Fertile ground for business growth

For IVF clinic Genea a healthy baby is not just a blessing, it’s good business. Since it was founded in 1985 (then called Sydney IVF) Genea has forged a tradition of investing in research and development, more than any other clinic of its kind in Australia, with at least 10 per cent of its revenue, on average, going back into research. As a result, technology developed by Genea scientists and clinicians is used by more than 600 clinics in 60 countries.

“We’ve very much focused on a program of improving technology to ensure that patients have a maximum chance of a successful outcome – and a successful outcome for IVF is a live, healthy birth – and that, from day one, has been our absolute focus,” says Genea’s Scientific Director Steven McArthur.

“I started working here in 1993 and the reality back in ‘93 was that for every embryo transfer only around 10 per cent resulted in a live, healthy birth. As a result of a lot of R&D that we’ve done over the years, that number is now around 50 per cent.”

The global fertility technology market is projected to hit $4 billion (USD) next year. Genea, who currently have about a 15 per cent share of the Australian fertility market, should be in an excellent position to capture a bigger piece of the assisted reproductive technology (ART) pie with their strategy of staying on the forefront of technology, rather than only focusing on capturing larger IVF cycle numbers. 

"Through our R&D investment and commitment to the best scientific outcomes, Genea has become one of the few Australian exporters of complex medical devices into the developed world and has delivered on our aim to offer technology that standardises clinical procedures and outcomes to clinics globally,” says Genea CFO Susan Graney.

“From a business model diversification perspective, Genea is unique from its competitors in that competitor IVF clinics don’t develop and sell medical devices globally, and competitor device distributors don’t own and operate IVF clinics. Furthermore, our technology and scientific excellence delivers superior outcomes to our patients, which is ultimately our purpose."

In 2015 Genea, which operates clinics in Western Australia, the ACT and NSW and through joint ventures in New Zealand and Thailand, struck an exclusive global deal with pharmaceutical giant Merck. Global sales of Genea’s two major medical devices (manufactured in Melbourne) for the fertility industry commenced in December 2015 through distributor Merck and reached $6.5 million for the financial year (FY16). Growth is expected to continue in FY17 as further sales territories will be added for these products and new products will be introduced to market.

In FY16, Genea Biomedx (Genea's medical devices arm) invested a further $12 million in research and development and is projected to invest $9 million in FY17. This will be partly funded by Merck through the ARTinnovations vehicle, the aim of which is to rapidly move ideas through to commercially viable products that serve the fertility community to improve patient outcomes.

According to McArthur, the symbiotic relationship between the research and clinical arms of Genea means that research is able to be targeted and results quickly identified.

“We’re lucky in the sense that our research and development program has been strongly linked to our clinical services, so what that allows us to do is identify areas of need initially and then we’re able to make, in real time, analysis of outcomes and comparisons of outcomes.”

The distribution deal that Genea has with Merck has contributed to the evolution of the way that the company takes its learnings to market, says McArthur.

“Back in the mid-90s our deal with Cook Medical was pretty much simply a licensing agreement, so they took the technology and we didn’t have control over how it was put to market,” he says.

“We stopped that relationship a number of years ago and in 2015 we signed an exclusive and worldwide sales and distribution agreement with Merck. What that has allowed us to do is that we are much more involved in the manufacturing and production of the technology now, which we believe gives us a grip of the quality aspects of the manufacturing and development, combined with a ready made and accessible global sales and distribution course. We’ve kept our hand in the process a lot longer than we have historically.”

Since their inception, Genea have developed and been the first to use many fertility techniques – including day five embryo transfers. Now, around 600 clinics around the world use Gems culture media developed by Genea – a result of over two decades of refinement by Genea scientists.

“It’s what we call a single step culture medium. And what that means is we do an egg collection and we fertilise a single egg and what we’re now able to do with Gems is leave the embryo undisturbed in culture across the whole first 5 to 6 days that they grow in our lab. And that’s fairly unique.”

So, how does Genea plan to keep its edge over its competitors? What’s the next area of focus in the fertility field?

“I think the next area of focus will be non-invasive pre-implantation diagnosis,” says McArthur. “The idea that we can better assess the genetic and metabolic competencies of embryos without taking cells away and without removing the embryo from an incubator will be the next area that we will see a lot of focus and development.”

Words by Alice Wasley

The articles represent the views of the authors and not necessarily that of the Bank. You should seek independent professional advice before acting on any matters set out in the articles.