Prosperity And Worries Of Assisted Reproduction

With the continuous liberalization of policies, private capital has more possibilities to participate in medical services.

Recently, the field of assisted reproduction is frequently private capital. On August 18, Chengdu aiweifu Biotechnology Co., Ltd. obtained the class III medical device registration certificate issued by the State Food and drug administration, achieving a zero breakthrough in the domestic similar class III certificate of this kind of product; before that, Jinxin reproduction successfully landed in Hong Kong stock market in 2019; and in a share, hanshang group, Tongce medical and medi technology also successively entered the field of assisted reproduction Domain.

"In recent years, China's private medical services have achieved remarkable development. At this stage, market-oriented capital pays more attention to the subdivision fields with better competitive environment and higher technical threshold, and assisted reproduction field has undoubtedly become one of the fields favored by capital." On September 1, Wang Jun, investment manager of a health industry investment fund in Beijing, told reporters of the 21st century economic report that in recent years, assisted reproduction enterprises in the primary and secondary markets have made frequent moves, and domestic private assisted reproductive service enterprises have been warmly welcomed by the capital market.

However, at the same time, Wang Jun also expressed his concern: "we can see that the assisted reproductive hospital with Tongce medical layout for nearly 10 years has not made profits in 2019, and CITIC Xiangya reproduction and genetics hospital Co., Ltd., a private assisted reproduction leader jointly operated by CITIC medical industry group and Hunan Xiangya group, has also been unable to enter the capital market, which shows that private capital has participated in this project The operational problems and exit channels in the field of assisted reproductive services have not been solved perfectly

Accelerating the entry of private capital

According to the data released by the China Population Association and the National Health Commission, the infertility rate of couples of childbearing age in China has risen from 2.5% - 3% 20 years ago to 12% - 15% in recent years, with about 50 million infertile people.

However, due to environmental pollution, delayed childbearing age, increased life pressure and other factors, the number of infertility is still increasing. According to frost Sullivan research, the infertility rate in China will increase to 18.2% by 2023.

Professor of Obstetrics and Gynecology of Beijing no.1-3a hospital told reporters: "at present, the treatment of infertility is relatively mature, and there are guidelines and consensus on the diagnosis of related diseases, corresponding drug treatment and surgical treatment. IVF (test tube baby) will be the last hope of patients when the general treatment methods are ineffective, and the number of such patients accounts for about 20% - 30%. However, compared with the general treatment, IVF costs more. Generally, the cost of one cycle is about 20000-30000 yuan, and it usually takes 2-3 cycles to get pregnant successfully. The average amount of money paid by patients is between 50000 and 100000 yuan. "

According to the data disclosed by the former national health and Family Planning Commission in 2016, China's approved assisted reproductive institutions have completed 700000 assisted reproductive cycles annually. According to the growth trend of assisted reproductive industry in recent years, it is conservatively estimated that the market size has exceeded 50 billion yuan.

The huge market scale and the rigid needs of patients are the important reasons why assisted reproduction is pursued by the capital market. In the capital market, the earliest listed company involved in assisted reproductive field is general medical.

In 2011, Tongce medical announced that it would invest 10 million yuan to establish a new hospital focusing on assisted reproductive services with Kunming maternal and child health care hospital, in which Tongce medical holds 65% of the total. In the same year, Tongce medical invested 1.4 million US dollars to establish a joint venture with the British born company, aiming to introduce the world's top assisted reproductive technology and management.

Since 2019, more and more capital players have entered the track. In July 2020, hanshang group announced that it planned to invest 71.3 million yuan in the reproductive medicine center of Tongji Medical College, accounting for 31% of the shares, and the overall valuation reached 230 million yuan. Medic technology started to acquire quickly from 2019, and successfully acquired 51% shares of Hainan Mary Hospital at a price of 38.862 million yuan in September 2019; it announced in June 2020 that it planned to acquire no less than 20% equity of Guowei reproductive hospital and lay out the Beijing market; in August 2020, it announced that it planned to acquire 51% shares of Tianyuan hospital and lay out the Heilongjiang market.

Development faces many constraints

Although the investment in the field of assisted reproductive services is enthusiastic, private capital often faces many problems after entering the board.

"The expansion difficulties caused by license restrictions, the operation problems caused by the disconnection of management and operation, and the income withdrawal mechanism after cooperation with public hospitals are all the core problems faced by private capital after participating in the investment of assisted reproductive institutions." Wang said.

According to the "guiding principles for the allocation planning of human assisted reproductive technology (2015 Edition)" issued by the former national health and Family Planning Commission, the newly planned assisted reproductive technology should be deployed in three-level general hospitals, three-level maternal and child health care centers or three-level maternity and obstetric hospitals. According to the principle of setting up one auxiliary reproductive institution for every 3 million people, all provinces will basically achieve the goal by 2020 The planned number of assisted reproductive licensing. That is to say, the number of new license plates for assisted reproductive institutions will be very small in the future. However, most of the assisted reproductive institutions business is limited by the region, so the acquisition of stock license in different regions in the future will be the focus of industry development.

In Wang Jun's view, the scarcity of licenses will be an important factor hindering the development of enterprises in the future, which explains why listed companies frequently acquire assisted reproductive institutions in recent years.

According to the annual report of Kunming reproductive health care Co., Ltd., which has a net investment of RMB 11 million, the difficulty of establishing Kunming reproductive health care Co., Ltd. is only 3 million yuan. It is located in Kunming, the capital of Yunnan Province, and operates jointly with Kunming maternal and child health hospital. However, the development of Kunming reproductive center has not reached the investment expectation of Tongce medical.

Of course, there are also successful cases. As a sample of early private equity investment, "CITIC Xiangya" was jointly established by CITIC medical industry group and Hunan Xiangya group in 2002. Its first mover advantage also makes CITIC Xiangya a well deserved leader in China's assisted reproductive institutions. It completes nearly 40000 assisted reproductive cycles every year, with an annual net profit of nearly 200 million yuan.

But even as one of the most successful enterprises in the industry, CITIC medical industry group has not been listed successfully. The closest time for CITIC medical industry group to go public was an attempt to restructure CITIC Haizhi, a listed company of CITIC, but ended up in the end.

According to the information disclosed by CITIC Hai at that time, "in view of the problems existing in the asset ownership, business qualification and historical evolution of the important subsidiaries of CITIC medical, all the rectification work has not been completed; and the minority shareholders of the important subsidiaries of CITIC medical can not reach an agreement with CITIC medical on the valuation level and future operating performance of the relevant subsidiaries", so this major asset is terminated recombination.

"Medical groups with market-oriented capital generally exist in the history of cooperation, restructuring and acquisition with public hospitals. If they want to land in China's capital market legally and legally, they need to undergo more rectification. One of the most core issues is the non-profit nature of public hospitals in China. If we can not successfully change the nature of hospitals into profit-making ones, then how to legally and legally obtain income from non-profit hospitals will be the biggest test for investors. " Wang explained.

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