Reproductive health market has potential to reach $15 Billion
IVF demand rises as lifestyle changes fuel fertility problems
On a recent afternoon, a visitor from northern China took a smoke break outside the Beijing Perfect Family Hospital. Cigarettes were one reason he had come to the capital: he reckons his nicotine habit played a part in damaging his fertility.
The 38-year-old construction businessman, who asked to be identified by his last name, Zhang, worked hard to build a business with his wife, who is 35. But when they were finally ready to have kids, it was a struggle. So the Zhangs became one more couple among millions of Chinese to turn to an assisted reproductive-health market that has the potential to be worth about $15 billion.
A paradox has emerged in China: As the country finally relaxes its one-child policy, factors like lower sperm counts, later pregnancies and other health barriers are making it harder for many to get pregnant. As a result, businesses from China to Australia, and even California are lining up to help — and profit from — the growing market of hopeful prospective parents.
Families in the world’s most populous country are willing to pay top dollar for fertility therapies. Zhang said his package for IVF, or in vitro fertilization, was 100,000 yuan ($14,700) for each round.
“Now that our economic conditions are better, we all want children but it’s hard for a lot of us,” he said, puffing on his second cigarette. “All the years of smoking and drinking and business dinners take a toll. It’s difficult for me and my wife to conceive naturally and we needed help.”
For decades, couples in urban China were only allowed to have one child, but the country, which is trying to boost its shrinking workforce, moved to end that policy in 2015. China’s market for IVF alone was worth $670 million in 2016 and is expected to surge to $1.5 billion in 2022, according to BIS Research. Assuming that 65 percent of infertile couples choose to seek treatment, the total assisted reproductive health market could someday be worth about 107 billion yuan using an average cost of as much as 40,000 yuan, brokerage firm Hua Chuang Securities Co. estimates.
Sperm counts (measured by the number of sperm per milliliter) dropped very significantly from 100 million in the early 1970s to as low as 20 million in 2012 in China, according to Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations. The higher stress levels accompanying economic development, pollution, late marriage and late childbirth, smoking and alcohol use could be contributing factors, he said.
A study in central China showed that only about 18 percent of those tested had healthy enough semen to be sperm donors in 2015. That number had been much higher at 56 percent in 2001, according the study, which was published this year in the medical journal Fertility & Sterility. Many Chinese women, meanwhile, are choosing to have children later as they pursue their careers.
Yet the desire to have biological children looms large, and that’s driving demand for services like IVF.
Virtus Health Ltd., an Australian company that offers fertility treatments, receives regular approaches from Chinese firms looking for partnerships, but getting a local license is difficult. So, Virtus works with medical tourism agencies in China that help patients get to its Australian and Singapore clinics. It has Chinese-speaking fertility specialists, scientists and nurses and its websites are translated into Chinese, according to the firm’s chief executive officer, Sue Channon.
Thousands of miles away, Mark Surrey, co-founder and medical director of the Southern California Reproductive Center in Beverly Hills, says about 20 percent of its patients came from China over the past year.
“There are increasing numbers of people in China who have the socioeconomic means to choose what kind of reproductive technology that they would like,” Surrey said. Among other services, the center’s California-based clinics offer tests to learn the gender of the embryo. Such services can be particularly attractive to patients from mainland China, where gender selection is banned.
At home, China’s “public facilities are currently quite overburdened, which significantly impacts the patient experience,” said Roberta Lipson, chief executive officer at United Family Healthcare, partly owned by China’s Shanghai Fosun Pharmaceutical Group.
Her company has been conducting IVF and fertility services in the northern city of Tianjin for over two years, with clinical expertise from around China, as well as from the U.K. and Australia. “We hope to get licensed in our other cities throughout China to provide a more convenient option for private patients,” Lipson said in an e-mail.
Still, Chinese patients face a number of regulatory hurdles at home. Single women, for instance, aren’t allowed to freeze their eggs in the country. Such restrictions have many patients considering trips abroad.
“Regulations make it difficult to enter the market,” said Masoud Afnan, director of fertility services and general manager of Tianjin United Family Hospital.
Clinics “need a full IVF clinic, with the required number of staff, to do IUI for 2 years. This is an expensive option to just do IUI,” said Afnan, referring to intrauterine insemination, a fertility treatment that places sperm directly into the uterus.
As of last year, the country had 451 sperm banks and medical institutions licensed to provide reproductive care, the National Health and Family Planning Commission estimates. But that’s outpaced by demand in a country of 1.4 billion people.
“Assisted reproduction has become one of the fastest-growing, high-potential fields in China’s medical market,” analysts with Haitong Securities wrote in a January report.
Overseas hospital operators like IHH Healthcare Bhd, which is listed in Malaysia and Singapore, Thailand’s Bumrungrad Hospital PCL and Bangkok Dusit Medical Services PCL are among those likely to benefit from increased patronage from Chinese patients, said Laura Nelson Carney, an analyst with Sanford C. Bernstein.
Zhang, standing on the busy and narrow street in downtown Beijing, said he knows many others with similar troubles. “Our friends can talk about it openly,” he said. “Many of them used IVF too.”
The process requires multiple visits to Beijing: They visited in November for the extraction of eggs and sperm, and again in March for preparations. Still, he will likely consider having two children — if the first attempt doesn’t result in twins.
— With assistance by Hui Li, and Natasha Khan