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The veterinary canine blood market is currently valued at approximately $40 million ($34-48 million), but if the potential of the market and the potential for medical benefit were fully realized, the canine blood and blood replacement market is $400 million ($314-$469 million). This potential market is based on the figure of 12 million dogs suffering blood loss annually, 30% (3.6 million dogs) of which could benefit from blood replacement. Figures given in the case indicate that only 2.5% of those 12 million dogs (the ¡°critical cases¡±) are actually transfused with four units of blood, each. An additional 3.51 million dogs stand to benefit from blood or blood product transfusion, resulting in a net potential market of at least 3.87 million units of blood or blood replacement product. Naturally, neither every dog, nor every pet owner, nor every veterinarian will achieve 100% of the potential consumption. Biopure, with a production capacity of only 300,000 units of Oxyglobin, cannot satisfy the total potential market, but the potential market instructs not only the marketing plan but also the pricing strategy for Oxyglobin. Based on market research including willing-to-pay surveys of both veterinarians and pet owners, and based on the full potential of the market, a veterinarian (wholesale) price of $200 per unit is recommended (retail, or billed, price of $400). The market for Oxyglobin based on Biopure market research is 138,353 units. Revenue from this model would be $27.7 million, assuming capture of 39% of the existing, ¡°critical case¡± market. Revenue maximization would result at $100 per unit cost, with maximal revenue of $127 million. Maximum revenue realization would necessitate not only perfect market adoption among the entire 30% of transfusion-eligible dogs, but also a production capacity of over 1.2 million units of Oxyglobin per year. The current production capacity and requirement for production of Hemopure to satisfy clinical trial needs makes a low-cost, high-volume market strategy less attractive. Furthermore, introducing Oxyglobin at higher cost will help to substantiate a high product cost for Hemopure. A major caveat associated with these calculations relates to the nature of ¡°willing-to-pay¡± market research data. There is often a large difference between the concept of what a consumer is willing to pay and consumer behavior when the actual transaction is demanded. For an extreme and entirely hypothetical example, very few survey subjects would say they are unwilling to pay $10 million to ¡°live twenty years longer.¡± If that offer were presented to those same respondents, tomorrow, with an invoice, far fewer respondents would actually produce the $10 million. To accurately analyze the size of the existing human blood replacement market, we must categorize each type of use for blood transfusions and their estimated costs. The total amount of red blood cell donations in the United States in 1995 was 14 million units.
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