I saw a comment about competition in18 months and have to disagree. I apologize in advance if this has been discussed. I had planned to write an article for Seeking Alpha on CYRX but had disagreements with the editors, so this is an edited portion of it.
The global regenerative therapy market was $18.9 billion in 2016, and according to Cryoport’s Q2 investor presentation, it is expected to reach $53.7B by 2021. Pharmaceutical Commerce’s Sourcebook estimates Pharma cold-chain logistics (refrigerated and frozen) will total $13.4 billion this year, and it estimates by 2021, it will be worth $16.6 billion.
Since Cryoport is expected to have revenues around $12 million this year, and the market is $13.4 billion, I think it would be safe to say that significant competition already exists. Some of the largest competitors to provide cold/cryogenic logistics and biologic clinical trial services are World Courier Group, (acquired by AmerisourceBergen in 2012 for $500 million) Fisher BioServices (a division of Thermo Fisher Scientific) and Marken (acquired by UPS in 2016). Despite the vast resources and capabilities of these competitors, all of the leading-edge, top names in the regenerative therapy market; Novartis, Kite, Bluebirdbio, Juno have chosen to partner with Cryoport. As of last year, they were supporting 23 of the 28 CAR-T clinical programs, and as of last quarter were supporting 172 of 899 clinical trials (18%) in regenerative therapy. This number would actually be higher, but a number of trials are kept in-house by the companies running the trials at a single site, so shipping is not required.
It has taken Cryoport years to build its cryologistics product offerings, establish its name, and build relationships with these companies, and prove their capabilities, reliability, and trustworthiness over time. Cryoport claims to have more advanced, proprietary, and non-hazardous products than their competition who are using older technology, hazardous dry ice and liquid nitrogen logistic solutions. That all of these blue chip clients chose Cryoport over any other company clearly demonstrates that they prefer the personalized products and services that Cryoport offers, and it’s a HUGE competitive advantage. The cryogenic logistics service that Cryoport provides are a critical and integral part of the regenerative therapy process and they have literally become imbedded with these companies, and therefore, the growth that is to come in the industry. This presents a very high barrier to entry since these companies are very unlikely to turn over such a critical part of the process to an upstart or even another established company, because it would also require new qualifications and extensive bridging studies. In addition, the validation from being selected to handle the logistics for the first 2 commercial CAR-T therapies, really raised Cryoport’s profile, and it sends a powerful marketing message, which will attract new business and put further distance between Cryoport and the competition.
Although I have discussed this already, I think Cryoport will also be able to compete very effectively in the rapidly growing cold-chain logistics market. It currently brings in little revenue to Cryoport, but is an area that they are now targeting because it represents a HUGE opportunity for future growth. It’s estimated that a third of all newly approved drugs are biologics that require cold-chain transportation and storage, which are rapidly becoming more complicated to handle. Last month, Cryoport revealed the newly developed C3 shipper for this 2 - 8°C temperature range, expanding its product offering to attack this huge and growing area of the market. So far, three of the largest and most successful pharmaceutical companies in in the world have decided to outsource some or all of their in-house cold-chain logistics functions. Not one or two, but ALL three of the BP companies chose Cryoport over all the other competitors, once again proving the preference for Cryoport’s offerings. In July, Cryoport hired a highly successful sales and marketing executive, who has previous relationships with Pfizer, Merck, and many other Big Pharma companies. This hire was no coincidence, and I fully expect more announcements of big name clients signing with Cryoport.
