asiamedic.wongwenghongAsiaMedic CEO Dr Wong Weng Hong in his office in Shaw House on Orchard Road. Photo by Leong Chan TeikASIAMEDIC's joint venture is launching its cord-blood banking business in a few months' time but people wonder how it will compete against an established player, Cordlife Group.

AsiaMedic's CEO, Dr Wong Weng Hong, gave some insights into this in an interview last week with NextInsight.

"Firstly, people will see us as a more scientifically-based company. We want to tell clients the science of cord-blood banking."

Even though Cordlife has established relationships with gynaecologists in Thomson Medical Centre and Mount Alvernia Hospital -- the two main private hospitals for deliveries -- the AsiaMedic JV will target gynaecologists who do deliveries in the two hospitals but who operate their clinics outside of the hospitals.

(Gynaecologists play an influential role in helping parents select a cord-blood bank.)

In addition, the JV named Cryoviva Singapore will seek to win over parents who do deliveries in other hospitals, especially public hospitals, said Dr Wong. 

AsiaMedic is entering the cord-blood banking business as a 25% partner with an option to raise its stake to 49% anytime.

Ravi-Jaipuria_ekantipur.comRavi Jaipuria, chairman of RJ Corp, the largest PepsiCo bottler in India. Photo: www.ekantipur.comIts partner, Cryoviva International, is 70%-owned by Mr Ravi Jaipuria, Chairman of India-based RJ Corp, a conglomerate with businesses in real estate, hospitality, food & beverage, healthcare and education.

The remaining 30% is held by Dr T Chandroo, Chairman of Modern Montessori International Group, a Singapore company which specialises in early childhood education in the Asia-Pacific region. 

Mr Jaipura is a well-known billionaire in India (see Forbes story) as is Cryobank India, so these factors suggest that Cryoviva Singapore will be able to connect quickly with the 500,000 or so Indian nationals who reside in Singapore, reckoned Dr Wong.

Dr-ChandrooDr T. Chandroo, a Singaporean and chairman of Modern Montessori International.They are a good potential pool of clients.

In addition Dr Chandroo, through his education business, also has a captive audience of high net-worth parents while AsiaMedic has its own existing clients to whom Cryoviva Singapore's services will be marketed.

Some clients are expected to come from the region, as Singapore is viewed as a politically and geographically stable country.

Cryoviva Singapore will have the expertise and experience of its Indian partner to count on in business development.

The latter has has set up cord blood banking JVs in India and Thailand. These have emerged as the No.2 and No.1 players in their respective markets within just a couple of years.

Dr Ashish Munjal, previously general manager of Cryobanks International India, has been appointed the general manager of Cryoviva Singapore to spearhead its business and operations.

Pricing, break-even level, capex

The start-up capex -- including automated processing equipment and storage tanks - is $1.5-2 million. 

The recurring fixed overhead costs -- including a couple of lab technicians and lab rental -- would come up to a few hundred thousand dollars a year.

Cryoviva Singapore plans to price its services at similar levels to Cordlife and the other service provider, StemCord (which draws clients chiefly from Gleneagles and Mount Elizabeth hospitals).

There are various payment plans with different upfront amounts and annual payments. 

The fees will be recognised over the 20 years that the cord blood samples are expected to be stored, translating into a few hundred dollars a year in revenue per client.

Part of the fee that Singaporean clients pay can be paid through their child's Child Development Account to which the government contributes alongside the parents.

What's the breakeven point for Cryoviva Singapore?

It's about 800 cord blood samples in the first year, after which the annual number for breakeven will be lower, reckoned Dr Wong.

"It's not difficult to achieve as there are 12,000 samples collected every year in Singapore and the figure is expected to rise as more people learn about the benefits of cord blood banking."

The critical mass is a few thousand clients beyond which the profitability of Cryoviva Singapore will rise very fast. 

For AsiaMedic's press release on the JV, click here. 

Recent story: CORDLIFE, BIOSENSORS : What analysts now say

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