KEY POINTS:
New Zealand has a fast-growing industry with a world-class "product" which has improved markedly over the past few years and consumers who can't get enough, making it pretty well recession-proof.
A large Australian company has recently expanded into New Zealand, rebranding two operations, and the dominant player in
the market is buying back a 40 per cent shareholding from a private equity investor.
The industry in question is IVF - in-vitro fertilisation, the process where egg cells are fertilised outside the womb, which every year helps hundreds of New Zealand women achieve their dream of "going home with a baby", as the fertility clinics like to say.
The treatment - which uses drugs to control a woman's ovulation - is not to be taken lightly. It is physically and emotionally gruelling and is often so taxing that many women either stop work or slow down their careers to go through it.
But the success rates are encouraging. According to fertility company Repromed, about 50 per cent of women under the age of 38 who have IVF treatment at Repromed-associated clinics become pregnant on their first cycle. After two cycles, the chances of pregnancy increase to over 70 per cent, and to 90 per cent after three cycles.
The IVF industry here is run by clinics such as Fertility Associates, Repromed Auckland and Christchurch, and Fertility Plus at National Women's Hospital in Auckland. They are supplied with the necessary drugs by international pharmaceutical companies like Merck Serono and Schering-Plough, and in the background there are a variety of alternative therapists - acupuncturists, massage therapists, even hypnotherapists.
Meanwhile, the publishing industry has done well out of couples seeking answers, from the more lighthearted Inconceivable by Ben Elton to Nature's Not Enough by Diana Olick.
According to one of the major fertility clinics, publicly funded treatment now amounts to around $10 million a year and private patients pay a similar amount. Private IVF business alone has the potential to reach $15 million to $25 million in the next few years, it predicts.
That growth potential helps explain why IVF is no longer the province of doctors alone, and why private equity investors have taken an interest in the business of making babies.
One of the main reasons IVF is so sought after in New Zealand, as it is around the world, is because of the trend for couples to delay having children. The average age of women treated in the public system is 36, right at the top of the best age group for IVF.
Infertility is a medical condition affecting many people; one in four New Zealand couples of childbearing age experience some problem with fertility.
Michelle Collyer, executive officer for Fertility NZ - the advocate for consumers experiencing difficulty with fertility - says interest in fertility issues is growing. Between December 11 and January 12, there were 730 visits to its website - www.fertilitynz.org.nz - and 353 new members joined up.
It is thanks to Fertility NZ that there is now public funding for two IVF cycles - the Government gave the green light for the second in 2004 - and the charitable organisation is lobbying for a third round of funding.
Women seeking publicly funded treatments currently face a wait of at least one year (some say 18 months) and time is not something they have, given that many have discovered they have fertility problems in their mid- to late-30s.
Because of the intensive manpower involved and the specialist drugs, the treatment is costly for those paying privately - $10,000 to $15,000 per cycle.
Many couples will go into debt to pay for the treatment. Those who have gone through up to four cycles are likely to have spent more than $60,000, and some who have gone overseas for younger egg donors than New Zealand can provide have forked out well over $100,000.
Couples will make huge financial sacrifices to get a chance for that "one last try". One woman confessed that it was either getting her car brakes fixed or paying for her next cycle. Another, a high-earning marketing executive, says she is still living in the first house she bought in her late 20s and is driving an old car with no air-conditioning.
Two fertility clinic brands market themselves commercially in New Zealand. Repromed Auckland and Christchurch and Fertility Associates handle both private and public patients, although the majority are private. Another alternative is Fertility Plus, the service unit which operates out of National Women's Hospital.
In 1983, New Zealand's first IVF baby was born at National Women's, masterminded by doctors Richard Fisher and Freddie Graham. Frustrated with the slow public system, they went on to found New Zealand's best known fertility clinic, Fertility Associates, in 1987.
Repromed Auckland is the newest fertility clinic, set up by former Fertility Plus clinical director Dr Guy Gudex, who has been in the industry for 20 years. He set up IVF Auckland in October 2007, which was then rebranded Repromed Auckland last November.
Gudex has the support of experienced health executive Dwayne Crombie, chief executive of Guardian Healthcare Group, who is chairman of the board of directors for Repromed in New Zealand.
Repromed Australia, a sizeable operation which came out of the University of Adelaide in 2006, has clinics in Adelaide, Darwin, and Mildura and has taken minority shareholdings in Repromed Auckland and Repromed Christchurch, formerly the Christchurch Fertility Centre, headed by doctors Peter Benny and Gregory Phillipson.
