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.

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.

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 it is challenging to expand this into international markets given that the underlying healthcare system plays a role as well. Speaking to our UK-based colleague, the notion is that the TAM wouldn’t enlarge 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.

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