Beyond the womb: Journeying through India's largest lab-to-life unit

(From Left to right:) Kshitiz Murdia, co-founder and chief executive officer of Indira IVF; Ajay Murdia, founder and chairman; and Nitiz Murdia, co-founder and managing director. They started Indira IVF in 2011. (Sanjay Fatnani/Mint)
(From Left to right:) Kshitiz Murdia, co-founder and chief executive officer of Indira IVF; Ajay Murdia, founder and chairman; and Nitiz Murdia, co-founder and managing director. They started Indira IVF in 2011. (Sanjay Fatnani/Mint)

Summary

The domestic IVF market is on steroids and Indira IVF is eyeing a larger share of the pie

UDAIPUR : It is a busy Monday morning at the Udaipur centre of Indira IVF Hospital Pvt Ltd. Inside the four-storeyed grey-stoned building, you can sense the high tide of hope. A sea of greying couples patiently wait—around the security desk, at the reception, in the seating areas. Round banners, hanging from the ceiling on every floor, inform them of a milestone: “Celebrating 125,000 successful IVF pregnancies".

IVF is short for in-vitro fertilization, the process of fertilizing eggs and sperm outside the human body, in a lab. The embryo is then transferred inside the uterus. Since the fertilization process takes place in a glass or plastic container, with the test tube being the most commonly used apparatus in a biology lab, the babies born out of an IVF procedure are colloquially called ‘test-tube babies’.

Forty-five summers ago, on 25 July 1978, Louise Joy Brown was born in Manchester, England. She was the world’s first baby to be conceived through IVF. Ever since, the procedure has been the last hope of couples when other infertility treatments fail.

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Graphic: Mint

At the Indira IVF centre in Udaipur, this writer met one couple who travelled all the way from Delhi, 732 km away. The husband is 47; the wife 42. They have been married for 14 years but had no luck with a child. They already have a failed experience at an IVF clinic in Delhi but still remain hopeful. One of their relatives, in her 50s, managed to conceive at this centre.

Such stories have played a critical role in making Indira IVF the largest such chain in the country—by some distance. Upon inaugurating the second clinic in Pune, in March this year, the hospital’s tally totalled 116 centres across more than 80 cities. In comparison, the second largest chain, Nova IVF Fertility, has 68 centres in 44 cities. In 2022-23, Indira IVF performed around 39,000 IVF cycles, more than double the 18,000 cycles performed by Nova IVF Fertility.

An IVF cycle entails consultation with the doctor, required check-ups, hormonal injection, egg retrieval, embryo culture and embryo transfer. It takes three to five weeks, and costs around 1.25-2 lakh.

According to some estimates, in any year, India has about 27.5 million married couples who are actively trying to conceive and are suffering from infertility. But only about 275,000 IVF cycles are performed every year. That leaves a long runway for growth. According to industry estimates, the country’s IVF services market was valued at $750 million in 2020 and is poised to grow to $3.7 billion by 2030.

No doubt, private equity players see this as fertile territory to play in.

Mint recently reported that Blackstone, BPEA EQT, CVC Capital Partners, and General Atlantic are in the fray to acquire majority control of Indira IVF. Currently, US-based private equity firm TA Associates holds about 47% of the company, the rest of the stake being with the promoters. The chain is seeking a valuation of more than $1 billion.

Meanwhile, the IVF market in India is consolidating and a tougher battle for market and mindshare is expected in the years ahead. Indira IVF is hoping to garner a bigger share of the pie, piggybacking on the brand it has already created and fast expansion with private equity money.

What exactly is the strategy? Before we answer, let’s look at how the company started.

Conception to birth

Ajay Murdia, the founder and chairman of Indira IVF, named the company after his wife. It is surprising that the man behind India’s largest fertility chain is not a gynaecologist—he is a pathologist.

Murdia left a government job in 1988 to set up a male infertility clinic, at the ground floor of his house in Udaipur.

