China Cord Blood announces formation of Zhejiang Lukou Biotechnology

Feb 22 2011

China Cord Blood Corporation (NYSE: CO) ("CCBC" or "the Company"), the first and largest cord blood banking operator in China, today announced the formation of Zhejiang Lukou Biotechnology Co., Ltd. ("Zhejiang Lukou"), an indirect non-wholly owned subsidiary with the Zhejiang Provincial Blood Center, pursuant to the Company's framework agreement announced in September 2010.  Zhejiang Lukou, which is 90% owned by CCBC, will operate, on an exclusive basis, its cord blood banking services in the Zhejiang province.  

Under China's "One License per Region" policy, only one cord blood bank license is granted per province or municipality.  The Zhejiang cord blood banking license would be the seventh license granted in China and represents the first license issued since 2008.  Operating the Zhejiang subsidiary will broaden CCBC's coverage into the new and previously untapped market of the Zhejiang province.  

Ms. Ting Zheng, Chairperson and CEO of China Cord Blood Corporation, stated, "We continue to make solid progress on the commercialization of our Zhejiang cord blood banking operation, and today's announcement is an important step toward commercializing our services in this previously untapped region.  We are excited about the opening of Zhejiang Lukou, and from there, the next step in developing the Zhejiang market is infrastructure construction and building up our team, followed by a series of pre-marketing initiatives and early-stage market education activities.  By replicating our successes in Beijing and Guangdong, we are confident that the Zhejiang operation will commence in a timely and efficient manner."

Zhejiang is one of the more affluent regions in China, after Shanghai, Beijing and Guangdong, with a birthrate of over 520,000 newborns per annum, according to the National Bureau of Statistics of China.  With the addition of Zhejiang province, CCBC's addressable market size will increase by more than 40% from approximately 1.2 million newborns per year to more than 1.8 million newborns per year.

Ms. Zheng concluded, "We have successfully positioned ourselves as the largest cord blood banking service provider in China and have captured several key affluent regions, namely, Beijing, Guangdong, Zhejiang and through our investment into the exclusive operator, to include Shandong.  With China's one-child policy, rising household incomes and increasing public awareness of cord blood banking benefits, we are very excited about CCBC's future prospects.  Aside from continuing our solid operational performance and ongoing nationwide consolidation strategy, we are also closely monitoring developments in the Asia Pacific region and will proactively pursue any emerging opportunities.  We are confident that our shareholders will be greatly rewarded as we develop our leading presence in the global cord blood banking industry."