In Australila IVF price war lower the costs of treatment due to new low cost competitors:
Its a good news for the couople who seeks IVF treatment in Australia due to budding price war in the IVF sector, which has led to lower treatment prices at one of Australia’s largest providers but costs for consumers could still go lower, according to one of the industry’s pioneers.
Two of Australia’s largest IVF providers – Virtus Health and Monash IVF – have this week reported sluggish earnings as fewer Australians seek reproductive assistance and as they battle increasing competition from a low-cost operator, Primary Health Care.
Virtus shares tumbled as much as 7.5 per cent on Tuesday after the group missed analyst forecasts by posting a 14.6 per cent fall in net profit to $28.1 million. On Monday, Monash IVF’s shares dived 8.7 per cent on its results and lacklustre 2018 outlook.
Virtus shares closed down 3.2 per cent at $5.48.
Virtus chief executive Sue Channon said competition from lower-cost providers has led to Virtus adjusting the cost of treatments at its cheaper The Fertility Centre clinics to between $900 and $1500 out-of-pocket costs.
This compares to the average out-of-pocket cost of $800 at a Primary clinic.
“The key thing to note is the services are provided by fertility specialists,” Ms Channon said.
Monash IVF does not offer a lower cost option.
Professor Alan Trounson, who was one of the scientists who created the first IVF baby, told BusinessDay prices are still too high.
“I do think the price could go lower. A lot of clinics set the price at the rebate price,” Dr Trounson said.
“At least for younger patients, where the woman is under 38 years of age and the men are in their late 40s, their fertility is pretty strong and I think they could be treated in a much more economical manner than they are currently being treated.”
Dr Trounson, who helped found Monash IVF but has sold out of the company, said people with complex infertility issues needed more expensive care.
Ms Channon said low-cost fertility treatments made up 15 per cent of the company’s total IVF cycles in 2017, an increase on 13 per cent in 2016.
“The average age of our patients is 37 and they have complex fertility issues and so the low-cost options – both ours, bulk-billed and everyone else who provides low-cost services – are not for everybody,” she said.
Virtus will pay a final fully franked dividend of 12¢ per share on October 13. During the year its revenue fell 1.8 per cent to $256.5 million. Australian earnings before interest, tax, amortisation and depreciation dropped 7.6 per cent to $65.8 million.
Driving the earnings fall was a 3.7 per cent decrease in IVF cycles on a like-for-like basis. Total IVF cycles were down 1.2 per cent in Australia over the year to June 2017.
Ms Channon said the sector was expected to continue to produce compound average growth rates of between 2 per cent and 3 per cent as it had over the past five years.
Morningstar analyst Chris Kallos said Virtus’ results had missed market consensus and the company’s outlook for growth rates in the sector coupled with weaker-than-expected growth in its low-cost option business had seen investors recalibrate the company’s overall growth prospects.
News Resource & Image – The Sunday Morning Herald, August 22, 2017