Written by / Chen Chang
Editor / Yang Jie
With the landing of the three-child policy, many provinces in China have extended maternity leave and increased parental leave, and "encouraging fertility" has become a hot topic in recent years.
However, in China, there is still a considerable number of group problems, which can not be ignored: the data quoted in the prospectuses of a number of listed companies show that the group of infertility patients in China is as high as 50 million people, and there is an average of one couple infertility for every 6 couples. For a large part of them, they have the unspeakable "can't have" problem in their minds. The scientific means of recourse to assisted reproduction, "making babies", is the hope of this group.
On February 21, 2022, Beijing announced that 16 assisted reproductive technology projects such as artificial insemination and embryo transfer will be included in medical insurance reimbursement, and the policy will be officially implemented on March 26, making Beijing the first city to include assisted reproduction in medical insurance.
As soon as the news came out, it immediately caused heated discussion in the industry. In the technical classification of assisted reproduction, IVF is the most common one. But at present, ordinary people to do IVF, the average cost of a single cycle is about 40,000 yuan, and even more than 100,000 yuan. The high cost has become a mountain that many people can hardly cross after overcoming psychological pressure. When assisted reproduction is included in medical insurance, this means that the maximum reimbursement amount for patients who do IVF can reach 10,000 yuan.
On the day of this news release, assisted reproduction concept stocks such as Jinxin Reproduction and Dajia Weikang have risen sharply.
This is also a landmark event for the assisted reproduction industry. On this subdivision of "making babies", investors are pouring in. In the expectations of different securities institutions, a huge market that is expected to break through the scale of 100 billion yuan is opening its doors.
Soon, however, some of the reproductive concept stocks experienced a pullback. Even Jinxin Reproduction, known as the "first share of assisted reproduction" in the industry, has an annual revenue of only more than one billion yuan.
Will the industry of "making a baby", which is regarded by the outside world as "huge profits", usher in "explosive growth"?
Expensive IVF: 100,000 in a single cycle
It took three years to experience three promotions and seven transplants, which is the personal experience of the netizen "Little Peach Mother" who successfully became a mother through IVF technology.
The unit of calculation using IVF fertility techniques is the cycle, which contains all the steps of treatment at once, including pre-examination, documentation, ovulation induction, sperm retrieval, transplantation and post-transplantation.
But IVF is a long and arduous process.
From the first induction in December 2014, Xiao Tao's mother repeatedly experienced implantation failures, egg retrieval, re-transplantation, and failure again... During this period, she went through a belly prick, no anesthesia to retrieve eggs, and played progesterone for two or three months, and was once helpless and confused, and finally succeeded in "drawing" in June 2017.
What's the most painful part of choosing TO do IVF? "Little Peach Mother" replied that to go through this process, the infertile couple must make a lot of preparations in terms of physical, psychological, and financial aspects. "Physical pain, psychological pain, and family pressure have overwhelmed people, and if economic conditions are no longer allowed, saving money or even borrowing money to do test tubes, it is easy to make these pressures multiply."
After the success of the test tube, Xiao Tao's mother organized a group of pregnant mothers so that everyone could communicate, encourage and share information with each other. She showed Caijing Weekly a single IVF statistic from 114 female patients in 25 provinces and regions. Among them, 17% of patients spend less than 30,000 yuan, 43% of those who spend 30,000-50,000 yuan, 32% of those who spend 50,000-70,000 yuan, and others spend 70,000-100,000 yuan, or even more than 100,000 yuan.
IVF technology, for these infertile couples, is both full of hope and there are countless pains and risks.
"No one knows how many times it will take to make it happen. Time and time again we run, again and again to destroy faith and rebuild. The point is, there are also external pressures on your heart. Every time I went to the hospital, the whole room was talking about who had failed again, and I heard that my heart was extremely depressed. A pregnant mother said.
Ivy and ivy institutions are mostly distributed in the city center, and every time the pregnant mother goes to the hospital, she needs to take a 1-hour bus from home to the train station, and then take a 40-minute high-speed train to the city where the hospital is located, transfer to the subway and walk to the hospital. "I don't know how many times I've walked along this road. The trees on this road, I sprouted from spring and saw fallen leaves in autumn. ”
(Discussion of pregnant mothers on the participation of assisted reproduction in Beijing medical insurance, photo/provided by the interviewee)
The infertile people who have the same experience as "Little Peach Mother" have supported the assisted reproduction track with great potential.
According to data released by the Chinese Association and the National Health Commission, the infertility rate of couples of childbearing age has climbed from 2.5%-3% 20 years ago to 12%-15% in recent years. With the intensification of environmental pollution, the postponement of the childbearing age, the increase in the pressure of life and other reasons, the number of infertile couples is still increasing. The World Health Organization (WHO) has predicted that infertility will be listed as one of the three major diseases of human beings in the 21st century, second only to tumors and cardiovascular and cerebrovascular diseases.
