Tick-tock: Cordlife’s fate on the line

AS THE clock ticks down for Cordlife Group, Singapore’s pioneer and Asia’s largest private cord blood banking provider, startling events of late have imbued little hope that things could be looking up for the controversy-stricken company.

A six-month suspension imposed by the Ministry of Health (MOH) on Cordlife’s Singapore operations to get its act together is fast coming to a close in mid-June. At stake is the fate of Cordlife’s business in Singapore, long the group’s jewel in the crown that accounts for over 40 per cent of total revenue.

How quickly the tables have turned – the Singapore business has now become a thorn in its side, while its operations in Hong Kong, Indonesia, Malaysia, the Philippines and India, where it is a leading player, continue to thrive and expand.

Effective mid-December last year, the suspension – which stopped Cordlife from collecting, testing, processing and storing new cord blood and human tissues in Singapore – has already dragged the company’s net profit for the year ended December 2023 down by 27 per cent to S$3.6 million.

MOH’s move followed several audits, which detected temperature irregularities in Cordlife’s cryogenic tanks in Singapore, rendering some 7,500 cord blood units unlikely to be suitable for stem cell transplant purposes.

The fallout has shattered the stock. From S$0.455 last November just prior to the suspension news, the stock has plunged to S$0.148, losing nearly 70 per cent of its market value to S$38 million presently.

Although the event dealt a major blow to the firm’s credibility – one that struck at the very heart of the business’ raison d’etre – the bewildering cascade of subsequent events has been nothing short of staggering.

From a surprise shareholder spat and the arrests of key board directors by the Commercial Affairs Department for breaching disclosure obligations, to a court-ordered abandoned private share placement and the looming potential for legal action by unhappy parents – arguably the least surprising of all – the embattled firm has had no respite.

Disconcertingly, the boardroom and shareholder tussle at Cordlife, which culminated in a board shake-up at last week’s shareholder meeting, has posed serious distractions from the key task at hand – rectifying the gaps in its Singapore operations to comply with MOH regulations.

While Cordlife appears to have taken corrective steps to strengthen its processes, there are signs that MOH’s patience may be running thin. More than a week ago, the regulator issued a notice to Cordlife, describing its circumstances (ongoing probe, current suspension and efforts to rectify the lapses) as “unique”.

It further emphasised the need for the board to provide oversight and direction to local management and lab teams, respond promptly to MOH queries, ensure operational stability and manage a smooth transition of board duties. A relevant factor, given the company’s present circumstances, would be whether the members of its board will be present in Singapore, it said. This could prove tricky, considering the new make-up of Cordlife’s board.

It remains to be seen if Cordlife’s efforts will meet MOH’s requirements to lift the suspension, or if it could be extended or worse, result in licence revocation. As Jun 15 looms, it is unclear whether this is a rumbling volcano or the lifting of dark clouds for the Singapore company.