"Part of our strategy was transtasman alignment," says Gudex, adding that there was a gap in the Auckland market and he is convinced the competition has seen Fertility Associates improve its service.
"We've been delighted with the response - we know the Auckland market very well, we are not new to it.
"Our philosophy when we set this up was to be patient-friendly. IVF was regarded as not particularly flexible. We offer ultrasound scans at lunchtime, in the afternoons, we are doing a clinic this Saturday. The Saturday morning clinic is very popular. We offer a very personalised service."
The fertility specialist says he linked up with Repromed for a number of reasons.
"I was interested in their quality management system, IT and research and development," he says.
Repromed Australia has developed the Repromed information management system, or RIMS.
"It allows us to manage a patient through their cycle, paperless. It's all sitting there on the screen. That's been really useful."
To run a fertility clinic cost-effectively, it needs to do a minimum of about 200 IVF cycles a year, says Gudex. Repromed Auckland is at 150 and will soon reach 200 or so. Fertility Plus does about 400-450 cycles and Fertility Associates around 700 in Auckland, estimates Gudex. With 40 per cent of the population, Auckland can sustain two or three clinics, he says.
Throughout New Zealand, there are about 2500 IVF treatments a year.
To help couples meet the cost of IVF, Repromed has set up a loan scheme with ASB, says Gudex.
"People approach ASB through us, they take out a loan if they need help."
Roger Stables, the New Zealand-born businessman who heads Repromed Australia, says becoming involved in two clinics here was straightforward, as he knew Gudex and the Christchurch Fertility Centre's Peter Benny and Greg Phillipson well. He believes Repromed's Australian experience can make a difference in New Zealand.
"In Adelaide we have the advantage of links to the University of Adelaide. We have got access to new science and also it's a recruiting ground; we can successfully recruit bright young scientists," he says.
In a sign of the financial potential of the IVF business, private equity company Ironbridge Capital took a $39 million stake in Repromed last August.
The advantage of the model in Australia, says Stables, is that most programmes are able to go to two to four cycles. Many couples in New Zealand still do other forms of fertility treatment as well as IVF.
"Where the cost is really small here, then you can go straight to what is really the best chance of success. With three cycles you have a 90 per cent chance of going home with a baby. If it is a hit-and-run exercise and you have one go, you are diminishing the chances."
Australia has been pushing IVF treatment as part of its social policy since 1990 under the Hawke Government. It was driven by a concern about Australian population growth, explains Stables. IVF babies represent 2 per cent of those born in Australia compared to 1 per cent in New Zealand and 6 per cent in Denmark.
According to Stables, the main science of IVF is done. "There is no silver bullet to come", he says, although there is a lot of very important genetic work in the pipeline. Around 80 per cent the reason for infertility is relatively straightforward to diagnose, he says, while 20 per cent of cases are difficult and that's where you need specialists.
Now it's about "improving the patient journey", says Stables. Repromed is pushing the shorter cycle. The old and long regime had nasty side effects, he says. It made women feel menopausal and gave complete control of their cycle over to the doctor.
"We want to remove as much of the unpleasantness as we can. The way we have always viewed it, is if we deliver a very good service we don't need to treat it as a commercially aggressive business. And business success will follow."
While Fertility Associates has undoubtedly been closely watching its new competitor, its biggest preoccupation is its decision to buy back a 40 per cent shareholding held by investor ABN Amro.
In 2003, Fertility Associates sold the shareholding to Monash University's IVF group - which pioneered the first frozen embryo birth - because it wanted to have a relationship with a larger IVF unit. Then private equity moved into the IVF market and ABN Amro bought a controlling stake in Monash IVF in 2007.
Although the company was comfortable to be part of Monash, it was "uncomfortable" having private equity as a major shareholder, says Fertility Associates medical director Dr Mary Birdsall.
"Private equity does not care about pregnancy rates, it cares about the bottom line," she says. "We are buying [the shareholding] back because we don't want to be part of a corporate. We want to be doctor-led."
Fertility Associates partners met recently to vote on going ahead with their bid to buy back ABN Amro's shareholding, which represents
a good opportunity for younger partners to buy into the business, says Birdsall. "No one's allowed to get sick or retire!" she adds.
The two founding partners, Richard Fisher and Freddie Graham, will continue to be involved.
She is hopeful about the company's future - "I think we are still seeing some growth in the market" - but would love more public funding.
"It will be interesting to see how the National Government views us," she says. "We had some very friendly conversations with them prior to the election."
