Cord Blood Industry Consolidation Escalates as 2020 Approaches

The global cord blood industry experienced strong growth from the early 1990’s through the mid 2000’s, during which time more than 450 cord blood banking companies emerged worldwide. Approximately half of those companies owned their own labs, while the others were marketing entities or sub-contractors of storage space.

Starting about ten years ago, the market suddenly changed course. It entered a period of aggressive consolidation.

Over the past decade, the cord blood industry has witnessed substantial consolidation, particularly within the United States, Europe, and Latin America.

With CBR’s recent acquisition of Natera’s Evercord™ Cord Blood Business on September 13, 2019, the trend of cord blood industry consolidation continues.

Cord Blood M&A within the United States

Within the United States, a major event was the acquisition of the largest cord blood, Cord Blood Registry (CBR), by AMAG Pharmaceuticals for $700M in March 2015. By June 2018, AMAG Pharmaceuticals sold its interest in CBR to GI Partners, a private equity investment firm. At the same time it acquired CBR, GI Partners bought California Cryobank, a donor sperm and egg bank. GI Partners then merged the two companies into a single entity providing combination stem cell storage and assisted fertility services.

In recent news, CBR aquired Natera’s Evercord™ Cord Blood Business on September 13, 2019. While many of the smaller banks had been acquiring companies for year, this was the first acquisition activity completed by CBR, the largest cord blood bank in the U.S. with more than 875,000 newborn stem cell samples in inventory.

Previously, the second largest cord blood bank in the U.S., ViaCord had been acquired by PerkinElmer in October 2007 for $300M.

In other M&A activity, Human Longevity Inc. (HLI) acquired LifebankUSA from Celgene in January of 2016.

HLI was co-founded by J. Craig Venter, tthe first person to sequence the human genome and transfect a cell with a synthetic genome. Because HLI is a genomics-based company, it stated that Lifebank USA’s cord and placental blood and tissue would “provide high quality DNA from mother and newborn for genome sequencing.” HLI now offers its newborn genome sequencing product in combination with stem cell banking services.

Other examples of cord blood market consolidation include:

• AlphaCord’s acquisition of LifeSource Cryobank in November 2015, which represented its 5th acquisition of smaller cord blood banks.
• FamilyCord’s acquisition of Southern Cord in April 2016.
• Cord Blood America selling the majority of its assets to FamilyCord for $15.5 million in February 2018.

In a rare international merger, Australia’s largest cord blood bank, Cell Care, acquired Canada’s largest cord blood bank, Insception Lifebank in October 2016.

Insception’s Founder shared, “Insception is enthusiastic about the growth that bringing Cell Care’s R&D and clinical trial experience to Canada will contribute to its business.” As indicated by this statement, the merger appears to have been related to ongoing research being undertaken by the two companies.

A Cord Blood Holding Company, Cryoholdco

Within Latin America, a different phenomena has emerged, which is the presence of a diversified holding company, Cryoholdco. CryoHoldco was created in 2015 with the purpose of forming the premier stem cell banking company in Latin America. It is a stem cell bank holding company that is the market leader in Latin America and one of the largest stem cell banks in the world.

CryoHoldco is five times larger (5X) than any other stem cell bank in Latin America—with more than 125,000 cord blood samples stored. When cord tissue units are also included, it has more than 130,000 stem cell units in inventory.

CryoHoldco has been highly effective at purchasing companies and combining their storage facilities, technologies, and employees to create a more cost-effective workflow.

Cord Blood Aggregator, Sanpower Group

Within Asia, Sanpower Group and its subsidiary Nanjing Cenbest have been aggregating cord blood banks.

With its acquisition of China Cord Blood Corporation (renamed Global Cord Blood Corporation) and Shandong Cord Blood Bank, it now holds “four licences out of the only seven issued provincial-level cord blood bank licences in China” and has secured 800,000 cord blood samples in China, as well as nearly 1,100,000 total when Cordlife’s reserves across Southeast Asian countries and regions are included.

This means that Nanjing Cenbest is the world’s largest cord blood banking operator.

Inorganic Growth of Cord Blood Banking within Europe

Within Europe, the cord blood banking market has been consolidating for over a decade. During the mid 2000s, Europe had more than 150 market participants. Today, it has less than 100, a reduction of the market by one-third.

In Europe, Vita 34 and PBKM (Famicord) have been the major consolidators, using inorganic growth to fuel their expansion. Vita34 has executed 10+ transactions, while PBKM has completed at least a half dozen. Vita 34 and PBKM are two of the largest cord blood storage companies within Europe.

Esperite (Cryo-Save) is the next most active consolidator in Europe with 5+ transactions and more than 330,000 cord blood and tissue samples in storage.

In February 2019, Esperite N.V. (Cryo-Save) and PBKM entered a Memorandum of Understanding (MoU) regarding a potential acquisition by PBKM of Cryo-Save’s stem cell banking business. With the signing of the MoU, both companies agreed to a storage agreement in which PBKM would preserve Cryo-Save’s stem cells within its laboratories in Warsaw, Poland.

By May 2019, PBKM announced it would not be proceeding with the transaction, but would continue to honor a 5-year storage contract.

The largest cord blood bank within Portugal, Stemlab, also executed a small number of acquisitions. However, by July 2018 Famicord acquired 95.6% of Stemlab company stock for a purchase price of $16.5M.

Benefits of Cord Blood Industry Consolidation

This era of maturation and consolidation has had as many benefits to surviving cord blood market participants as drawbacks.

On average, the remaining market participants are now:

• Larger
• Better capitalized
• Storing larger quantities of cord blood and tissue units
• Experiencing operational efficiencies related to scale
• Better positioned to fund R&D activity

Surviving cord blood banks have also been able to diversify into the storage of other types of stem cells, including cord tissue-derived MSCs, stem and progenitor cells from the placenta, and in some cases, adipose-derived stem cells.

Clearly, the trend of cord blood industry consolidation is global.

To learn more , view the “Global Cord Blood Banking Industry Report.”