“He was also among the first to establish a commercial sperm bank in the country at a time when there was no concept of sperm donation," says Nitiz Murdia, the elder son of Ajay Murdia. Nitiz is the co-founder and managing director of Indira IVF.

Murdia developed novel media for handling semen, which increased the survival rate of sperm from less than 10% to 80%. He started supplying it to other doctors and labs.

“He was very aggressive in marketing," says Nitiz. He put out ads in newspapers directed at awareness, he adds. In addition, Murdia began conducting training sessions for other doctors, charging 50,000 for a two-day workshop, back in the 1980s and 1990s.

Nitiz had no plans to join his father, nor did his younger brother, Kshitiz Murdia. Nitiz is a graduate from the Indian Institute of Technology, Kharagpur, and was working at Schlumberger, an offshore drilling company. Kshitiz, a doctor, was working in the US.

Nitiz started helping his father with marketing and innovation in the late 2000s. Later, Kshitiz returned to India and earned a specialization in gynaecology. Currently, he is the co-founder and chief executive officer of Indira IVF.

When the father wanted to explore the IVF treatment business, the two sons helped him plan and renovate his old clinic into an IVF lab, with a capacity of 10-15 IVF cycles per month.

That’s how Indira IVF came into existence, in 2011.

The spoke model

From the very beginning, it was an all-family affair. Murdia took charge of counselling and consultation while other family members manned the reception and the cash counter.

By 2013, the small lab was performing 470 IVF cycles per month. People waited on the streets, across the centre—such was the demand.

Indira IVF, however, had hit the ceiling. It couldn’t increase the number of cycles any further. Patients from outside the city also started complaining of distance. The Murdias decided to branch out, but they were not yet confident of setting up shop in a big city. The second centre came up in Pune, in 2014. Within months, this centre reached 200 IVF cycles per month. The following year, Indira IVF opened in Delhi. Between 2016 and 2018, the chain stepped on the gas, opening 47 centres, largely across northern and eastern India..

Murdias then realized that opening a full-fledged lab in every town wasn’t feasible. “Finding the right doctor and training manpower was a challenge," says Nitiz. So, they adopted a hub-and-spoke model. For instance, in the national capital region, its Patel Nagar centre in Delhi is the hub while Faridabad is a spoke.

Patients need to go to the lab in a hub only twice—for egg pick-up and embryo transfer. These hubs are staffed by about 25-30 people. However, they also need to visit a doctor daily for 12 to 15 days for tests, medication, and monitoring before the egg retrieval.

The spokes, with one doctor and five-six support staff, come in handy here. They are also closer for many couples to travel to. “Such an arrangement greatly reduces their travel and stay cost," says Nitiz.

This strategy, despite initial apprehensions, worked for the company. Today, the company has 51 hubs and 65 spokes.

Tech edge

Very early, the family decided to opt for the best in technology, another strategy which appears to have worked for the fertility chain.

“When the first centre was being established, my father was adamant on installing a ‘closed working chamber’, which he had seen in Europe. This cost as much as setting up the entire lab," recalls Nitiz. The system was imported from Australia.

A closed working chamber, using high-efficiency filters, maintains the human body temperature of 37 degrees Celsius, the required CO2 level at 6% and other conditions to provide a womb-like atmosphere for the handling of gametes (sperm and eggs) and embryos.

In addition, Indira IVF invested in electronic witnessing systems, which prevent the mixing of gametes of unrelated parents, using radio frequency identification chips.

The latest addition to its labs is a product from a company called Life Whisperer. Using artificial intelligence, it assesses the images of embryos for quality and grades them. So far, embryologists have used their judgement to pick the right embryo, but this system attempts to minimize human discretion.

Growth from diversity

A key inflection point for the chain was the investment from TA Associates in 2019.

Indira IVF grew from 50 to 116 centres since the private equity player came onboard. Moreover, it also grew from being a family-run and doctor-mindset organization to a professional, process-driven and data-led organization.

