- Organ transportation has become more complex and expensive as organs now travel nationally rather than just locally. As a result, they are increasingly reliant on commercial and chartered air which can cost hundreds to $20k+ per flight.
- To make sense for a venture-scale outcome, there will need to value captures in areas beyond transportation.
- Adjacencies of interest that could support a venture-scale outcome include visibility/transparency and related optimization as part of existing logistics capabilities, drone delivery, and ambulatory transport.
Organ logistics recently came across our desks and caught our eye as a unique topic with perhaps some potential - they’re one of the most sensitive materials to be transported and the technology systems which facilitates this movement are lacking. The process is run by Organ Procurement Organizations (OPOs): monopolistic-like NGOs who facilitate the authorization, testing, recovery, and delivery of organs to one of the ~250 US-based transplant hospitals. These OPOs often express frustration with the barriers faced to run this process efficiently due to analog processes and inherent intransparencies. With this in mind, we set out to uncover whether there could be a venture-backable opportunity in this space.
Organ transportation background
The labyrinth of ground and air carriers to navigate, capricious weather, unpredictable scheduling, and more lead to challenges for effective transportation of these life saving goods. As the number of transplants grows, driven in part by rising incidences of chronic diseases, so too have the complexities of this process as some organs must travel much greater distances to reach the sickest patients.
All organs regardless of type or transportation method are escorted from the hospital of origin by a certified courier and/or tracked with a monitoring device. Most of these organs (namely kidneys which make up >50% of annual transplants) fly via commercial air. As they must be transported via cargo rather than in the cabin in a post-9/11 world, they face the same challenges of flight delays, missed connections, inability to get short-notice tickets, and risk of lost baggage as we do as passengers.
Others, particularly those with greater time sensitivities such as hearts and lungs, are transported via charter aircraft from operators of private fleets such as Aircharter or CSI Aviation. Sometimes it makes more sense for the organ recipient to come to the hospital where the organ is instead, rather than bring the organ to them. These charters are also available to transport the patient in such instances. Short flights can cost upwards of $10K, with longer flights exceeding $20K - cost of flying private! The pilots and aircraft in this segment of the market are already in short supply and in growing demand from wealthy individuals, further driving up the cost of service.
What does this mean for seed investors?
Alone, we’re challenged to see organ transportation support venture scale outcomes. The market size is a significant factor as only ~40K transplants occur annually in the US, with ~100K individuals on the waiting list. For organs alone, assuming 40K transplants per year with the maximum transportation cost of $20K (for the most sensitive organs traveling the most expensive method), and an assumed brokerage fee of 20%, the TAM is a generous $160M.
Note that is is challenging the expand this into international markets given the underlying healthcare system plays a role in this is as well. Speaking to our UK-based colleague, the notion is that the TAM wouldn’t expand materially with such an expansion. However, we do note that it might be interesting in emerging markets but the operations and networks themselves would be wholly different and potentially, lacking.
I’d be remiss not mentioning Ozempic and the host of other weight loss drugs in this commentary. Research suggests that as chronic diseases are better managed with these medical advancements, the need for transplants may decrease. While perhaps futuristic sounding, bioengineering and xenotransplantation could also step in as meaningful contributors to transplants in the long-term.
That said, we do believe that this end-market is compelling as a bolt-on or extension of a core capability.
- Transparency and Optimization. Our research indicates that these services and the optimization of them do in fact present a compelling opportunity but rather as an adjacency to supply chain transparency tracking or an existing logistics capability, not necessarily as a venture-scale play in and of themselves. If you consider that the current workflow is email, phone calls, and spreadsheets - this creates a lot of siloed information, fragmented workflows, double data-entry, etc. It would necessitate getting the OPOs on and then using their leverage to get adjacent stakeholders working in the same system. Much of this might be leveraging integration prowess into existing workflows as well as LLMs that can streamline data extraction, cleanup, and entry.
- Drone Delivery. Drones are increasingly deployed to delivery food, beverage, and small items such as pharmaceuticals. They could theoretically also transport organs, substantially reducing the time and cost associated with delivery via commercial or private air. Again, while not a segment a drone company should center as its focus due to its small size, it could be an interesting high-margin add-on of core delivery capabilities.
- Ambulatory and Emergency Transport. The question of identifying potential adjacencies to expand the addressable market led us to discover that ambulatory and emergency transport services, although highly capable in the US and similarly developed nations, lack the necessary infrastructure and resources in countries like India, Pakistan, and others. Consequently, only 10-50% of road accident victims in these regions manage to reach the hospital, compared to 75% in the US. While policy improvements can certainly contribute to addressing this issue, there may also be technological or service opportunities to explore.
- Full-stack Models. This might be an interesting, high margin, bolt-on to existing brokerage models especially those with a critical or time sensitive cargo capability. The key will be to have visibility from end to end across location, temperature, and other environmental factors to ensure the organs are handled properly. Again, similar to prior statements, a brokerage cannot solely focus on organ transportation in order to have a venture justifiable TAM.
“All in all, our [current] approach to transportation reduces access to transplantable organs.”
Dr. Joseph R. Scalea MD, Transplant Surgeon, University of Maryland Medical System
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