In the first half of fiscal 2011 CryoPort derived more than half its sales from one client. The company no longer needs cryogenic shipping for one of its products, making CryoPort reliant on increasing business with its other, currently smaller, clients. This is a gradual process.
“The life sciences industry is heavily regulated and prospective customers generally require a lengthy evaluation and validation process prior to the adoption or our solution”, Larry Stambaugh, CEO of CryoPort, said.
ImClone Systems and ACM Global Central Laboratory recently became clients after completing a review and qualification process lasting months. Other companies have also begun outsourcing to CryoPort and its portfolio of active clients grew year-on-year.
US-based CryoPort also had success overseas. Foreign net revenues, primarily from Europe, Japan and India, grew by more than 50 per cent year-on-year. In the second quarter ex-US sales accounted for more than half of revenues.
Offsetting the loss
However, the gains failed to offset the loss of business from CryoPort’s biggest customer. A year ago the client accounted for close to half of net sales – in the latest results this tumbled to three per cent.
Fixed manufacturing costs and capacity underutilisation meant the cost of sales exceeded revenues. Hiring ten sales and marketing staff to ramp up promotion of the CryoPort Express System added to costs in the second quarter, but the company thinks raising its profile will help in the long-term.
Stambaugh said: “We have seen the deep frozen shipping market in healthcare continue to grow due to the globalisation of clinical trials and an increase in development of biological drugs. In addition, the need to upgrade shipping and logistics standards has become an important industry topic.”