In a world marked by rapid lifestyle changes, sedentary habits, the lure of junk food, and the pressures of modern life, fertility issues have become an increasingly common concern. Factors like smoking, alcohol consumption, environmental deterioration, stress, a focus on financial independence, and delayed marriages have all converged to create a complex web of challenges for those aspiring to start a family.
However, amid this shifting landscape, there is a beacon of hope: Assisted Reproductive Technology (ART).
ART encompasses a wide array of fertility-related treatments involving the manipulation of eggs or embryos. It offers a diverse range of solutions, each tailored to specific fertility needs:
- In Vitro Fertilization (IVF)
- Intracytoplasmic Sperm Injection (ICSI)
- Gamete Intrafallopian Transfer (GIFT)
- Zygote Intrafallopian Transfer (ZIFT)
- Intrauterine Insemination (IUI)
In recent years, a significant and widespread shift has emerged in the realm of healthcare, one that transcends borders and impacts both developed and emerging markets. This transformative trend is the growing popularity of In Vitro Fertilization (IVF) procedures. Notably, this change isn’t confined to mature healthcare economies like Australia, the United Kingdom, and the United States; it’s also sweeping through key emerging markets such as India, Latin America, and the MENA region. Below graphic shows cost comparison of IVF procedure region wise, showing India as a good cost-effective market for IVF treatment.
(Source: All India Institute of Medical Sciences)
India’s IVF boom: Investing in hope
India, a society that has historically placed immense value on biological parenthood, is currently undergoing a profound transformation in societal attitudes. Stigmas surrounding infertility are diminishing, and with that change comes greater acceptance of IVF as a means to achieve parenthood.
IVF, the flagship procedure within ART, involves a meticulous process of egg retrieval, sperm retrieval, and the delicate fusion of these elements within laboratory settings. The resulting embryo(s) are then carefully transferred to the uterus, where the journey of gestation begins.
In this blog post, we will delve deeper into the world of IVF, exploring its myriad facets and success stories, navigating the challenging terrain of fertility issues, and understanding why it has become an attractive industry from an investment perspective.
As per the data reported by Business standard, the organized IVF sector in India, which enjoys ~ 18% share of the total Rs 6,000+-crore market, and is growing at 15%-20%.
Investments in IVF industry:
As per the data from Venture Intelligence, since 2018, the IVF industry has already seen investments worth $318 million from leading private equity (PE) funds. The driving forces behind this phenomenon are accessibility and expertise, making India an increasingly attractive destination for medical tourism in the field of IVF.
Noteworthy IVF Transactions: Industry Insights
In this section, we’ll explore the key transactions that have reshaped the IVF industry since 2017 to date, offering valuable insights into its evolving landscape and promising future.
(Source: Business Standard, Dark side of IVF boom: Money pours in but industry remains unorganized)
Baring Private Equity Asia’s $1.1 Billion Stake in Indira IVF:
Highlighting the global significance of this trend, Baring Private Equity Asia (BPEA) recently made a strategic move by acquiring a 60% stake in one of the largest chains of fertility clinics, Indira IVF, having 16%-17% of the Indian IVF market. This acquisition was valued at approximately $1.1 billion (Rs 9000 crore), and it involved existing investor TA Associates selling their 47% stake. Indira IVF’s financial performance underscores the sector’s potential, with a reported profit of ₹340 crore on a revenue of around ₹1,205 crore in the fiscal year ending on March 31, 2023. This success story is even more remarkable when you consider that Indira IVF started as a single clinic and has since expanded into a nationwide network comprising 116 centers across 20 Indian states, performing an impressive 40,000 IVF cycles annually.
(Source: Business Standard, Fertility chain Indira IVF seeks partnerships to expand clinics in India.)
Gujarat’s Fertility Frontier: Wings IVF Acquisition By Nova IVF
The driving forces behind the surge in the number of fertility clinics are twofold: a surging demand for ART treatments and a burgeoning number of fertility clinics and ART centers. In the midst of this dynamic landscape, one such fertility center, Nova IVF Fertility, India’s second-largest fertility chain, made a strategic move that deserves our attention. Nova IVF Fertility expanded its footprint in the vibrant state of Gujarat by acquiring Wings IVF, an Ahmedabad-based fertility center. This acquisition was valued at an estimated Rs. 125-140 crore and encompassed six centers in Gujarat.
Wings IVF, launched in 2014, quickly spread its wings to multiple regions, including Gujarat, Rajasthan, Bihar, and Delhi. What sets Wings IVF apart is its specialization in treating couples with recurrent implantation failures, with an astounding 20,000 live births achieved through IVF pregnancies. As per the sources, Wings IVF is expected to achieve a revenue of ₹70 crore and an Ebitda of ₹12 crore in the fiscal year 2024.
Verlinvest’s Foray into Indian Healthcare:
Vinesh Gadhia, CEO, Ferty9 Fertility Center, highlights that one of the key factors driving investor interest in the fertility sector is the remarkable technological advancements over the past few years.
Verlinvest, an investment firm founded by the families of beer maker AB-Inbev and based in Brussels, has made a strategic move with its first investment in the Indian healthcare sector by acquiring a controlling stake in Ferty9 Fertility Center, a fertility chain in the AP/Telangana region that was founded by Dr. C. Jyothi Budi and her partners in 2013. By investing around USD 50 million in the platform, Verlinvest will focus on scaling Ferty9’s footprint, offering, and positive impact nationally.
Key observations:
- The allure of the IVF industry for investors is undeniably strong, driven by cutting-edge technology, a growing demand for fertility services, and a commitment to reshaping the future of reproductive medicine.
- Recent regulations in Assisted Reproductive Technology (ART) for 2023 have further solidified the industry’s attractiveness. These regulations emphasize ethical practices, ensuring fairness and transparency in oocyte donation, protecting the rights of donors, and mandating genetic disease screening for enhanced safety.
- Investments are not confined from India alone, as evidenced by Verlinvest’s entry into the Indian healthcare sector. This signifies the industry’s appeal on a global scale.
- The fusion of Artificial Intelligence (AI) with IVF is revolutionizing the industry. AI algorithms can predict embryo viability and optimize fertility medication dosages, enhancing success rates.
- As we stand at the crossroads of medical innovation and compassionate care, the IVF industry continues to prove its worth not only in the quest for parenthood but also as a promising avenue for those seeking investment opportunities with a lasting impact.
Prepared By
Nishtha Gurnani
Investment Banking Analyst – IBGRID
MBA in Finance (Gold Medalist)