April 21, 2024

Road to profit in IVF like “fast food industry”

A business profile of the two largest IVF practices in the Australian state of New South Wales shows that they have extraordinary potential” for profitability. In one of the world’s first behind-the-scenes look at the finances of the fertility business, Margot Saville, of the Sydney Morning Herald, says that Sydney IVF and IVF Australia have been transformed from medical cottage industries into 21st Century conglomerates. IVF Australia earned revenue of almost A$15 million in the 2002-03 financial year, with a net profit of $1.5 million. Sydney IVF’s profit for the same period was only $684,00 on a revenue of $21.3 million but it had invested $1.5 million in R&D — “a virtuous circle which gives us a competitive advantage on the clinical side,’ says chairman Rowan Ross.

One of IVF Australia’s directors, Robin Crawford, has a clear idea of the business model for fertility clinics. “In other areas of medicine, you just pay for the doctors’ hands-on time, and you can’t leverage the skill base of the doctor,” he told the SMH. But in this business, “most of the work is not done by the doctor; it’s done by the nurses and the scientists. You can leverage off that and add volume.” A part-owner of a fine-dining restaurant in the Sydney Harbour suburb of Balmoral, Crawford says that the IVF model is like “the fast food industry, with lots of outlets”. Although neither company is large enough to float on the sharemarket, eventually they could be sold to health-care providers.