The fertility sector is booming

In most of the world most couples cannot afford IVF. A recent study in lower-income countries found that a single cycle costs between 50% and 200% of people’s average annual income. There is a sad irony in this. Among the forms of infertility for which IVF is particularly effective is a blockage in the Fallopian tubes, which often arises as a complication of infection. Those complications are most commonly suffered by poor women in poor countries. The population least likely to get access to IVF thus contains a disproportionate number of those it was originally designed to help.

Even in countries where IVF accounts for 1% or more of births, prices are high enough that, unless governments either mandate that they be offered by health insurers or provide the service themselves, most women cannot afford it. An American whose insurance, if she or he has any, does not cover IVF can expect to pay $20,000 a cycle. Unsurprisingly this means a lot of people who need treatment do not get it. Eduardo Hariton of US Fertility, a network of clinics, reckons that for every patient who gets IVF in America as many as four more may go without.

Politicians are paying increasing attention. Five years ago, there were nine American states where insurers were required to cover some IVF treatment. Today there are 14. Employers are aware of the value placed on access to fertility treatments, too. Job packages which included fertility benefits such as IVF were once just a perk for Silicon Valley. Today, according to Mercer, a consulting firm, four in ten large employers include them. In online infertility forums, women exchange tips on where to get jobs with coverage. Walmart, America’s largest employer, recently started offering fertility benefits through Kindbody, a chain of clinics. The chain last year built a clinic near to its new client’s head office. It opened another one near Lockheed Martin in April.

Potential patients with financial worries increasingly look to travel abroad as a way to afford what they cannot at home. So do some patients looking for regulatory regimes more permissive than those they live under. The barriers that going abroad may circumvent include restrictions on who can try to conceive (several countries restrict IVF to married couples) and on how they can become parents (some countries ban surrogacy or the use of donated eggs). But many destinations, including the Czech Republic, Mexico and Thailand, are popular at least in part because they are cheaper.

The evidence of price sensitivity provided by such IVF “tourism” is backed up and quantified by formal research. An international comparison published in 2014 found that for every percentage point of average disposable income that the price of IVF drops, demand increases by 3%. It all suggests that companies which can bring costs down so as to attract more clients could do very well out of it. And some are trying to do just that.

Five years ago Joshua Abram, a veteran tech entrepreneur, co-founded Conceivable Life Sciences, an IVF-automation company with headquarters in New York City. Neither he nor his business partner knew anything about reproductive technology at the time, but they could see a market gap. “Because we know that 10% of kids in a just world will be born through IVF, versus less than 1% today, solving this is one of the great medical and ethical opportunities of our lifetime,” says Mr Abram. “And indeed a mammoth, mammoth business opportunity.”

Hope springs eternal

The sector is certainly soaking up capital. As the entrepreneurial doctors who set up the first generation of fertility clinics reach retirement, investors have been buying their businesses on the basis of opportunities for consolidation and strong growth prospects. “In the past decade, while the overall birth rate declined, the birth rate resulting from ART [assisted reproductive technology] grew around 6% annually,” says Jennifer Gregoire from McKinsey, calling it “a market with strong tailwinds”.

The investments are often from private equity (PE). Today about a third of IVF cycles in America are done through clinics affiliated with PE funds. In January KKR, a PE firm, paid €3bn ($3.2bn), a very high multiple of earnings, for IVIrma, a large Spanish chain of clinics. Such investment has driven a new level of consolidation. In Australia three networks now provide around two-thirds of all cycles.

For the most part, though, these large organisations are not particularly focused on increasing access. After all, patient numbers are going up even though prices are not coming down. Though they do not see it this way, the clinics’ customers are buying hope as much as, or more than, they are buying healthy pregnancies, and it is easier to upsell hope than increase the number of pregnancies that go to term. “Bringing hope to life” is the headline for Columbia Fertility Associates’ sales material. “The best way to predict your future is to create it,” assures Liv Fertility in Mexico. “Every two hours an SGF baby is born,” says Shady Grove Fertility.

Websites juxtapose pictures of smiling babies with figures purporting to provide a “success rate”. Professional associations caution against choosing providers on the basis of such numbers. They can be inflated or massaged through a number of presentational tricks. It is often impossible to tell if one site’s claimed rate is truly comparable to another’s. Think of the range of metrics that fund managers use to claim “above-average” returns, and then remember that fund managers’ claims are much more regulated than those of fertility clinics. But in the absence of other clear differentiators they will be the numbers to which most of the hope market’s consumers latch on.

Other things being equal, buying more tends to bring people more hope and a greater sense of control. This offers a number of ways to make already fairly fat margins fatter. Zealously catering to patients’ desperation through “add-ons” to their IVF despite their lack of proven success is one. A recent study found that in America PGT-A, a controversial add-on, is significantly more likely to be part of IVF treatment in a PE-affiliated clinic than elsewhere.

Profit pushes perpetual

The newest vendors in the hope market are a wave of “reprotech” startups, some associated with starry names: TMRW, which has an automated system for freezing and storing eggs and embryos, boasts investors including Amy Schumer, a comedian, Peter Thiel, a venture capitalist, and Susan Wojcicki, the former CEO of YouTube. Legacy, which sells sperm tests, dietary supplements that claim to improve sperm quality and sperm-freezing services, is backed by Justin Bieber, a musician.

At the Reproductive Health Innovation Summit held in Boston, Massachusetts, in February, entrepreneurs from around the world pitched everything from AI that promises to select the best sperm to needles that make hormone injections easier. At times, the proceedings felt like a speed-dating event. The emphasis was largely, though not exclusively, on trying to improve the process and outcomes for existing patients rather than lowering prices to improve access. “Almost all of this caters to the women who can already afford IVF and just digs deeper into their pockets,” grumbled one veteran fertility doctor.

Some think that technology could do more. David Sable, a reproductive endocrinologist turned venture capitalist, reckons that the right investments could raise the worldwide number of IVF babies from 64,000 per month today to over a million a month. At Conceivable Life Sciences Mr Abram says he is confident of being able to reduce costs by as much as 70% in America and 50% in Britain. A large part of the company’s plan rests on centralised labs with hyper-modern microscopes and lots of automation. They also think there are savings to be made by using local gynaecologists rather than higher-paid fertility doctors.

Such investments may pay off in time, especially if insurers get behind them. But for now the IVF part of the ART sector remains focused largely on selling more hope to the sort of people who are already in a position to buy it.

This will not stop the spread of IVF. But the current state of play makes it likely that investors and entrepreneurs will not be the driving force. Politicians will be—whether because they just think it is the right thing to do, as in much of Europe, or because they worry about ageing populations, as in a lot of Asia, or because their voters are increasingly insistent.

Correction (July 24th 2023): This story was updated to reflect that TMRW freezes and stores only eggs and embryos, not sperm.

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Updated: 15 Sep 2023, 01:46 PM IST