The ABC News report yesterday on the International Breast Milk Project actually didn't lead off with their donations of breast milk to HIV/AIDS orphans in Africa. Instead, it began with a domestic tragedy, the tale of Kim Sciulli, who gave birth to her daughter Isabella almost three months early, then died suddenly of postpartum cardiomyopathy, a rare, pregnancy-related heart attack. As Isabella struggled in the NICU,
...[family] friends contacted the International Breast Milk Project, a group of mothers who donate their breast milk to orphans in Africa."Another organization"? I didn't even notice the phrase yesterday. But after a night of Googling around, I would be shocked if "another organization" is anything besides Prolacta Bioscience, the venture capital-funded, for-profit breast milk banking company which is the major supporter of the IBMP, and which has a contract to buy 75% of the breast milk donors provide. [high five to dt reader Lee for flagging the connection.]
The project then connected the Sciullis with another organization that was able to provide milk for Isabella.
Milk banking is great and important, and the more breast milk that's available for whoever needs it, the better, whether they're NICU babies, formula-intolerant babies, adoptees, or African orphans. And I'll be damned before I pass judgment on any parent who buys breast milk to help his kid.
But first Oprah, and now ABC News have done glowing stories on the IBMP without mentioning the charity's inextricable relationship with a biotech startup that is seeking to create significant value for its investors by commercializing the historically non-profit trafficking in human breast milk.
Prolacta/IBMP's Fresh Embrace Of Transparency
Before having any remotely meaningful discussion of the Prolacta/IBMP relationship, we all have to read Jennifer Laycock's extensive posts from last summer on her blog, The Lactivist:
May 22, 07: Is The International Breast Milk Project a Scam?
Jun 3, 07: Update on Prolacta and the International Breast Milk Project
Jun 5, 07: My Thoughts on the Prolacta / International Breast Milk Project Arrangement
While the IBMP now clearly explains to milk donors that 75% of their milk will be sold to Prolacta for $1/oz., and that that money--$133,000 in 2007--is used to fund other health initiatives in Africa, The Lactivist posts make it clear that such transparency was not the case before last June. Not only was Prolacta's involvement in IBMP apparently obscured or undisclosed until donors received their shipping materials, there was also a significant, undisclosed chance that none of a donor's milk would actually be shipped to Africa by Prolacta/IBMP at all. It was only in an email that IBMP explained how much milk would be shipped--"5,000 ounces twice a year"--and anything beyond that would "go to" premature infants in the US, i.e., be sold, "to enable additional donations to Africa."
"Give us your milk, and we'll sell it to preemies for $35/oz!"
Flip this around for a second. If you were starting a company that pharmaceuticalizes and productizes human breast milk, you would need to secure a steady supply of raw material. The bigger your market got, the more milk you would need. But you can't pay for it; there's already a well-established, non-profit milk bank network across the country, with a national organization, the Human Milk Banking Association of North America, setting safety standards and principles that don't permit the for-profit sale of human milk.
The best/only way you could generate an attractive, steady supply of product is with a compelling appeal to donors' altruism. Which the competition--non-profit milk banks--already do, too. So first, you set up a generic-seeming milk bank network of your own that doesn't acknowledge its for-profit status. [Though Prolacta is named as a sponsor and the phone number is located in Monrovia CA, Prolacta's headquarters, the owner of the milkbanking.net domain is deliberately obscured.] And then for successful commercialization, you locate the target of donors' charitable impulses outside of your actual market.
[And speaking of outside the market, does collecting, processing, and shipping American breast milk to Africa even make sense philanthropically? Wouldn't it be far more effective and sustainable to develop a local milk bank infrastructure, using local womens' milk? Or to put wet nursing education programs in place, particularly where the risks of HIV transmission are so high? Is it cause for concern that IBMP's financial initiatives in Africa are not related to developing either local breastfeeding education programs or safe, local milk banks?]
Targeting the NICU Market
While non-profit milk banks serve all babies and parents who need milk--and when they have enough, they even provide milk to adult cancer patients--at the moment, Prolacta is actually only targeting the most potentially lucrative segment of the breast milk market: the NICU.
Prolacta's goal--at it was described by one of its major investors, at least--is to "seek to fundamentally change the way that babies are fed in the NICU." In addition to pasteurized breast milk, Prolacta sells fortified, concentrated, and calorie-pinpointed human milk products that could at once put them in direct competition with mothers' own milk, and might be the most compelling argument for their existence. If NICUs develop specific treatments and protocols around them, Prolacta's pharmaceuticalized products could displace mothers' milk, which might be deemed too variable for reliable use. Is that an acceptable decision for the NICU, where we're already talking about extraordinary medical interventions to save babies who otherwise have no chance of survival? Fine, then let the neonatal medical community have that discussion, and see the results of Prolacta vs. mother's milk vs. milk bank.
What's The Market?
In the last couple of years, as the milk banking concept has gained momentum, Prolacta has really stepped up its presence by raising $12 million in two rounds of funding by Silicon Valley giant Draper Fisher Jurvetson and several other VC's. Though she's still with the company, the founder doesn't have a seat on the board, which is composed entirely of VC reps, plus the two blood plasma industry executives brought in to run the show. The company has filed an application for a remarkably broad-looking patent for a system of collecting and distributing human milk.
Here are some metrics for sizing up the market opportunity: The HMBANA's banks delivered around 750,000 ounces of milk in 2005, a 28% increase over 2004. That could be over 1 million ounces in 2007. According to IBMP's 2007 financial statements, they had 43,000 ounces of milk on hand at the end of 2007, and sold 143,000 ounces to Prolacta. Presumably, that doesn't include the 50,000 ounces delivered to Africa. So right out of the gate, Prolacta's controlling between 15-20% of the donated human milk market.
The non-profits charge $3/oz to recoup their processing costs. Prolacta charges up to $35/oz., though I have to imagine their straight milk is more competitive. Their CEO said product costs can run from $100/day--about the same as the non-profits--to around $250/day. For an average length of stay [ALOS] in the NICU of 30 days, that can be a $5-8,000 sale. With over 500,000 premature births in the US each year, you can start to see the theoretical size of the pie.
Client hospitals get free fridges and equipment as well as support for setting up a milk donor system--and they earn money based on the milk they bring in, a practice the HMBANA now explicitly opposes.
I've got no dog in this race; as a recovering private equity guy from the tech industry, I'm not kneejerk anti-Prolacta, even if they did go to HBS instead of Wharton. The reality is, until the new money came in in 2005-6, the company seemed to be as sleepy and slow as the rest of the cottage-like, milk bank field. If research bears out the efficacy of Prolacta's product vis a vis current NICU options, fine. But except for The Lactivist, I haven't found any discussion of milk banking that isn't completely tainted with either undisclosed self-interest or emotional manipulation. And for all the good IBMP may be doing in Africa or wherever, they're part of the misinformation problem.