. 9 million units, but there is also an unserved market of borderline transfusions that would require an additional 1. 5 million units (1 million surgeries with requirements of 1-2 units / surgery). Trauma: Out of the 0.
5 million trauma cases / year, currently only 10% received the blood on-time, while the remaining 90% had to wait until the victim arrived to the ER. We consider that this 90%, equivalent to 0. 45 million cases would be the potential market for the product. The average units/patient for this cases is 3. 2, thus the potential market in units is of 1. 46 million units / year. Chronic anemia: the total current market of 3. 2 million units is currently served with donated blood, according to estimates this represents the 15% of the population, but in 2030 it will represent 25%.
Assuming that in the short term, this will increase to 20%, this would mean an additional 1. 07 million units / year. As summarized below, the total additional market size would be of around 4 million units. We also considered a more optimistic scenario were besides capturing the additional market, the new entrant would capture 50% of the current market for surgeries and trauma. Based on this two escenarios, and a price between $600-$800 / unit, the estimation for market size would be in the range of $2,400 – $5,600 million dollars.
b) Potential market for Animals Of the total number veterinary practices in the U. S., 14,250 (95%) were primary care, while 750 (5%) were emergency care. On average, the first group transfused 17 units/practice/year, while the second group transfused 150 units/practice/year.
Which means that on average, a total of 0. 35 million units were transfused. This 0. 35 represented critical cases (2. 5% of total), which means that the total number of cases would have been ~14m. Of these ~14m, 30% of the dogs (4. 3m) would have benefited from transfusions, representing an additional potential market of 27. 5% or 3. 9 million units. Taking a selling price of $150 / unit, the potential market size would be in the range of $640-$585 million dollars. Considering the higher price of $400/unit, the potential market size would be in the $1,550-$1,700 million range.
2. As it was calculated in 1. b), the potential market for Oxyglobin exceeds by far the production capactity of Biopure (300,000 units/year) which would allow the company to price the product at the higher point of $200 / unit to veterinarians. This would give the company annual revenues of around $60 million/year that could be used to finance the expansion of the production capacity and all the costs while Hemopure is approved by the FDA.
Besides the financial benefit of having stable revenues during the approval process, the company would start to build a brand awareness and reputation that will later benefit the marketing and sales of Hemopure. Additionally, launching Oxyglobin will protect the veterinary market from entrants like Baxter or Northfield that could decide to sell veterinary products while waiting for the FDA approval. 3. As mentioned on 2. , launching Oxyglobin will bring many financial and marketing benefits on which the company can leverage to later launch Hemopure.
Furthermore, as the company has no selling and distribution experience, it can start developing the knowledge internally while learning how to build distribution channels. The only foreseeable risk of this, would be having difficulties to later justify a higher price for Hemopure; but taking into account that Oxyglobin will be sold to end customers for around $400 / unit, it is easy to justify a $600-$800 price point for Hemopure, taking into account lower production capacity, and more regulatory requirements that require a higher quality and testing procceses for human use.