According to public information, assisted reproductive technology refers to the use of medically assisted means to make infertile couples pregnant, including conventional drug treatment, artificial insemination and in vitro fertilization. "In vitro fertilization" is one of the mainstream methods, which is often referred to as "ivory infant" (IVF). The pregnancy success rate of this technique is as high as 50%, which is 2-3 times that of artificial insemination, especially for women over 35 years old.
Data show that about 300,000 IVF babies are born every year in China. For many infertile couples, this technology can be said to be their last hope, but the high cost has blocked many families who want to do IVF.
According to the "Finance and Economics" weekly, IVF has developed three generations of technology so far, each technology for the population and the problems solved are different, the price is also increasing step by step, from the first generation to the third generation of the cost of 35,000-50,000 yuan, 37,000-52,000 yuan, 70,000-100,000 yuan.
(Source: Overview of Human Assisted Reproductive Technologies, et al.)
(Photo/ Screenshot of Caijing Tianxia Weekly)
"According to the current technical level of the industry, the cost of doing a routine cycle of test tubes is about 30,000 yuan to 35,000 yuan, but women over the age of 35 who have decreased ovarian function may need to do multiple cycles to successfully conceive." The cost of more than 100,000 yuan is indeed a big expense for the average family, which is not counting transportation costs, accommodation costs, lost work costs, etc. Fang Fu, a reproductive medicine doctor at Tianjin First Central Hospital, introduced to the weekly magazine "Finance and Economics".
But according to Frost & Sullivan data, the penetration rate of assisted reproductive technology in China was only 7% in 2018, far lower than the 30.2% in the United States in the same period. During the months of an IVF cycle, each link requires a huge cost of time and money for the patient's family, which is also one of the reasons for limiting the increase in penetration.
Therefore, the news that assisted reproduction will be included in Beijing medical insurance has won countless applause. The sensitive capital market is even more volatile, and on February 21, the news came out, Jinxin Reproductive once rose more than 13% intraday.
According to Fang's calculations, several items covered by medical insurance can be comprehensively calculated, which can save more than 10,000 yuan, reaching 1/3 of the cost of a single cycle.
Following the footsteps of Beijing's first trial, Sichuan, Shandong and other countries have also made positive statements on whether assisted reproduction is included in medical insurance. However, in the view of industry insiders, in the short term, it is not realistic to achieve the inclusion of national assisted reproduction in medical insurance. "After Beijing makes a demonstration trial run, problems may be found and adjusted, and the pressure on medical insurance across the country is different." Fang Said.
"At least the overall trend is good, indicating that the country is making efforts to support assisted reproduction." Xiaomei, a staff member of a fertility center in Beijing, said: "After the announcement of this news, the number of people who have recently come to our place for consultation has increased significantly. I've heard that many public hospital fertility centers have also seen an increase in the number of consultations. ”
10 billion market, gross profit margin of up to 70%?
The outlet of assisted reproduction has long been targeted by keen capital.
According to the data of enterprise investigation, there are currently 1018 assisted reproduction-related enterprises in the mainland, and a total of 69 enterprises will be registered in 2021. In the past ten years, there have been 66 financing incidents in the assisted reproduction track, and the amount of financing disclosed is nearly 3.92 billion yuan. Among them, more than 10 financing events occurred in 2020 and 2021, and 2021 became the year with the largest number of financing events in this field, reaching 13. Including Sequoia Capital China, Warburg Pincus Investment, Aobo Capital, Hillhouse and other leading institutions, have entered this track. In November last year alone, three companies, Nuwa Life, Dongyun Medical and Xingbo Biology, have successively obtained financing.
More representative such as nuwa life. Focusing on the research and development and application of assisted reproductive medicine, it was established in June 2021 and received two rounds of financing within half a year. And its angel investor is Wang Gang, a well-known investor who once invested in Didi.
These companies favored by capital are distributed in the upper, middle and lower reaches of the assisted reproductive industry chain. The upstream of this field includes enterprises such as assisted reproductive drugs, testing reagents, and equipment supply, the middle reaches of enterprises are mainly Internet platforms that provide related services, and the downstream is the specific implementation agency responsible for assisted reproduction.
According to the data of enterprise investigation, from the perspective of the financing amount of assisted reproductive projects, Jinxin Reproduction ranks first with a total financing of 2.584 billion yuan. Becon Medical ranked second with 250 million yuan, and Mingyue Medical ranked third with 130 million yuan. In June 2019, Jinxin Fertility was listed on the Hong Kong Stock Exchange, becoming the "first share of assisted reproduction". As early as June 2015, the company received strategic investments from Warburg Pincus Investment, Sequoia China, WuXi AppTec, etc. On the eve of the listing, Jinxin Fertility also received the blessing of Hillhouse.
