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 it. One of the forms of infertility for which IVF is particularly effective is a blockage of the fallopian tubes, which often occurs as a complication of an infection. These complications are most commonly suffered by poor women in poor countries. The population least likely to access IVF therefore includes a disproportionate number of people for whom it was originally intended.
Even in countries where IVF accounts for 1% or more of births, prices are so high that most women cannot afford it unless the government determines that it should be offered by health insurers or provide the service themselves. An American whose insurance, if he or she has one, does not cover IVF can expect to pay $20,000 per cycle. Unsurprisingly, this means that many people who need treatment do not get it. Eduardo Hariton of US Fertility, a network of clinics, estimates that for every patient who gets IVF in America, as many as four may go without.
Politicians are paying more and more attention. Five years ago, there were nine American states where insurers had to cover certain IVF treatments. Today there are fourteen. Employers are also aware of the value placed on access to fertility treatments. Job packages with fertility benefits like IVF were once just a perk for Silicon Valley. Today, four in ten major employers are among them, according to consultancy Mercer. On online infertility forums, women exchange tips on where to get a job with coverage. Walmart, America’s largest employer, recently started offering fertility benefits through Kindbody, a chain of clinics. Last year, the chain built a clinic near the headquarters of its new customer. Another opened near Lockheed Martin in April.
Potential patients with financial worries are increasingly looking abroad to afford what they cannot at home. This includes some patients who seek regulatory regimens that are more permissive than those under which they live. The barriers to bypassing foreign countries include restrictions on who can try to become pregnant (several countries limit 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 partly because they are cheaper.
The evidence of price sensitivity provided by such IVF ‘tourism’ is supported 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 falls, demand increases by 3%. It all suggests that companies that can lower costs to attract more customers could come out of this very well. 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 headquartered in New York City. Neither he nor his business partner knew anything about reproductive technology at the time, but they could see a gap in the market. “Because we know that in a just world 10% of children will be born through IVF, compared to less than 1% today, solving this is one of the greatest medical and ethical opportunities of our lifetime,” said Mr. Abram . mammoth, gigantic business opportunity.”
Hope produces eternity
The sector is certainly sucking up capital. As the enterprising doctors who founded the first generation of fertility clinics retire, investors are buying their companies based on consolidation opportunities and strong growth prospects. “While the overall birth rate has declined over the past decade, the birth rate due to ART [assisted reproductive technology] growing at about 6% annually,” says Jennifer Gregoire of McKinsey, calling it “a market with strong tailwinds.”
The investments often come from private equity (PE). Today, about a third of IVF cycles in America are performed through clinics affiliated with PE funds. In January, KKR, a PE firm, paid 3 billion euros, a very high multiple of profits, for IVIrma, a large Spanish chain of clinics. Such investments have led to a new level of consolidation. In Australia, three networks now provide approximately two-thirds of all cycles.
For the most part, however, these large organizations are not particularly focused on increasing access. After all, the number of patients is rising, even if prices are not falling. Although they don’t see it that way, the clinics’ customers are buying hope as much as, or more than, healthy pregnancies, and it’s easier to sell hope than to increase the number of failed pregnancies. “Bringing Hope to Life” is the headline of Columbia Fertility Associates’ sales materials. “The best way to predict your future is to create it,” assures Liv Fertility in Mexico. “An SGF baby is born every two hours,” says Shady Grove Fertility.
Websites post pictures of smiling babies next to numbers claiming to give a ‘success rate’. Professional associations warn against choosing healthcare providers based on such figures. They can be inflated or massaged using a number of presentation tricks. It is often impossible to tell whether one site’s claimed percentage is really comparable to that of another. Consider the range of metrics that fund managers use to claim “above average” returns, and then consider that fund managers’ claims are much more heavily regulated than those of fertility clinics. But in the absence of other clear differentiators, these will be the numbers most consumers in the hope market stick with.
All other things being equal, buying more people tends to bring more hope and a greater sense of control. This offers a number of options to make already quite thick margins even thicker. Diligently capitalizing on patients’ desperation through ‘add-ons’ to their IVF, despite the lack of proven success, is one of them. A recent study found that in America, PGT-A, a controversial add-on, is significantly more likely to be part of IVF treatment at a PE-affiliated clinic than elsewhere.
Profit pushes forever
The latest sellers on the hope market are a wave of “reprotech” startups, some associated with star names: TMRW, which has an automated system for freezing and storing eggs and embryos, has investors including Amy Schumer, a comedian, Peter Thiel, a venture capitalist and Susan Wojcicki, the former CEO of YouTube. Legacy, which sells sperm testing, nutritional supplements claiming 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 presented 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 focus has been largely, but not exclusively, on improving the process and outcomes for existing patients, rather than lowering prices to improve access. “Almost all of this is aimed at women who can already afford IVF and are only digging deeper into their pockets,” grumbled one experienced fertility doctor.
Some think technology could do more. David Sable, a reproductive endocrinologist turned venture capitalist, thinks the right investments could increase the global number of IVF babies from 64,000 per month today to more than a million per month. At Conceivable Life Sciences, Mr Abram says he is confident he can reduce costs by as much as 70% in America and 50% in Britain. Much of the business plan relies on centralized laboratories with state-of-the-art microscopes and lots of automation. They also think savings can be made by using local gynecologists instead of higher-paid fertility doctors.
Such investments can pay off in the long term, especially if insurers support them. But for now, the IVF part of the ART sector remains largely focused on selling more hope to the kinds of people who are already in a position to buy it.
This will not stop the spread of IVF. But the current state of affairs makes it likely that investors and entrepreneurs will not be the driving force. Politicians will be – either because they simply think it’s the right thing to do, as in much of Europe, or because they worry about population aging, as in much of Asia, or because their voters become more and more persistent.
Correction (July 24, 2023): This story has been updated to reflect that TMRW only freezes and stores eggs and embryos, not sperm.
© 2023, The Economist Newspaper Limited. All rights reserved. From The Economist, published under license. Original content can be found at www.economist.com
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Updated: Sep 15, 2023 1:46 PM IST