It wasn’t a subject Deepak Ghaisas understood at all. But he was trying, even before he fully exited i-flex, a financial product company that he had incubated at Citi Group, which was acquired by Oracle in 2005. When Ghaisas did exit, in 2008, he was convinced he wanted to do something “different at age 50”. A year later, that something turned out to be stem cells. As someone who would attend seminars and text his biologist wife to understand the difference between ‘in vitro’ (in a lab) ‘in vivo’ (in an organism), Ghaisas’ foray into stem cells, a class of cells that can repair organs and promise to cure some diseases, was rather unusual.
In late 2010, Stemade Biotech, Ghaisas’ new venture, announced that its dental stem cells banks were operational across a few cities in India. The nature of his bank took everyone by surprise. Around that time, nearly a dozen stem cell banks were being set up in India but all stored umbilical cord blood, a source of these cells. Ghaisas had gone to France, invested in an R&D outfit, Institut Clinident Biopharma, and brought the technology to Stemade in India. It would harvest dental pulp, from which stem cells could be extracted. Plans were afoot, in plenty: To start R&D, preclinical studies with hospitals, and commercialise a few therapies.
Now, six years later, Stemade claims to have 5,000 units stored but almost everything else is elusive. The company grossed Rs 3.4 crore in revenue for the year ending March 31, 2015, and booked a loss of Rs 3 crore. Most of the other stem cell banks, even though an established business in other parts of the world, aren’t in good shape either. LifeCell International, India’s largest cord blood bank, has seen a steady decline in profitability in the last five years, it recorded a loss of Rs 55 crore on revenues of Rs 141 crore in FY15.
Even if in fits and starts, these banks have been adding to their collection of cord blood units and dental pulp but they are at best non-performing assets. While Ghaisas would like to assign a good part of the mounting losses to the government’s withdrawal of service tax exemption to such banks since February 2013; the reality is a little more complex.
Is being ‘private’ the roadblock?
Storing umbilical cord blood in private banks is like ‘biological insurance’ against illnesses. That’s been a popular catchline for these banks. Parents who bank their children’s cord blood can use it for the family’s personal use. But the usage of these cells is so low that the need for this service is under question.
To set this in context, LifeCell, which its vice chairman Mayur Abhaya claims, has 200,000 units stored, is on its way to becoming one of the largest banks in the world.