BGI Gene, which has a market value of more than 35 billion yuan, is also a star company in the assisted reproduction track. Its genetic testing series of products can provide a reference for the safe implementation of assisted reproduction technology and reduce the risk of birth defects. In the eyes of doctors in some institutions, it is one of the few enterprises in China that master core sequencing technology. "It can be said that it is a deep practitioner in the field of gene sequencing." Fang Said.
Assisted reproduction, which is targeted by capital, is a market with great potential. According to Frost & Sullivan's analysis, from 2014 to 2018, China's assisted reproductive services market grew at a compound annual growth rate of 13.6%, reaching 25.2 billion yuan. It is expected to grow at a compound annual growth rate of 14.5% from 2018 to 2023 to reach 49.6 billion yuan.
According to jinxin reproductive prospectus, there were about 47.7 million infertile couples in China in 2017, which is expected to increase to 56.2 million in 2023. About 527,000 patients received assisted reproduction services in China in 2017 and are expected to grow to about 956,000 in 2023, a compound growth rate of 10.4%.
This is also an industry with high gross profit margins.
According to the company's financial report, from 2017 to 2020, jinxin reproduction's gross profit margin was 45.6%, 44.8%, 49.5% and 39.7%, respectively. In the case of the impact of the epidemic, the company's sales gross profit margin in the first half of 2021 also reached 42.27%.
Some media have even reported that the average gross profit margin of the domestic assisted reproductive service industry can reach 70%, because the cost is relatively low, and the gross profit margin has approached or exceeded the branches of medical services such as medical aesthetics and dental services.
(Key upstream and downstream enterprises in assisted reproduction industry, Photo/Ping An Securities Research Institute)
It should be noted that most of the more than 500 medical institutions approved to carry out human assisted reproductive technology in China are concentrated in first- and second-tier cities, and many patients can only choose cross-provincial and municipal treatment. This means that there are still huge development opportunities for assisted reproductive institutions in the sinking market of third- and fourth-tier cities.
Some industry experts revealed that due to the high threshold of assisted reproduction centers, the initial investment required is huge, and it takes at least two years for general institutions to reach breakeven; however, once the source of patients is stable and mature, it will also obtain a higher level of profit. According to expert calculations, excluding the cost of the venue, the number of patients in an institution is stable at about 20 a month, which can basically cover the costs of personnel costs, consumables, equipment depreciation and so on, and the profit level will be higher after mature operation.
The market penetration rate is still low, coupled with considerable market prospects and high profits to be expected, under the support of policies, the assisted reproduction industry has also become a tempting cake.
Industry explosion, stuck on the license?
However, the outbreak of the assisted reproduction industry is not as fast as the outside world imagines.
As the "first share of assisted reproduction", Jinxin Fertility's stock price trend in 2021 is not ideal. With the full liberalization of the three-child policy, on May 31, 2021, the company's stock price soared by 20% to HK$23.5, but soon fell back. As of the close of trading on March 24, its share price has fallen back to HK$6.81.
In 2020, Jinxin Fertility's total revenue was 1.444 billion yuan and net profit was 252 million yuan. In the first half of 2021, the company's revenue was 864 million yuan, an increase of 40.34% year-on-year, and net profit was 156 million yuan, an increase of 34.07% year-on-year.
As a head company, Jinxin Reproductive's annual revenue of more than one billion yuan does not seem to be "commensurate" with the popularity of this track.
In the primary market, according to statistics, the "peak period" of financing in the assisted reproduction industry is actually in 2019, and the investment scale of that year reached 5.07 billion yuan. Although the topic of fertility has been widely discussed in recent years, financing events have also increased, but the scale of investment has never exceeded this data.
(Photo/Visual China)
A medical investor said that assisted reproductive institutions are "hard to find", which greatly limits the growth of the market volume.
At present, the assisted reproduction industry is mainly dominated by public hospitals, with low industry concentration and uneven distribution of practitioners.
According to the data released by the National Health Commission, as of the end of June 2020, there were 523 medical institutions approved to carry out human assisted reproductive technology in China, and a total of 27 medical institutions approved to set up human sperm banks; of which only 396 hospitals had IVF licenses, and 23.40% of the reproductive centers did not meet the technical requirements of IVF.
According to the 2018 domestic assisted reproductive service market share data compiled by the Prospective Industry Research Institute, among the top five medical institutions in terms of market share, Jinxin Reproduction is the only private medical institution, with 20,958 egg retrieval cycles in 2018, with a market share of 3.1%, ranking third in the industry.
