Sunitha and Suresh Ramaswamy, both Gurgaon-based corporate executives in their late 30s and married for a little over 10 years, have been planning a family for the past three years. “We decided to go in for a late pregnancy as we wanted to focus on our respective jobs in the initial years,” says Sunitha, 38, a senior HR executive in a blue-chip multinational.
After repeated attempts at conceiving, the couple decided to go in for in vitro fertilisation, or IVF, and are expecting their first child in November.
Like Sunitha and Suresh, nearly 10-15 per cent of married couples in India today suffer from infertility, or the inability to conceive by natural means. Changing lifestyles, stressful work and personal environment, increased consumption of alcohol, tobacco and rising levels of obesity, among other factors, are leading to a drastic rise in infertility cases across the country. Besides, medical conditions such as poly-cystic ovarian syndrome, endometrial tuberculosis and sexually transmitted infections too are adding to infertility problems.
According to data available with healthcare private equity firm Quadria Capital, although infertility affects nearly 28 million couples seeking children, only 1 per cent of them are seeking treatment. The total demand for IVF cycles, primarily used for treatment of infertility, was 100,000 in 2015 and is expected to touch 260,000 by 2020 at a compound annual growth rate (CAGR) of over 20 per cent, throwing up a plethora of opportunities for both domestic players and foreign chains wanting to either establish or strengthen their presence in the bourgeoning IVF market.
“The IVF market is estimated to be underpenetrated by 9-12 times than the addressable demand in the key cities such as Delhi, Mumbai and Bangalore, and provides a huge opportunity for penetration of IVF centres across the country,” says Amit Varma, managing partner at Quadria Capital. “The IVF market is highly fragmented with both domestic and a handful of foreign companies offering services,” he adds.
Of the nearly 1,000 centres offering IVF across the country, organised players account for 50 per cent of them and contribute three-fourths of the total number of cycles.
Swedish firm Medicover, which has a significant presence in the European market, is for the first time foraying out of the region to set up its establishment in India and take on some PE-backed IVF firms and other fertility clinics operating in a fragmented market. It is the first European family-owned organisation to bring in 100 per cent investment in healthcare delivery.
Medicover plans to launch around 50 greenfield fertility clinics over the next few years across the country and expecting to generate revenues of over $100 million in five years. “In the first phase, we will be looking to tap the market in Delhi, the National Capital Region (NCR), and states like Punjab, Uttar Pradesh, Maharathtra and Rajasthan,” says Fredrik Stenmo, director at Medicover Holding. “It is absolutely fantastic to be in India as there is incredible potential in the domestic market, which offers a great diversity,” he adds.
The other prominent foreign player in the market is Bourn Hall India, which is a part of the UK-based healthcare services firm Bourn Hall International that specialises in IVF treatment. Domestic single specialty hospital chains that cater to IVF treatment include Nova, Ridge IVF, Milann Fertility Centre, Morpheus IVF, Bloom, Indira Infertility Clinic, among others. In addition, several multi-specialty hospital chains including Max Healthcare, Fortis Hospitals and Apollo Hospitals offer IVF treatment. “In the recent past, the sector has witnessed an exponential growth… the drivers being increased availability/accessibility of competitive treatment procedures,” says Rohit Kapoor, senior director and chief growth officer at Max Healthcare.
A recent entrant to the market is the Patni Group through its venture Currae Specialty Hospitals and Currae Gynaec, IVF and Birthing Hospital. Apoorva Patni, director, Patni Healthcare, says the group plans to leverage its IT experience and latest modern medical technologies to be part of the transforming healthcare in India.
Currently, all foreign and domestic players are trying to upgrade technology in IVF treatment. Richa Jagtap, chief fertility consultant at Nova IVI Fertility, which has recently introduced Magnetic-Activated Cell Sorting (MACS) — an efficient method to select functional sperms and enhance pregnancy rates, says: “MACS applies a magnetic field through which the semen sample is run. The magnetic forces will attract and bind the fragmented DNA containing sperms leaving the better sperms to come out unaffected. These selected sperms are then seen under high power microscope to further select the best looking sperms.” So far, in IVF, typically, sperms were randomly chosen for the procedure.
