Cryo-Save looks to India & France for growth
Sep 15, 2009
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Adult stem cell storage bank operator Cryo-Save used its dominant market position in Europe to push through price increases in the first half of 2009, resulting in an improvement in underlying profit before tax.
Reported profit before tax fell to €1.19m from €1.82m in the first half of 2008, but profits were hit by a one time €0.9m write down relating to its 35% owned associate company Cryo-Save Arabia.
Revenue rose 52% to €18.6m from €12.2m, reflecting price increases, contributions from recent acquisitions and an increase in demand for stem cell storage. The second quarter saw a record number of storage samples at 7,000, up from 6,600 samples in the second half of 2008.
'We saw good growth in the number of samples stored, which is a good indicator of underlying performance,' Arnous van Tulder, Cryo-Save's chief financial officer told Sharecast.
Three umbilical cord blood samples were released for medical treatment during the period and van Tulder expects the release rate to increase as the children whose stem cell samples were captured at birth grow older and some develop medical conditions that can be combated by use of stem cell therapies; currently, stem cell therapy is common practice in treating 85 diseases.
'The release of more stem cell samples will spread the word about the advantages of Cryo-Save's services. These are factors that will feature in our organic growth,' van Tulder said.
The company's current priority is driving organic growth in India and France. The Indian operation is expected to break even on a monthly basis by the end of the year while sales activity has only just started in France, after the company went to a lot of trouble and expense to convince the French authorities that a private company should be allowed to operate alongside publicly owned stem cell laboratories.
'France has the highest birth rate in Europe, so it is an important growth market for us. There is scope for growth in all of Europe, as the percentage of births where the cord sample is stored is still well behind the rate in the US,' van Tulder postulated, noting in passing that acceptance of the practice is much wider in southern Europe than in northern Europe.
'In southern Europe they are much more used to paying for their healthcare, so when they learn that it will cost money to store a sample they see nothing unusual in this. In northern European countries the response is more likely to be: why is this not covered by my insurance? We work with six out of the seven major health insurers in Spain and we are working with health insurers elsewhere in Europe to make our service available through them,' van Tulder said.
Net cash remained stable at €4.5m, despite a substantial investment programme. The company intends to continue focusing on inward investment rather than chasing acquisition opportunities.
'Each week we are approached by a potential partner or a company looking to sell its business, but an acquisition is not top of our list of priorities,' van Tulder divulged.
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