Global Cord Blood Corporation provides cord blood banking services in China. The company provides cord blood processing and storage services for expectant parents interested in capturing the opportunities made available by evolving medical treatments and technologies, such as cord blood transplants.
The company also preserves cord blood units donated by the public, provide matching services on such donated units and delivers matching units to patients in need of transplants. The company’s Beiji...
Global Cord Blood Corporation provides cord blood banking services in China. The company provides cord blood processing and storage services for expectant parents interested in capturing the opportunities made available by evolving medical treatments and technologies, such as cord blood transplants.
The company also preserves cord blood units donated by the public, provide matching services on such donated units and delivers matching units to patients in need of transplants. The company’s Beijing-based subsidiary, Beijing Jiachenhong Biological Technologies Co., Ltd. (Jiachenhong), was the operator of the first licensed cord blood bank in China.
The company’s operations benefit from multiple exclusive cord blood banking licenses issued in China, including its licenses for Beijing, Guangdong and Zhejiang. The company also has a 24.0% equity interest in Shandong Province Qilu Stem Cells Engineering Co., Ltd. (Qilu) (its controlling shareholder owns the remaining 76.0% equity interest), the operator of the exclusive licensed cord blood bank in Shandong province.
The company’s cord blood banking network is the largest in China. The company has developed a highly effective sales and marketing platform that has enabled it to consistently grow its cord blood subscriber base in the markets it serves. The company’s 766-person sales team has direct access to expectant parents through collaboration with 434 hospitals in Beijing, Guangdong and Zhejiang. The company also cooperates with some local government family planning agencies and medical institutions and utilizes a variety of marketing programs, including media advertising, seminars and pre-natal classes, to further educate expectant parents on the benefits of cord blood banking.
The company generates substantially all of its revenues from subscription fees. Effective from April 1, 2021, the company provides further storage service with a contact period for 10 or 20 years to subscribers who completed the first 18-year contract period. For the year ended March 31, 2022, storage fee revenues represented 43.3% of the company’s total revenues.
Cord Blood Banking Services
The company’s cord blood banking operations primarily consist of its subscription services, which involve the preservation of cord blood for the new born as a precautionary healthcare measure for the benefit of the children and other family members.
The company has developed hospital networks by entering into collaborative agreements with hospitals located in Beijing, Guangdong and Zhejiang, where it operates licensed cord blood banks. The company’s collaborating hospitals collect the cord blood of the newborns of its subscribers and it reimburses them handling fees for the collection services performed.
The company’s subscribers are required to enter into a subscription contract with it prior to the birth of their children. The contract provides for the collection of cord blood from their newborns at one of the company’s collaborating hospitals and preservation of the cord blood for an initial storage period of up to 18 years.
The company offers recurring subscribers, medical practitioners, including doctors, nurses or other medical professionals, its services at a discount from time to time. The company offers one-stop-shop services for its subscribers. The cord blood collected is then transported to the company’s facilities for testing, processing and storage. The company acts as the custodian of the cord blood stored at its facilities during the term of the subscription contract.
The company’s remaining revenues are derived from matching services it provides and the matching cord blood unit it delivers to the hospitals for patients who are in need of transplants. The company accepts and preserves cord blood units donated by the general public and have created a database containing information of the human leukocyte antigen profiles and characteristics of the donors on an anonymous basis. The company requires its donors to deliver their newborns at one of its collaborating hospitals. Another source of donations in the future may be the cord blood of the newborns of its former subscribers who cease subscription for the company’s services at the end of the contract period and the cord blood units stored by its subscribers who fail to pay. The company requires its employees to fully inform all prospective subscribers of its policy of releasing cord blood units to its cord blood inventory in such circumstances, and its subscribers are required to give their consent to this policy when subscribing for its storage services. In the opinion of its PRC counsel, Commerce & Finance Law Offices, a consent of this nature is valid and enforceable under PRC law. Based on information available to the company, treating cord blood units abandoned by former subscribers and releasing such units to cord blood bank inventory available to patients in need of transplants is a common practice followed by cord blood banking operators in China.
The company searches, upon request, for possible matches among the donated cord blood units stored in its cord blood banks and provides one or more matching units to the hospitals for patients who are in need of transplant. The company also entered into a memorandum of understanding regarding the collaboration with Cordlife Singapore in which Cordlife Singapore, on behalf of its patients who are in need of cord blood stem cell therapy, can facilitate the process by providing relevant information to it, and it will perform searches for possible matching units among its donated cord blood samples in the People’s Republic of China (PRC). For patients who reside in the PRC, the company may seek Cordlife Singapore’s assistance or contacts to source possible cord blood unit matches in the relevant public cord blood registries in the regions, such as Hong Kong, Singapore, Malaysia, India, Indonesia and the Philippines. Further, Jiachenhong is affiliated with AsiaCORD, an international organization for cord blood banking operators in Asia and also works with other cord blood banks to promote the usage of donated cord blood units.