Of late, infertility has become a major concern in India. According to data available with Quadria Capital, 40-50 per cent of infertility cases are due to female factor with male factor contributing to the rest. While there is a rise in the proportion of women in the reproductive age of 20-44 years (14 per cent increase estimated between 2010 and 2020), the increase is skewed towards those aged between 30-44 years (20 per cent increase estimated between 2010 and 2020), who typically display lower fertility rates.
“This shifting demographic trend coupled with increasing contraceptive use and risk factor exposure is likely to drive further rise in the burden of infertility in India,” says Quadria Capital’s Varma.
The IVF market in India was estimated to be over Rs 43 billion in 2015. The IVF treatment has witnessed a robust CAGR of over 18 per cent during 2005-2015, and the volumes in the sector increased from 19,000 cycles in 2005 to 100,000 cycles in 2015. During the same period, the total number of IVF centres in the country increased from 108 to over 1,000 at a CAGR of around 25 per cent. The overall market is expected to hit the Rs 80 billion mark by 2018 with a CAGR of 14 per cent.
However, the penetration of the IVF market in India is quite low at present with only 2,800 cycles/million infertile women in the reproductive age group (20–44 years) as compared to China which has 6,500, US 46,042 and Germany 50,884 cycles. The key challenges are lack of awareness, affordability and accessibility.
Still A Taboo?
“There exists a social stigma around IVF treatment in India. Being a conservative society, social and religious concerns prevent people from seeking IVF treatment. There is still a section of society which is unaware of the positives of this treatment,” says Nilaya Varma, partner and head, Healthcare, KPMG in India.
While the market for IVF is growing, many people still refuse to accept the scientific facts behind IVF. Family succession in case the child doesn’t carry family genes, treating the child as multi-parental creation, and child’s emotional safety are some of the key taboos existing in the society. Additionally, third-party donors, whether they provide eggs, sperms, embryos or surrogacy, are anathema, especially to people with religious and social reservations.
Typically, the cost of IVF treatment in India ranges between Rs 150,000 and Rs 200,000 per cycle and often requires multiple treatment cycles — generally 1-2 cycles per couple. The cost of an IVF treatment in India is 3-4 times lower than that in markets such as the US, the UK, Spain and Russia, which makes India a favoured destination for medical tourism in the IVF space. A basic IVF cycle in the US costs approximately $10,000 compared to just $3,000 in India.
“India has become one of the favoured destinations for infertility treatments due to its medical expertise and cost-effective technology,” says KMPG’s healthcare Varma. Echoing the same sentiment, Kapoor from Max Healthcare adds: “Mostly patients from Britain, Japan, the US, Australia, Iraq and eastern African nations frequent India for IVF procedures. The main drivers here are quality healthcare services and cheaper cost of treatment.”
Currently, India and other Asian countries attract 40 per cent of US women seeking IVF and 52 per cent of US women seeking IVF with donor eggs. Delhi-based IVF specialist Archana Dhawan Bajaj says: “India has been a forerunner especially for infertility treatment. The cost is less than half compared to countries like the US, UK, Germany, which draws many reproductively challenged medical tourists to the country.”
So all in all, factors such as under penetration of the infertility market, quality medical expertise, state-of-the-art technology and a cost-effective healthcare system along with vast demographic statistics make India a very important market for IVF players.
The Road Ahead
Healthcare is one sectwor that addresses the domestic consumption story. And within healthcare, single specialty chains that cater to one area of healthcare – be it eye care, dental care, fertility or oncology, to name a few – are witnessing a robust growth.
Going forward, analysts tracking the sector say the market is likely to witness more players foray in and the existing ones are likely to witness significant deal activity. Some of the prominent deals in the sector include the acquisition of Bengaluru-based Nova Specialty Hospitals by Apollo Health and Lifestyle and Ankur Healthcare’s buyout of Genesis Fertility Centre.