Global Economics

For Virgin, Good Science Is Good Business


Richard Branson's new venture, Virgin Health, will bank your child's umbilical cord blood for use in case of illness, or to donate to others

The Virgin Group empire spans planes, trains, spaceships, and even comic books. But on Feb. 1, Virgin Group founder Richard Branson made one of his boldest moves yet with the creation of the Virgin Health Bank, which enables parents to bank the stem cells of their newborn child's umbilical cord. These primitive cells are capable of developing into any one of a number of different cell types and are currently being used to treat 75 rare blood and immune system disorders, including some forms of cancer. "There is huge potential to be gained from the collection and storage," Branson says.

The business is vintage Virgin. Branson supplies the Virgin brand while a London-based life sciences venture capital firm, Merlin Biosciences, supplied the bulk of the $20 million in financing. Profits are split equally but Branson has pledged that Virgin's share will be donated to support research in umbilical cord blood stem cells.

Umbilical cord blood banking is already big business in the U.S. In 2005, Congress allocated $77 million to fund a national cord blood stem cell bank network. In addition to these publicly funded banks—such as the one operated by the American Red Cross where parents donate their children's stem cells to others—in recent years a number of commercial players have gotten into the act. At these private banks, parents pay a fee, usually around $2,000, for the collection of the cells plus an annual storage charge of up to $200 to reserve their children's blood cells for personal use. Many view the service as a form of biological insurance for their family in the event of future disease.

Shortage of Healthy Cells

The chances of a child actually being able to use his or her own blood cells are still very rare. Scientists put the odds of successfully treating someone under the age of 20 with his own cord blood stem cells at just 1 in 5,000 because anyone with a genetic disorder will need healthy donated cells.

In the last 18 years, more than 7,000 patients worldwide have been treated with cord blood stem cells, according to Colin McGuckin, a professor of regenerative medicine at Newcastle University in Britain. The vast majority of these transplants have used cells donated from another person. And experts say there is a global shortage of publicly available umbilical cord blood stem cells.

Now Virgin Health claims it has the solution. It claims to be the world's first dual private and public umbilical cord blood banking service. Parents pay a total fee of between $2,956 and $3,152 for collection of the cells and 20-year storage. The sample will be split so 20% will be stored for the family's exclusive use and the remaining 80% deposited in a public bank available for free to anyone worldwide. "I'm absolutely passionate about the possibilities of stem cells, which is why I'd like to make sure the future benefits are open to everyone," Branson says.

Evolving Technology

Virgin Health's open approach is welcomed by researchers and public health experts. "The combination of private and public banking is a great innovation," says Gail Rogers Chrysler, the former national director of operations for the American Red Cross's Cord Blood Program.

Some scientists are still cautious. "It is possible that other stem cell types, such as embryonic stem cells, may provide better therapies in the future," says Professor Robin Lovell-Badge, head of developmental genetics at the MRC National Institute for Medical Research. "So, while this venture is certainly worthwhile, the bank may not necessarily contain useful 'deposits' in the future." On its Web site, Virgin has made those points explicitly clear to potential clients, noting that there is only a very small chance they will be able to use their own privately banked cells.

One of the attractions of cord blood stem cells is that they do not pose the same ethical issues as embryonic stem cells. Embryonic stem cells are thought to offer greater potential in the treatment of disease as they are able to differentiate into any type of tissues in the body. But they are obtained from human embryos, making them controversial. In the U.S., the Bush Administration has restricted federal funding for embryonic stem cell research since 2001, although privately funded scientists face no such restrictions.

Good Science

Still, recent research on cord blood stem cells is yielding some interesting results. On Jan. 23, a team of South Korean scientists announced they had grown pancreatic beta cells, which can help treat diabetes, from stem cells taken from the umbilical cord blood of newborn babies. The team, headed by Kang Kyung-sun of Seoul National University, claimed they had turned the cord blood cells into cells that secrete insulin.

And late last October, McGuckin's team at Newcastle University reported they had managed to grow coin-sized pieces of liver tissue from cord blood stem cells. "Advances in cord blood therapy around the world are amazing, with research teams turning the theoretical into reality," McGuckin says. "Cord blood therapies will become routine." Virgin Health is betting he's right.

Capell is a senior writer in BusinessWeek's London bureau .

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