Despite perceived rising populations, the number of births is in decline, and we are facing a world in which the volume of elderly persons far surpasses the young. Fertility is not just an emotional issue, it is important in terms of securing the future. Now is the time to sit up and pay attention. This is an industry that’s on the rise, and private equity has a key role to play.
In the UK, of the 76,000 fertility treatments taking place each year, 60% are paid for out of the patient’s own pocket. Private clinics make up 34% of the UK’s 119 fertility treatment centres, compared with 22% of NHS clinics. In terms of NHS/Private partnerships, the figure is 29%, according to data from the HFEA.
Online Data Analysis
OneFourZero has performed analysis of online performance in the UK fertility sector, looking at the top 20 functioning non-NHS fertility centres registered with the HFEA, as well as the 14 functioning NHS centres registered with the HFEA.
We found that the top 20 private fertility brands collectively account for 83.9% of site traffic towards the full 45 UK centres in the private sector, with modest traffic growth from the previous 12 month period of 3.2%. Interestingly, by comparison, traffic towards NHS fertility services pages (both on the main NHS site and those of the 14 dedicated NHS fertility centres) has grown by 59.5% over the same period. This could be the result a number of factors but our experience indicates budgetary considerations and using the NHS as the primary research tool are prominent.
Despite the impressive traffic growth for NHS fertility services, social media sentiment analysis tells a different story. Online conversations regarding the private sector demonstrate net positive sentiment which continues to rise, with positive sentiment rising 5.2% over the previous 12 month period and the rise in conversation about the private sector in general seeing a 36.3% rise. The NHS has fared much worse, with net sentiment dropping by over 10% from an already negative starting point and general conversation plummeting by over 17%.
It’s important to note that our analysis should be viewed directionally, though this should not impede our general understanding of the growth, behaviour and development within these sectors.
The Dominance of the Private Sector
Perhaps one of the key reasons for the dominance of the private sector is the significant growth of multi-clinic groups, particularly in Manchester and London. With increased demand for treatment, there is strong competition between private clinics, leading to ever-more prevalent and pervasive marketing campaigns designed to draw in patients; campaigns that, of course, one doesn’t see for NHS services. And despite largely positive reviews and comparable outcomes for NHS fertility services, confidence in the National Health Service is low. The result? Fertility is big business. Indeed, the global fertility market is expected to exceed $21 billion by 2020.
Whilst arguably mercenary, but there’s a deeper element here that supports the argument that private equity investment in the Fertility sector is a good thing. Infertility affects one in six couples, yet relatively few are able to afford private treatment. Private equity can actually help to improve affordability and accessibility to services, bypassing long waiting times that put the NHS on the back foot. By acquiring fertility clinics and egg banks, the industry becomes increasingly standardised, expanding reach to underserved areas and driving down prices for treatment.
Taking the NHS out of the equation, as we look to the States where health insurance rarely covers fertility treatment, yet 250,000 cycles of IVF are conducted per year, these benefits are even more pronounced.
Private Equity Deals In Fertility
2019 has seen several private equity deals and investment into Fertility. Among these, the acquisition of Bowmark-owned CARE Fertility by fellow private equity firm, Silverfleet Capital in April for an undisclosed sum, after CARE itself bought Bath Fertility in March. Swedish investment firm Impilo acquired a majority stake in The Fertility Partnership in March, following on from their 2017 majority interest purchase of Ultrasound Direct.
Key Areas of Investment
In the 2016-17 period, of a total of 86,016 treatments, 76,469 were for IVF specifically. 96 of the 119 licensed fertility clinics in the UK, 96 of these were specialist treatment centres for IVF and Embryology services.
In terms of geography, London and the South East accounted for the vast majority of clinics, comprising 39% of all treatment providers and seeing 45% of all patients overall.
The FemTech Phenomenon
It’s also worth looking at fertility as part of the wider phenomenon of FemTech, where private investment is booming. Global private investment in FemTech exceeded $400 million in 2018 (up from $354 million in 2017).
FemTech covers a broad range of tech-driven services for women, including everything from period and ovulation tracking to period-proof underwear and smart tampons for diagnostic and genetic testing.
FemTech represents part of the broader paradigm shift towards a more female-focused world at large. In a world where only 7% of partners at the top VC firms are women, and the vast majority of investors, even in healthcare, are men, there is a loud cry to break the wheel. And that is exactly what is happening.
There is clearly a wealth of opportunity for private equity investment in fertility, and services for women as a whole. The numbers speak for themselves, but looking to social, analysis demonstrates positive sentiment within both Fertility and FemTech related keywords. By investing in fertility, private equity investors stand to benefit not just themselves, but the broader culture itself.