Taipei Times: Taiwan's fledgling cord blood storage sector started in the late 1990s and aroused people's interest in the stem-cell-rich cord blood -- often considered waste in the past -- for its possible medical applications, such as the reproduction of internal organs and nerve cells, or a variety of currently incurable diseases including paralysis, apoplexy and Parkinson's disease. How do you see the market outlook in the future?
Chang Shiu-kang (章修綱): Taiwan's cord blood storage sector began in 1997 when the state-run Chinese Blood Services Foundation (中華血液基金會) was established to store donated cord blood for public use. Private cord blood banks started to emerge around 1999, about four to five years behind their international counterparts, to promote the concept of storage for personal use.
After five to six-year development, Taiwan's cord blood storage market is estimated at around NT$700 million to NT$800 million shared by eight companies, in which HealthBanks Biotech Co (生寶臍帶血), established in 2001, is the largest player, with nearly 60 percent market share. To my knowledge, this market is expected to grow to NT$1.5 billion in the next three years.
TT: According to the Ministry of Interior's statistics, the nation's crude birthrate has been trending down annually to 9.56 last year from 15.18 in 1996. Will the declining birthrate pose a problem for the industry?
Chang: Currently, only 5 percent of around 200,000 newborn babies store cord blood a year. The decreasing natality means a decrease in the number of newborn babies and thus less sources of cord blood.
And, yes, the problem could lead to limitation to market growth.
The upper limit could be at just NT$1.5 billion, or higher at NT$3 billion, depending on another factor -- the advance of technology.
The case of the Korean woman who regained her ability to walk after long-term paralysis and a Brazilian patient who recovered from a stroke following cord blood stem cell treatments are inspiring developments.
The increase in new stem cell treatments and applications spurred by the advancing technology can in turn boost the popularity of the cord blood storage market.
TT: New technology seems to be a solution which requires both patience and time. However, facing the pressures of the moment brought on by declining natality and increasing competitors, don't you feel it's difficult to survive in this industry?
Chang: It is indeed a tough and relatively small market. It is no easy job to share the crowded market with so many rivals. But due to the specialization of the industry, most of the customers would choose to store cord blood in the top two companies.
In other words, since cord blood is not stored for immediate use but for 20, 30 or even 70 years from now, what the consumers would be concerned about is the sustainability of the storage service companies.
Therefore, they do not choose small players.
Another key issue in the industry is that we found that "big" only grows "bigger" in the future.
Actually, it is a thorny market for latecomers as, after strong competition, the industry is expected to be dominated by the top two players, which have already secured over 80 percent of the market, in the next two to three years.
TT: Do you think that merger and acquisition (M&A) will become a possible way to help push forward a consolidation in the industry, like the financial and telecom industries?
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