But TA Associates is now looking to exit, and the Murdias are going through rounds of discussions with various private equity funds, as reported by Mint.

The incoming capital could be used for further consolidation of the market, international expansion, as well as diversification.

Indira IVF is expecting to take the annual number of IVF cycles to 45,000 and the centre count to 140-150 by 2023-24. The company is planning expansion in Nepal, Bangladesh, Southeast Asia, the Middle East, and Africa.

Fertility clinics have diagnostics needs. Thus far, Indira IVF outsourced the diagnostics needs to Ahmedabad-based Neuberg Supratech and Gurugram-based Agilus Diagnostics. That will change soon. Indira IVF has already forayed into diagnostics—called Indira Path Labs, the diagnostics arm is currently active at five of its centres in Mumbai, Delhi, Lucknow and Patna. The plan is to expand this service across centres.

For a fertility clinic, a logical extension of the business is mother and childcare (delivery and neonatal care). Indira IVF, for the longest time, resisted diversifying into this market. But this, too, is set to change. Two mother and childcare centres are coming up in Dehradun and Pune in the next five months.

These new markets won’t be easy to crack. There is established and growing competition.

Indira vs Nova

Indira IVF is not the only fertility chain to draw interest from investors. In 2019, Asia Healthcare Holdings (AHH), a healthcare investment platform, acquired Nova IVF Fertility, which is headquartered in Bengaluru.

In the last four years, Nova has grown from just 19 centres to 68. Meanwhile, Nova already has an edge in mother and childcare centres. AHH-run Motherhood Hospitals, a mother and child healthcare network, are present in many of the cities Nova operates in—this ensures an overlap between the two segments of the businesses that feed into each other.

Indira IVF also faces stiff competition from Oasis Fertility, which, in August 2022, raised $50 million from the domestic private equity fund Kedaara Capital. Then, in April, Brussels-based Verlinvest acquired a controlling stake in Ferty9 Fertility Center.

The robust interest from investors is leading to market consolidation in the IVF segment, which has so far been quite fragmented. The introduction of the Assisted Reproductive Technology (Regulation) Act, 2021, has improved regulatory standards. However, compliance costs have risen while donor-led cycles have declined. This has also dampened the mushrooming of small IVF clinics, benefiting larger players.

A ‘donor cycle’ uses eggs or sperm from a donor while ‘self-cycle’ IVF is when a couple’s own gametes are used. The law puts greater restrictions on donation and disallows commercial transactions with a donor. The fertility clinics are now bound to work harder with couples to help them conceive with their own gametes, which is self-cycle IVF. If couples suffer from infertility issues, self-cycles will have lower success and may cost more. Self-cycles, hence, require a greater effort from the clinics.

“As it has happened elsewhere, the IVF industry, too, will eventually see a higher degree of consolidation among three-four players," says Kshitiz.

All large players are eyeing this growing pie.

“The industry has grown at 15%, but the company (Nova) has grown at 37-40% year-on-year in the last four years. So, we are grabbing a lot of market share," says Vishal Bali, executive chairman of AHH. “We are now looking to expand to 72-75 centres by 2023-24. Now, as the pie grows, we want to have a disproportionate share of that market. From market share and growth of market share, we are very close to the number one player," he adds.

Bali says clinically, Nova wants to be the best. “90% of our IVF cycles are self-cycles, which is the highest in the industry; only 10% are donor-led cycles," he stresses. Indira IVF did not share the break-up of self-cycles and donor-led cycles.

As of now, Indira IVF sounds unfazed by the competition. “For us, the idea is not to compete with the rivals, but to grow the overall market," says Kshitiz. The market is under-penetrated. All of us can benefit from market growth," he adds.

Indira IVF has had a smooth sail so far, with its revenue and profit seeing a steady growth in the last five years. Nonetheless, with its bet on new sectors and geographies, the chain may burn cash and its profitability may take a hit in the coming quarters. But in a supply-constrained market, growth appears to be the imperative for every large player.

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