For over seven years, Japan’s birth rate has been witnessing a decline. Its fertility rate has fallen below the rate required to maintain a population. Of course, the consequences are dire, ranging from a small labour force to vulnerable borders. The Japanese government has been investing in developing childcare packages to entice people into having children. Plus, it has introduced an IVF reimbursement scheme, as per which it will cover 70% of the costs of the otherwise super expensive IVF treatments. 

Making note of that, reproductive biotech company Memphasys (ASX: MEM) has entered into an exclusive partnership with Vitrolife Japan KK, a subsidiary of the reproductive health company Vitrolife Group. This agreement enables the sale and distribution of Memphasys’ flagship product, Felix™, in Japan. Felix is an advanced automated device designed to prepare sperm for human IVF procedures. Utilising electrophoresis and size exclusion membranes, the device gently separates sperm from a semen sample within six minutes, ensuring minimal damage to sperm DNA.

MEM Chief Executive Officer, Ms Alison Coutts, said, “This strategic collaboration enhances the availability of cutting-edge fertility treatment for men in Japan, a major IVF market, where population levels have been on the decline for many years.”

The exclusive agreement grants Vitrolife KK the sole rights to sell and distribute the Felix system in Japan for a duration of five years. The Japanese market, which accounted for approximately 450,000 cycles of IVF treatment in 2020, is experiencing growth due to the inclusion of IVF in Japan’s national insurance system in 2022. For Memphasys’s Felix, Japan represents a potential market opportunity exceeding $105 million per annum.

In accordance with the agreement, Vitrolife KK will take on the responsibilities of marketing, sales, and training, with a primary focus on engaging key clinicians and high-volume clinics within Japan’s private health sector. Collaboratively, Vitrolife and Memphasys will work to accumulate clinical data sets over time, aiming to position the Felix™ system for future full insurance coverage in Japan.

Valued at over $3 billion, Vitrolife is a provider of medical devices, consumables, and genetic testing services dedicated to the human IVF and reproductive health sector. It operates manufacturing facilities in Sweden, Denmark, and the USA and has a direct presence in 25 countries, including Japan, while the rest are served through distributors. Vitrolife AB is well-known in the human IVF market for its offerings, and it predominantly markets its own products and only selectively promotes products from other brands.

Coutts added, “MEM has enjoyed a long-standing relationship with Vitrolife. They have supported the development of the Felix™ device over the past few years, generously providing Vitrolife media for use in FelixTM clinical trials and providing MEM with introductions to key opinion leaders across various of our target markets.” 

With only $638k cash in hand as of FY23, the Company could use some profitability in its key markets.

The IVF push does not cement that the issue with Japan’s declining population is infertility alone. A report found that “unsteady employment”, wherein young people opt for part-time and freelance jobs and only enter the steady workforce much later in life, might also be the problem. Owing to few benefits and job insecurity, people choose to not have kids. 

While the childcare packages and insurance schemes are making having kids more appealing, if the population numbers stay low, the government might have to take a deeper dive into the philosophies driving this behaviour.