Fertility startups in Japan thrive on high demand

A SMALL NUMBER of startups are stepping up to address infertility issues in Japan, where shortages of treatment options plague patients in a country grappling with one of the world’s lowest birth rates.

Yukiko Nakai, one such entrepreneur, spent hours in packed infertility clinics, counting the inefficiencies that exacerbated already long wait times. She soon ran out of her vacation days at work. Her take-home salary fell, while her out-of-pocket medical bills climbed to around ¥10 million ($66,000).

“I was so frustrated, and that feeling was made worse by the uncertainty about whether the treatment would succeed,” said Ms. Nakai, who had always dreamed of a large family. After leaving her managerial role at Yahoo Japan, she founded Arch in 2021, an app developer that helps women’s clinics cut patients’ wait times through digitalization. “The knowledge that you can never regain each moment that passes adds to the stress.”

Demand for infertility treatment is high in Japan, where the number of live births fell for eight straight years to another record low last year. One in 4.4 couples in Japan has undergone tests or treatment for infertility, and the number of babies resulting from assisted reproductive technologies such as in vitro fertilization stood at one in 11.6 in 2021. The country is home to the world’s second-highest number of assisted reproductive technology cycles after China, according to the International Committee for Monitoring Assisted Reproductive Technologies.

Next week marks two years since Japan expanded public health insurance coverage to include a small number of infertility treatments. That stamp of approval is spurring even more demand and causing chronic shortages in hormonal drugs such as Duphaston, Provera and Norluten, according to the Japan Society of Obstetrics and Gynecology.

It’s also propelling bigger sums of money into startups that until recently struggled to grab the attention of venture capital funds.

Tokyo-based Varinos raised ¥600 million in a Series C funding round in 2022, lifting the total amount raised to ¥1.1 billion. Founder Yoshiyuki Sakuraba, who once worked at US gene-sequencing firm Illumina, Inc., previously had little success sparking investor interest in a startup that focuses on the uterine bacterial microbiome for clues for successful births.

Instead, he received financing from his network within the medical community to build a laboratory equipped with genome analyzers, each costing tens of millions of yen, and reagents costing several hundred thousands of yen per test. —