Preservation of Cord Blood
Preservation of cord blood consists of the following major steps:
Collection: The company’s subscribers and donors must give birth to their newborns at one of its collaborating hospitals in order to use its services. The company communicates with the hospital to arrange for a certified medical practitioner to work on the case. When its subscribers or donors give birth to the newborn, the practitioner clamps the newborn’s umbilical cord at birth and drains the blood from the cord into specialized container. Although the company is not responsible for the collection, it provides a kit that contains the medical apparatus necessary for the collection procedure.
Transportation: After collection, the cord blood is transferred to its cord blood bank within 24 hours in specialized containers where temperature changes can be controlled. If necessary, the cord blood retrieved is stored in a designated refrigeration unit at the maternity ward in the hospital prior to the company’s arrival. The company has a team of transportation specialists responsible for the delivery of cord blood units from its collaborating hospitals to its facilities in special containers to ensure the viability of the hematopoietic stem cells during transit. Each cord blood unit is assigned a barcode so that it can be tracked easily throughout processing, storage and restoration.
Processing: Cord blood undergoes processing and separation procedures which ultimately extract the hematopoietic stem cells for subsequent storage. At this stage, cell counts are conducted twice to calculate the cell recovery rate and the amount of nucleated cell, so as to ensure the quality requirements are met.
Testing: The company conducts several tests on the cord blood unit to retrieve information that will be essential to its future use in a transplant. Such information includes volume of cord blood collected, number and viability of nucleated cells, sterility, blood type and density of hematopoietic stem cells, commonly known as cell count. The company also tests the maternal blood sample for infectious diseases, viruses and bacteria.
Storage: After processing and testing, the company freezes the cord blood unit in a controlled manner and stores the unit using liquid nitrogen. The liquid-nitrogen storage freezer in which the hematopoietic stem cells are stored after their initial processing is equipped with a thermostatic control to ensure storage at minus 196 degrees Celsius. The entire processing and storage of hematopoietic stem cells at the company’s cord blood bank is documented and closely monitored to ensure the integrity of all cord blood units and the veracity of all data.
Sales and Marketing
The company’s hospital networks offer it the platforms where a significant portion of its sales and marketing activities are undertaken. The company has established collaborative relationships with 434 hospitals in Beijing, Guangdong and Zhejiang as of March 31, 2022.
The company’s sales and marketing force gives thought to the input and comments they receive from prospective subscribers in promoting its services. The company’s sales and marketing activities consist primarily of the following:
Activities Targeting Prospective Parents: The company maintains its hospital networks, which consist of 434 hospitals in Beijing, Guangdong and Zhejiang. The company assigns consultants to each hospital with which it collaborates, and the consultants oversees its sales initiatives and directly interacts with the prospective subscribers in that hospital. The arrangement enables the company to interact directly with expectant parents, distribute promotional leaflets and marketing materials to expectant parents and their family members, and set up information booths at designated areas where members of its sales team can interact with potential subscribers and answer questions. The company also works with various institutions or hospitals to organize pre-natal classes and other events for expectant parents.
Education of the Medical Community: To increase public awareness of the benefits associated with cord blood banking services, the company educates obstetricians, childbirth educators, and hospitals on the benefits of cord blood preservation and offers educational seminars at its premises.
Advertising Efforts: The company attempts to inform and educate its potential subscribers about these benefits through distributing such information via government agencies whenever possible. To broaden the reach of its services to the company’s target population, it advertises on billboards at hospitals and community centers, publishes articles in newspapers, social media and publications, and sponsor government campaigns concerning personal healthcare awareness, such as conferences concerning the medical application of cord blood technology.
Intellectual Property
The company has completed the trademark registration process and has been licensed by the Trademark Office of the State Administration for Industry and Commerce of the People’s Republic of China (which had been reorganized as the Trademark Office of National Intellectual Property Administration since March 2018) to use its trademarks. As of the date of issuance of this report, the company had 86 registered trademarks.
Research and Development
The company’s research and development expense incurred during the year ended March 31, 2022 amounted to RMB22.3 million (US$3.5 million).
Investment in Qilu
The company invested in a 19.9% equity interest in Qilu, the exclusive cord blood banking operator in Shandong province.
Investment in Zhejiang Lukou Biotechnology Co., Ltd. (Lukou)
Lukou is 90% owned by the company and is the exclusive cord blood banking operator in Zhejiang province to provide cord blood stem cells collection and storage services for expectant parents as well as preserving cord blood units donated by the public.
Strategy
The key elements of the company’s strategy are to further penetrate existing markets; acquire the right to operate additional cord blood banks and invest in other cord blood banks in China; expand overseas presence; and expand service portfolio.
Regulation
The company operates its business in China under a legal regime consisting of the State Council, which is the highest authority of the executive branch of the PRC central government, and several ministries and agencies under its authority, including the National Health Commission of the People’s Republic of China (NHC); the State Administration for Market Regulation (the SAMR); the State Administration of Foreign Exchange of the PRC (SAFE); the Ministry of Commerce (MOC); and the National Development and Reform Commission (NDRC).
History
The company was formerly known as China Cord Blood Corporation and changed its name to Global Cord Blood Corporation in 2018.
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