Despite a high population growth rate, IVF remains popular in the MENA countries. Mansoor Ahmed, director research and advisory (MENA Region) healthcare, education and PPP at Colliers, analyses the demand for IVF in the region and identifies opportunities and challenges to operators and investors.
In the beginning…
In Vitro Fertilization (IVF) was pioneered by biologist Robert Edwards who, with gynaecologist Patrick Steptoe, fertilised the first human egg in a Cambridge laboratory in 1969. Louise Brown, the first test tube baby was born on July 25, 1978, at Oldham General Hospital in England.
The International Committee Monitoring Assisted Reproductive Technologies (ICMART) estimates that globally in the last 40 years over eight million babies have been born using IVF or other assisted reproduction techniques. Today, around the world over half a million babies are born annually using IVF or other assisted reproduction techniques with over two million treatment cycles performed every year.
The World Health Organisation (WHO) estimates that globally over 10% of women are classified infertile and require assistance to enable conception. The current global IVF market, based on various studies, is estimated to be between US$$10bn to US$13.7bn.
While there is no definitive accurate data available for the Middle East, the estimated IVF market size drawn from a number of cycles by Colliers is roughly US$200m for UAE, US$300m for Kingdom of Saudi Arabia (KSA) and US$500m for Egypt.
What is infertility?
Medically, infertility is generally recognised as the failure to establish a clinical pregnancy after trying over a 12-month period.
In the MENA region the population has increased from just over 100 million in 1950 to 500 million in 2020 and is expected to increase to 700 million by 2050. However, overall fertility rates have decreased from seven children per woman in 1960 to less than three in 2020.
There are several reasons for the decline in family size, including socio economic factors, such as female empowerment, an increase in the female literacy rate, aspirations to be economically independent, the evolution and increase in use of contraception and changes in cultural norms.
In addition, men are also choosing to start families later in life. The rise in lifestyle diseases (diabetes and obesity), especially in the Arab countries, has also increased demand for infertility treatments.
Many studies, including those published by the Global Diabetes Community has shown a direct and indirect link of diabetes and obesity to both male and female infertility. Based on Colliers research and interviews with industry experts, compared to 10% worldwide, the infertility rate in the region is 15% or even higher.
Infertility is split approximately 50% male to female across the middle east region. The growth in the UAE IVF sector stems not only from domestic demand but also UAE’s success, particularly Dubai, in promoting medical tourism and the availability of its infertility treatment centres, which are of international standards.
Declining fertility in the MENA region
Across the globe and in the MENA region fertility rates are decreasing due to several factors. The increase in female literacy rate and female empowerment has directly influenced women’s choice of when to enter the family planning cycle. Moreover, although individually males and females account for an equal percentage of infertility cases, in around 75% of couples seeking IVF treatment, it is male fertility that is either the primary factor or, at least, a co-factor in the condition.
Factors contributing to male infertility include lifestyle, environmental influences, diabetes, obesity, hypertension and genetics.
Increase in the literacy rates
The overall literacy rate for both men and women in the Arab World has increased from 46% in 1980 to over 73% in 2019, with Saudi Arabia, UAE and Lebanon having above 90% literacy rates and Egypt just over 70%. The female literacy rate has increased from a level of 32% in 1980 to over 66% in 2019.
Increase in the Female Labour Force Participation
Based on the latest data available from ILO, the overall female labour force participation rate in the Arab world has increased from 16% in 1990 to over 18% in 2019.
Most Gulf Cooperation Council (GCC) countries have made significant improvements in welcoming greater female participation into the workforce.
In the UAE, the ratio increased from 28% to 52%, KSA (15% to 22%), Oman (21% to 36%), while the ratio in Egypt decreased from 22% to 19%.
Cost of IVF treatment/cycle
Due to the high success rates and quality of treatment offered, UAE is in the best position to become the regional hub for IVF. Pregnancy rates in the UAE are higher than the average of IVF centres in Europe or the USA and is comparable with success rates of the best centres in the world.
Higher cost of treatment as compared to other countries in the UAE is considered the major limiting factor for more patients coming from abroad. However, based on Colliers’ discussions with major providers in the UAE, ‘high success rates and quality are directly related to the significant investments made in this sector both in equipment and staff’.
If treatment fees for IVF are substantially reduced, it will have an impact on UAE’s ability to retain talent. Failure to do so can jeopardise the quality of treatment currently being offered.
It is expected that UAE’s focus will remain on attracting medical tourists willing to pay a premium for its ‘high quality – high success rate’ service.
Impact of Covid
Like most elective procedures, IVF activity took a hit at the beginning of the pandemic. Embryo transfers slowed as the sector awaited guidelines from the Health Authority. In order to restart the embryo transfer, clinics adopted Covid-safe protocols. Fertility clinics, as with much of the health-care industry, increasingly turned to telehealth in 2020 for consultation.
Attractive returns
The IVF market in the MENA region is quite a lucrative investment. A mid-size premium facility set-up cost ranges from US$2.5m to US$3.5m excluding rent or construction cost. EBITDA margins for efficiently run clinics at optimal capacity typically range between 25% to 40%. Project investment returns (IRR) typically range from 18% to 25%.
Changing IVF laws
The new changes in IVF laws are also expected to further boost the IVF market. One of the most fundamental changes introduced by the new IVF law for fertility patients relates to the freezing of human embryos as well as unfertilised eggs and sperm.
The new IVF law also introduces a framework for intragovernmental consultation and decision making, and allows limited scientific research, in the field of fertility treatments. These changes are in line with the UAE’s National Agenda 2021 and the UAE Centennial 2071 project, which aim to elevate the UAE’s position in the global community and are especially important as the UAE positions itself as the go-to medical hub in the region.
Market growth potential
The IVF market in UAE is relatively stable with a total number of 15,000–16,000 cycles performed per year. The growth of the market will be driven primarily by population expansion, but other factors that could amplify demand include increases in the incidence of infertility due to lifestyle changes and a rebound in IVF medical tourism — once the travel restrictions are lifted — particularly given the better quality, infrastructure and success rates in Emirates.
Moreover, it is expected that the new IVF law will provide more options to couples who are looking IVF as a mean to conceive babies. Moreover, the new law also will further establish UAE as a key destination for couples seeking IVF treatments regionally and internationally.
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