Big business cashing in on reproductive services boom

Xavier Symons
25 May 2013
Reproduced with Permission

The cliché "bundles of joy" has two meanings in the assisted reproduction industry: babies and cash. Keen businessmen are scrambling to take advantage of this burgeoning area of the health sector.

This was evident last week when reproductive services corporation Virtus Health conducted a hugely successful IPO. The market priced the shares of Australia's largest reproductive services provider, at A$5.68. The company is now valued at $449 million.

Virtus has become a behemoth. It owns almost 50 fertility clinics, day hospitals, and laboratories across Victoria, NSW and Queensland. It has also established a low-cost clinic in each state that targets "a new segment of the market for whom fertility treatments were previously unaffordable". The company employs over 80 fertility specialists, supported by 650 staff. It performed about one-third of all of Australia's 39,000 fertility cycles last year. According to Virtus's prospectus, IVF cycles and other assisted reproductive services generated revenue of more than $350 million.

Virtus has now set its eyes on expansion into Asia. CEO Sue Channon told the Australian Financial Review (AFR) that "The Asia-Pacific, China, India and Middle East markets are very immature and highly fragmented and we are looking for opportunities in these areas at the moment".

AFR finance expert Michael Stutchbury said that "Virtus is in a bit of a sweet spot as it's a unique offering, IVF is not listed anywhere else in the world [and] healthcare is a strong growth area". Even the Wall Street Journal is following Virtus's growth with keen interest. As The Australian punned, this is "a fertile ground" for investment.