Lifecell - A Star Business in the Stem Cell Banking Space

A few businesses are absolute dream businesses. The insurance business is one such business. You collect money upfront and you pay up when a particular (relatively rare) event occurs.

But there is one new business that is even better than an insurance business. It's the business of preserving stem cells from the umbilical cord of new born babies. The idea is that you harvest the stem cells at the time of birth. Stem cells can be used to treat a wide variety of potential inherited (or acquired) defects and health problems such as Thalassemia.

While the medical benefits may either be laudable or debatable depending upon your point of view and personal situation, the merit of the business model is absolutely brilliant. You are being paid upfront in most cases or every year (in some cases where parents opt for a deferred payment scheme.) Your costs are fixed. Your maximum downside is if one of the people who has banked their stem cells with you asks for their stem cells to be returned.

The entire main market(of stem cell research and applications) is growing at a remarkable rate. If you can be a market leader in a sub-market in this market, you have it made. One such company is Lifecell.

It describes itself thus: "LifeCell is India's first & largest private stem cell bank and stem cells solutions provider to bring the revolutionary concept of umbilical cord stem cell banking to India. LifeCell started its operations in 2004 with cryogenic preservation of umbilical cord blood stem cells at its advanced facility in Chennai. The company has a technological collaboration & exclusive license agreement with CRYO-CELL International Inc. - the world's first and largest stem cell bank. Since 1992, Cryo-Cell has helped nearly 185,000 clients worldwide preserve their newborn's umbilical cord blood for potential use against many diseases. Along with cord blood banking, Cryo-Cell Cord Blood Bank is pioneering the way in research, to find more solutions to preserve stem cells in a noncontroversial way. This technological partnership with Cryo-Cell ensures that the stem cells are collected, processed and preserved at international quality standards & guidelines to meet future requirements, if any, which may arise after many decades.

Since inception LifeCell has grown at a consistent pace and has strongly established its leadership position in the industry. As leaders LifeCell had the responsibility of educating the public and medical fraternity on stem cell technology and through these efforts today close to 20,000 clients who have banked their baby’s cord blood stem cells with LifeCell with this number compounding every day."

When it comes to life-critical issues, people do not mind spending more money to go with the market leader. So the issue of market leadership becomes even more important and this is a winner-takes-all style business. In such a scenario, the "question marks" (businesses that are followers in a growing market) will lose money or struggle while leaders thrive beyond their wildest dreams. Additionally, as technology improves the cost of the technology will come down. But the costs will not necessarily get passed on to customers immediately (similar to the computer industry.) The company will thus have an amazing situation where costs are not rising (and probably falling), and the overall market moves from early adopters to early majority and then the late majority.

An absolute dream business this!