Stem cell banking, a space currently predominated by MNCs, holds immense scope for domestic players ready to exploit the growing opportunity
Currently a US$ 2 billion market in India, and projected to be a US$ 5 billion market in the next five years, the life-giving stem cell industry is only partially exploited so far. Much remains to be seen while players make up their minds to capitalise on the opportunity.
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Growing at a considerable speed, the stem cell industry can, however, witness a magnificent acceleration in its growth with more SME (Small and Medium Enterprises) entrepreneurs taking the plunge. Stem cell banking has huge scope in India. The country currently records 25 million births every year while only a pitiful 10,000 cord bloods
are banked.
Stem Cell Banking
Stem cell bank is a facility that preserves stem cell, a specialised cell in the body that is capable of regenerating and turning into tissues, organs and systems in the human body, for future use.
Due to their ability to replace damaged cells in the body, they can be used to treat a range of conditions including heart failure, cancer, spinal injuries, diabetes, Parkinson disease, and many more.
There are various sources in the body from where stem cells can be procured. At the time of childbirth stem cells could be extracted from amniotic membrane, placenta, cord, cord blood, etc. Later it can be extracted from bone marrow and dental pulp.
However, since cord blood, obtained from umbilical cord, is the purest form of stem cell with high potential to differentiate into specialised cell types, the trend of storing them at the time of childbirth is on the rise. Lest other sources get infected and are rendered useless in the event of some disease, parents are increasingly considering the option of storing cord blood at the time of childbirth despite the high cost that it involves.
Verticals of The Sector
There are three verticals in stem cells— cord blood banking, application and pure R&D (reasearch and development). While all of these offer ample scope, cord blood banking is the most popular. The reason being entrepreneurs without relevant background and much technical knowhow can as well enter the industry and reap benefits while the other verticals require specialised knowledge.
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| “Starting a cord blood bank is not something that you can read up a book and do. There are certain protocols of the business which not everyone know and the ones who know may not give theirs” - Chaitanya Purandare
CMD, StemOne |
Lately, however, the practice of dental stem cell banking has picked up some pace in India. But it isn’t as popular as cord blood for reason such as— a.) the amount of dental pulp is insufficient to be used for curing any disease b.) the science behind its use hasn’t been established so far. Giving an example Chaitanya Purandare, Chairman and Managing Director, StemOne, says,”If you are going on a long hike would you carry a small bottle of water or a big one that you know will last you till the end-- you would probably go for the latter. Similar is the difference between cord blood banking or application using bone marrow against dental pulp.”
Segments of Banking
Anyone contemplating starting a stem cell bank has two options: public and private banking. Public banking is, however, off limits for any entrepreneur unless he has extremely deep pockets. Purandare says, “An entrepreneur not interested in seeing results in his life-time can consider this option.”
World over public banking is done by government or government sponsored institutions. In fact, very few private banks engage in public banking primarily because the usage of donated cord blood is not much right now and secondly to keep cord blood for the Indian population, from the point of view of genetic diversity, one will have to keep stock of a lot of cord blood and hold on to it until it is used. That would mean running a humongous inventory without knowing when it is going to be used.
Requisites of The Business
To start a stem cell bank, an entrepreneur, besides a keen interest and long term vision, must have the technical knowhow of the business. He should have a biology based background to understand the scientific basis of the business, but in case he doesn’t have a relevant background, he should employ a team which has a strong technical background. Alternatively, he can tie-up with an international brand to get the international knowhow on how to start a stem cell bank.
Purandare says, “Starting a cord blood bank is not something that you can read up a book and do. There are certain protocols of the business which not everyone know and the ones who know may not give theirs.” It is important to have the technical knowhow to know how to process a cord blood sample when received.
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| “Stem cell banks need to educate doctors who in turn will educate and offer the service to their patients.” - Dr Kedar Gadgil, Director
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Additionally, the business, like any other, requires investments. Stem cell banking requires around `10-15 crores as initial investment. The investment encompasses expenditures on acquiring land, equipments, building, manpower, etc. The business also requires a good sum of amount to pay for its operational expenses.
Apart from capital and the technical knowhow, it is important for one, contemplating to enter the industry, to understand the market. Market surveys could come in handy to understand the dynamics of the market one is targeting.
Need to Market
An entrepreneur should see that his services are well marketed. Since stem cell banking is a specialised subject, not everyone is aware of it. While people from educated backgrounds find it easier to understand the concept, many find it difficult to see the use of storing their children’s cord blood for years not knowing when they might be required or whether they would be required at all.
Dr Kedar Gadgil, Director, StoreYourCells, says, “Stem cell banks need to educate doctors who in turn will educate and offer the service to their patients.”
Break-even Period
No denying that the business has bright prospects, but the gestation period in this business could be longer. However, one can probably break-even in three to five years depending upon how much amount is invested, where one is placed and other variable factors.
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| Stem cells in human body |
Possible Risks
One of the biggest risks of this business could be deferred break-even. Among the other risks, one could be the possibility of being taken over by a bigger brand in the market. However, Purandare says, “If you are coming in with `10-15 crore, I don’t see a reason why would you not be able to take a decent share in a market of a country that records 25 million births a year.”
According to him there is a huge market out there waiting to be exploited, however, the entrant must come in with the right frame of mind. He says, “This is a long haul game. People are here for 21 years and you can’t walk out of it after 3 years.”
How to make it big
To make it big here, one must refrain from getting stuck in a zone. Stem cell is evolving constantly. Every six months there is something new happening in stem cells. Therefore, one has to be flexible enough to move from one vertical to another. And to be flexible it is important to keep yourself updated with the changes in the market and have a long term vision.
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