However, within general public hospitals, assisted reproduction is often only an affiliated department under the obstetrics and gynecology department. Fang Told Caijing Weekly, "When the news of the initial liberalization of the two-child policy first came out, some hospitals had already perceived it in advance and expanded the obstetrics department. But they soon discovered that the increase in fertility had not reached the level they had imagined, leading to some obstetrics now shrinking again. ”
Therefore, although the demand for assisted reproduction is increasing, there are still insiders who say that the third-generation IVF market, which is the most difficult to implement and the most scarce license in technology, is still in an unbalanced state of development.
Xiaomei's institution is one of the few institutions in Beijing to receive a license. "The Beijing Municipal Reproductive License has not been approved in the past two years. We are one of only 12 public and private hospitals in the city that have been approved for test tubes except for military hospitals. She told The Weekly Journal of Finance.
In the "Human Assisted Reproductive Technology Application Plan (2021-2025)" issued by 12 provinces and cities such as Shanghai, Hebei, Henan and Tianjin, it has been said that the number of human assisted reproductive service institutions will be increased.
However, the review of the licenses of relevant institutions has not been relaxed, and the number of licenses issued is still strictly controlled.
The assisted reproduction license application process consists of four core links: demonstration, review, obtaining artificial insemination license, obtaining first- and second-generation IVF licenses, and applying for third-generation IVF technology PGT licenses. The requirements for applying for a license are also high, not only for the level of the hospital, the title of the person in charge, but also for the business volume of doctors and laboratory personnel, the number of institutional cycles, the pregnancy rate and other aspects have also set standards.
Guotai Junan Securities Research Report has said that institutions applying for a license, from demonstration to application for ICSI (intracytoplasmic sperm microinjection technology, that is, second-generation IVF technology) qualification success, often take more than 3 years, the complete application process up to 10 years. After that, the institution needs to carry out verification every two years, and if it does not pass, it will be withdrawn from the operation qualification.
Faced with qualification problems, some private institutions began to "save the country" through acquisitions. For example, Maddy Technology obtained the assisted reproduction license in 2019 through the acquisition of Hainan Mary Hospital.
The high technical requirements and the scarcity of licenses have set up high industry barriers for the assisted reproduction industry. It is basically difficult for small and medium-sized institutions to cross this "threshold", and it is more difficult for the market to obtain opportunities for explosive growth.
And for those who have already become the head players, they will still face the dilemma of how to balance medical ethics and commercial interests.
"It is most important to follow the principle of values and keep the moral bottom line." Fang Said. According to his observation, the public's acceptance of assisted reproduction has been greatly improved, not as taboo as before; and in the case of "inner volume" in first-tier cities, the assisted reproduction industry has also shown a downward trend.
According to its understanding, there are still problems in this industry that are worth vigilance, and in order to pursue efficiency, some institutions will also have the practice of rushing to make quick profits.
"In theory, as long as you can get pregnant, you should still encourage you to get pregnant through normal channels." For example, if the woman's ovarian function is acceptable, the double tube is unobstructed, the male semen parameters are generally normal, and it is completely possible to start with simple artificial insemination, the success rate of this method is about 12%-15%, and there is a complete possibility of successful pregnancy. Fang Xi explained.
He continued, "But artificial insemination costs about 3,000 yuan, much lower than IVF, and some institutions will induce patients to do IVF directly in order to make a profit, and reduce the indication standards of IVF technology and guide them to higher-charged projects." Including in recent years, many couples with fertility who have been able to conceive twins at once have the idea of doing IVF, and these institutions will also be vague, accepting and making unrealistic promises to patients. However, in fact, doing IVF does not necessarily mean that you can conceive twins, and the so-called IVF generation, second generation, and third generation are not the higher the progression, the better, they have strict indication requirements. ”
In addition, for many families who are eager to have children, they will pay more attention to the pregnancy rate, so some institutions will reject some elderly couples with low ovarian reserve function on the grounds of "the woman is older and the risk is greater" in order to improve the success rate.
Fang Also mentioned that at present, the embryo culture liquid used for IVF in China and some related instruments still mainly rely on imports. "As far as possible, the upstream key consumables are 'localized', which is also a common expectation of the industry."
However, assisted reproduction, an industry that is related to countless families, after passing through the grassy period, with the increase of many participants in the upper, middle and lower reaches of the industrial chain, as well as the guidance of national policies, will also usher in the changes and prosperity that should be there.
At present, private institutions and public hospitals in the industry have formed a situation of complementarity, "We hope that the future can usher in more standardized supervision, reduce excessive medical treatment, and further reduce patient expenditure." Fang Said.
(At the request of the interviewee, Peach Mother and Xiaomei are pseudonyms)