On January 8 and 9, 2016, Nanjing Cenbest, subordinated to Sanpower Group, issued two announcements: its completed acquisition of all assets and businesses in China of the China Cord Blood Corporation (CCBC, referred to as CO Corporation) and the acquisition of a 76% stake in Shandong Qilu Stem Cell Engineering Co. Ltd. (namely, Shandong Cord Blood Bank). Through these two acquisitions valued at about RMB 11 billion, Nanjing Cenbest is set to become the world’s largest cord blood corporation and take its position as the “largest provider in the Chinese health industry” with the two-engine strategy of “department store retail + medical senior care.” Meanwhile, this also unfolds the plans of the “Broad Health” of Sanpower Group, a substantial shareholder of Cenbest, forming the three-pillar pattern of “senior care services, biotherapeutics and hospital operations.”

Currently, there are only seven blood banks with provincial-level cord blood bank licences which are issued by the National Health and Family Planning Commission throughout the country. Following the completion of the transaction, Nanjing Cenbest has successfully obtained four cord blood banks with said license, in Beijing, Guangdong, Zhejiang and Shandong, respectively. As of December 31, 2015, these four cord blood banks have reserved about 700,000 cord blood samples at home. And if adding up Cordlife reserves across the seven countries around where CO Corporation has made strategic investments, there are about one million cord blood samples in its associated reserves, which considerably exceed the 500,000 samples in the original largest cord blood bank in the world, namely, the American Cord Blood Registry (CBR). This means that Nanjing Cenbest has emerged as the world’s largest cord blood corporation. Until recently, the National Health and Family Planning Commission issued a notice that it would not issue any more cord blood bank licences before 2020. It is possible to say that Nanjing Cenbest has obtained a decisive opportunity in the cord blood field and relevant business areas.

Industry figures noted that cord blood is rich in hematopoietic stem cells that can reconstruct blood and the immune system. In other words, the storage of cord blood is, in essence, the storage of hematopoietic stem cells. The entire industrial chain around hematopoietic stem cells from cord blood has a relatively wide range of business applications, including the collection and storage of cord blood, hematopoietic stem cell treatment, medical cosmetology, anti-aging technology, genetic testing, precision medicine and other biomedical fields. After being acquired by Nanjing Cenbest, CO Corporation will delist from the NYSE, gradually converting from foreign investment into domestic investment. Thus, it won’t be restricted by access policies, without excluding the possibility of extending its business in terms of genetic testing and precision medicine, which means broader market prospects. Meanwhile, CO Corporation will coordinate with the Chinese biotherapeutic field and introduce more advanced technologies and innovation management to provide new ideas and new energy for economic growth, which conforms to the national trend of “supply-side reform.”

Associated with the successful restructuring of Xuzhou Third People’s Hospital by its substantial shareholder Sanpower Group, the cooperative construction of Jiangsu Province Hospital Xuzhou Branch with Jiangsu Province Hospital and the proactive plan for tumour, obstetrics & gynaecology and other specialised hospitals, it may have a synergic effect on the future of cord blood storage and the extended biotherapeutics businesses of Nanjing Cenbest.

Besides the professional biotherapeutics and hospital operations, there is another “senior target” under the “Broad Health” industry of Sanpower Group—homecare and telemedicine services. In recent years, Sanpower Group has built an ecological chain of “Internet + Broad Senior Care” by a series of M&A activities at home and abroad, and its health and senior-care sector includes the Israeli professional health and senior-care service provider Natali; the largest homecare service company in China An Kang Tong and the professional mobile health management platform More. At present, Natali (China) has been established, which will introduce advanced telemedicine senior care technology from Natali. What’s more, Sanpower Group will extend its industry chain of senior care services in the future.

Sanpower Group, with remarkable achievements in its M&A activities in recent years, has rich experience in international synergy between industries. It is not hard to foresee that the world’s largest cord blood bank may generate significant synergy with Sanpower Group’s healthcare and senior care resources, and the three parts in the industry layout of Sanpower Group’s “Broad Health,” namely, senior care services, biotherapeutics and hospital operations, will also generate scaled effects. Liu Zhangming, analyst of Essence Securities, believes, “Nanjing Cenbest will become the sole homecare service company among all Chinese listed companies, which is distinctly different from the business models of other corporations engaging in the senior care industry and has tremendous space for growth in the future. As for the cord blood bank business, their models are both mature and advanced, and its scale will be the largest all over the world, which also has great room for development. Based on the above analyses, the market value of Nanjing Cenbest will be more than RMB 150 billion.”