With the government system, if you get a baby on the first cycle there is no further funding, explains Birdsall. "Most of us [think] of a family as more than one child," she adds drily.
However, she might have to wait for an official change of heart. "The Government would like to do more," Health Minister Tony Ryall said last month, "but at this stage we don't have the financial resources available."
So does fertility pay as a profession? If you want to make real money, you do orthopedics or cardiology, says Birdsall.
"I do it because it's lovely helping someone have a family, it's the biggest buzz around, particularly if you have got children."
Birdsall is fully aware that it's a financial stretch for some people, but she prefers to keep her distance from lenders.
"We have no relationship with them, we tell people of their existence.
"It's an area that we feel uncomfortable with. We hate to think of people going into debt to finance the treatment. People do without new cars and holidays."
Fertility Associates and the other clinics have developed relationships with some alternative players - acupuncturists, counsellors, psychotherapists and herbalists. A recent study showed that 66 per cent of IVF patients were using some alternative healthcare provider, says Birdsall.
"A lot of people don't tell us about it, fearful of what we might say."
There's an emerging body of work showing that acupuncture might be helpful for IVF patients, she acknowledges.
One of the best-known names in fertility-related acupuncture is Auckland-based doctor Vitalis Skiauteris. When he arrived in New Zealand in 2002, he found that acupuncture treatment of fertility was controversial, but it is now much more accepted, he says. About three quarter of his patients are women trying to conceive, and most do acupuncture as an adjunct to IVF. He charges $390 or more for a series of treatments.
Animal studies show that acupuncture increases the blood flow to the uterus, says Dr Skiauteris, but more research is needed.
There is also scientific research which shows that acupuncture regulates stress hormone levels. Skiauteris says he has been accepted by the fertility clinics. "I am already working very closely with the clinics; they have got an open approach."
Are the clinics offering a perfect service? Some women who have been going through the process for several years would argue not. They see the clinics as increasingly commercial, although they appreciate their expertise.
Anna, a Fertility NZ member and lobbyist, is excited about the arrival of Repromed. "We all heard really good things from them."
She likes the fact the company is offering short cycles. "I thought it was fantastic. I travel a bit for work, it was short and sweet."
She has also watched the clinics' marketing campaigns with interest. "From the consumer perspective, I feel that there's very little thought and compassion ... when looking at marketing initiatives and communications in the clinics," she says.
"What they are missing is there's no commitment to the consumer. If there was, they would appoint a consumer or ex-consumer on their boards for advice ...
"There are many examples where the clinics are not being upfront and discussing options early enough, giving clients the ability to get more aggressive in their treatment.
"These people feel that they have wasted a lot of time and effort - they need clear options. I feel like the clinics are money-grubbing."
While the specialists say that theirs is a vocation, Anna is cynical.
"It's a business without a doubt. If they were motivated from a truly vocational perspective, they would want to have the consumer more involved.
"They would not be worried about things like looking pretty; they would put everything into research and equipment."
One Auckland woman, Diana, aged 39, did her own research. After going through more than five cycles of IVF treatment, she flew to the United States to find an egg donor.
She and her husband have spent well over $100,000 on their quest. They have tried several egg donors in the States, paying each one US$10,000 to US$15,000 ($19,075 to $28,614).
The advantage US egg donors have over New Zealand ones is that they are younger. Women must be over 20 to be an egg donor in the US, whereas in New Zealand, women must have completed their families, so they are often in their 30s.
Diana knows other women who have gone to the US like her, and some who have gone to the Czech Republic and Spain because they are cheaper. In the US, says Diana, some clinics offer cheaper plans for people on lower incomes, refund plans if the treatment does not work and other deals such as three rounds of treatment for the price of two.
Diana found the medical advice in the US refreshingly blunt. The information she received there was much more illuminating, she says. While she had five IVF cycles in New Zealand before she took the egg donor route, she thinks that if she had been given all the information, she would have stopped at three or four.
She also feels, had she had better advice, that she would have gone straight to IVF treatment rather than trying other treatments first like Intrauterine Insemination. Diana and her husband also looked for an egg donor in New Zealand - a year-long process which in the end proved fruitless.
Despite her concerns, Diana maintains respect for her fertility clinic here.
"As much as women research and research you still want to be guided by the clinic. They are the experts. I do think it's a vocation for the medical staff at the clinics, but it's a business as well."
30 years on
The world's first baby conceived using IVF was Louise Brown, born in Manchester in 1978. Her younger sister, Natalie, was the 40th, and later became the first IVF baby to give birth herself.
