Jinxin strengthens fertility treatments

Money Glitz | Avery Chen 4 Mar 2019

Jinxin Fertility, an assisted reproductive services, ARS, provider in China and the United States, has filed an application for an initial public offering in Hong Kong, aiming to raise up to US$600 million (HK$4.68 billion).

The Sichuan-based firm ranked third in China's ARS market in 2017, in terms of in-vitro fertilization, IVF, treatment cycles conducted and revenue generated from ARS institutions, with a market share of 3 percent and 3.5 percent, according to a Frost & Sullivan research report.

There were about 47.7 million infertile couples in China, among which only about 527,000 received ARS in 2017, while the number of infertile couples is expected to increase to about 56.2 million in 2023, says Jinxin in the prospectus, citing the F&S report.

Jinxin generated the majority of its revenue from ARS, offering two treatments: artificial insemination, which can be performed with either husband's sperm or a donor sperm; and IVF technology, where fertilization is achieved through conventional in vitro fertilization and embryo transfer or IVF with intracytoplasmic sperm injection.

Revenue from ARS accounted for 86.3 percent of overall revenue for the first three quarters last year.

The assisted reproductive medical facilities in Jinxin's network in China achieved a success rate of 53 percent in 2017, compared to the national average of 45 percent, the firm says.

Jinxin also provides management services and ancillary medical services to its network of assisted reproductive medical facilities.

In the mainland, Jinxin owns and operates Chengdu Xinan Gynecological Hospital and Shenzhen Zhongshan Urological Hospital. The two hospitals contributed the majority of its revenue, accounting for 31.1 percent and 59.1percent of its total revenue respectively, from January to September last year.

It also jointly manages the IVF center of Chengdu Jinjiang District Maternity and Child Health Hospital in mainland.

Jinxin acquired Willsun BVI in the United States, which owns HRC Management, the manager of HRC Medical, at the end of last year, aiming to capture the rising numbers of infertile Chinese couples seeking ARS in the US.

About 7,200 international patients went to the US for ARS in 2017, of which 62 percent were from China. The number of Chinese going to the US for ARS has increased from 2,600 in 2013 to 4,500 in 2017, representing a compound annual growth rate of 14.7 percent. The number is expected to further increase to 13,500 by 2023, representing a CAGR of 20.1 percent from 2017.

HRC Fertility, including HRC Medical, ranked first in the western United States' ARS market in 2017. It also ranked first in the US, in terms of IVF treatment cycles provided to ARS patients traveling from China to the US for treatment in 2017, according to the F&S Report.

Jinxin's gross profit margin was 38.3 percent and 45.6 percent in 2016 and 2017 respectively. It improved to 46.7 percent in the first nine months of 2018.

Jinxin intends to use 25 percent of net proceeds to expand and upgrade existing assisted reproductive medical facilities and recruit medical professionals.

About 20 percent will be used for the potential acquisitions of additional assisted reproductive medical facilities in provinces the company is currently not operating in. Another 20 percent will be used for potential acquisitions of ARS service providers and businesses along the ARS service chain.

Jinxin also plans to spend about 15 percent to improve brand awareness and general ARS awareness in China and the US. Also, 10 percent will be used for research and development. The remaining 10 percent will be used as working capital and general corporate purposes.

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