This week’s guest, Vinesh Ghadia, CEO and co-founder of BlackCap Equity’s fertility vertical in India, talks about the exponential growth and consolidation happening right now in India in the fertility space. How is it possible to have 60 to 70 new fertility centers per year opening, with no shortage of fertility doctors? Tune in to the the latest episode of Inside Reproductive Health to find out.

Listen to hear:

About the five to six biggest fertility chains in India, and the four to five that are on their way up now.
How India is averaging more than one new fertility clinic per week in the country.
What the US can learn from India in terms of consolidation, comparatively, where a network with 35-40 clinics is considered a midsize chain.
Why Mr. Ghada believes India will be the biggest market for growth in the ART space in the next decade.
What Indian fertility companies did to solve their fertility doctor shortage problem, and what they may do regarding the embryologist shortage.
What Vinesh thinks is causing the falling price of PGT-A.

Vinesh Gadhia’s Info:

Website: Black Cap Equity Management
Website: Star Fertility Prive Ltd

LinkedIn: https://www.linkedin.com/in/vinesh-gadhia-56a00890/

Twitter: https://twitter.com/gadhiavinesh?lang=en

Transcript

Vinesh Gadhia 00:00

Nice Jean. But 30% of IVF cycles were done in the organized ci 16% clinic 3% in ownership 30% in cycles, at present as we speak 35 to 40% of India's IVF cycles are part of organized chain and the rest 60 person is still fragmented and organized. So starting from zero to 40, it only took one decade.

Griffin Jones 00:32

60 years 70 New Fertility Centers per year, no problem getting doctors imagine that that's according to our guests, Dinesh Gadea, who is the CEO of the IVF vertical in India and the emerging markets for black cap equity. He had been the CEO of RT fertility clinics. He had been the ce o of Nova, part of the Evie network or partner of the Evie network. And he makes that clarification finesse started in the IVF world in India in the early 90s, at the ripe age of 21. At a time when there were only four or five fertility clinics in the entire country. We talk about the five or six biggest chains and fertility clinics in India and the four or five that are coming now we talk about how more than one new fertility clinic a week on average is coming to be in the country. We talk about what the United States can learn in terms of consolidation because this is a marketplace where roughly a decade or so ago 0% of market share was under fertility clinic chains. And now 40% is in India and network with 35 to 40. Clinics is a mid sized chain, Vanessa is looking at buying some of those mid sized chains and consolidating them into a larger group. He talks about that and then I make him put in demographics in numbers and in figures why he believes that India is the biggest market for growth in the assisted reproductive technology space in the next decade. He talks about the scaling opportunities for companies growing into the fertility space in India and their internal rate of returns or expected IRR. Anyway, he talks about what Indian fertility companies did to solve their fertility doctor shortage what they're doing and might be doing to solve their embryologist shortage. And we talk a bit about career tracks for young fertility doctors, which I think is probably the biggest difference, at least that I heard in a short conversation between the United States and Canada. And what seems to be happening in India, according to at least this account in a very small conversation. And if we didn't talk about enough, he talked about the falling price a PG TA and why he believes that that is going to make the total percentage of cycles that use PG ta go up from five to 6% to about 25% of all cycles that are done. This little bit of coverage that we've done on the assisted reproductive technology space in India is only the tip of the iceberg for covering what's happening in that country. We plan to do a lot more of it. So I hope you enjoy this conversation with Dinesh Gardea, Mr. Gowda, the Nash, welcome to the Inside reproductive health podcast.

Vinesh Gadhia 02:52

Thank you very much Griffin for having me. It's an absolute pleasure and my privilege to be speaking and talking to you on your podcast. It's very interesting space. For me and us. I think it's becoming interesting space for millions of couples in India and globally. Thank you for having me here.

Griffin Jones 03:09

I think it's becoming an interesting space for people that worked in the fertility field all over the globe. And I said to one of our recent guests Dr. GHOSH dusty Dyer, that 5% of our subscriber base comes from India, people that work in the IVF field in India. And previously to that episode, I had never created any content specific to the marketplace in India and I look forward to covering more this year with Dr. GHOSH dasa, we laid the groundwork of the history of IVF. In India, how some practices are set up there, you have a lot of experience at the home of some larger groups. And so I'd like to talk to you about the history of some of the large clinic groups of the business landscape and then what you see as some of the unique scaling opportunities and challenges. Let's start with the clinic side, can you walk us through the history of the large fertility groups in India, who are they and how did they come to be

Vinesh Gadhia 04:10

when we talk about fertility groups is more about organized change of IVF clinics in India, but to just to understand my narration in in detail, I would take a little bit historical background on how our as a country we have evolved. I have started working in this space in early 90s. This is my 30th year in IVs space from Day Zero Day One of my professional career at the tender age of 21. I fell in love with this space because it's something that helps to create more happiness and I'm the author in the universe in early 90s. In India, fertility infertility or fertility was considered as personal shortcoming and it was considered as destiny it was neither accepted as medical treatment or Medicaid disease. And and most doctors I would say now 85% of gynecologist who are treating infertility did not have a chapter of infertility in their final year of master's in gynecology. So that was the state and I come from that background where I've seen this industry growing from ground zero. So, very few IVF clinics in early 90s, maybe four or five, and then it started growing towards the end of the decade, early 2000 is where infertility treatments started becoming a little popular amongst the patients and also wants the doctor I have been on pharma side for 16 years kneading and launching large IVF business from the pharmaceutical companies and I crossed the bridge in 2011. When I came towards the service side, I was one of the founding member of India's first organized IVF chain backed by a private equity company. So, it was only in 2010 Later, large fertility groups started coming into existence. It was a group of venture capitalists and private equity in healthcare business. And they thought that possibly IVF is complementing to the naked healthcare model. It was it was group of venture capitalists and backed by one large private equity. They reached out to one senior doctor in India, Dr. MANISH banker, and Dr. banker and me used to be very good friends because I was from pharma side and he was my key account. He reached out to me, we went and did a presentation to the board about business case and scientific case. And we started we worked three months on the strategy board on the ground zero business plants and also in business model. And then started our first step is India's possibly the first ambitious plan for a large fertility Qi. What did

Griffin Jones 06:47

you have to prove at that time? Dinesh, what did you as you're building the business plan? This is something that is pretty new to the venture capitalists and private equity partners and you're working three months on this business plan, what did you really have to focus on to prove in that business plan?

Vinesh Gadhia 07:05

Very interesting me nobody in during that time in India believed that this fragmented Doctor owned IVF clinics, this market can be organized, the biggest challenge was to present the business model to the private equity and the board. And one of the interesting fact which I was driving and and there were not many takers in the boardroom also, is that we will launch a PRK IVF business first time in India, where in the IVF clinic we will not have any neighbor room. No guyhnic practice no obstetric practice, because what investors were thinking is that if we if and once we grow IVF business, we have readymade pregnancies from our IVF business. So we will do delivery business also, let's birding business, where I was very sure in the model that it has to be pure plain I had my logic ended. Second from where to bring patients in India. So the belief system was that it's word of mouth. And I was very, very sure that because infertility is not talked about, there are meats and taboos, there is stigma around it, people take very few people first come forward for treatment. And people who get positive results don't speak about IVF amongst their friends and family. So word of mouth is extremely slow. It takes very long time to develop business on word of mouth. So I had why business plan which was based on a very new concept of meeting 1000s of gynecologist convincing them to refer a patient to us and the business model. So there were a lot of challenges. There were too many no naysayers that did not work. I think in deep in my heart and along with the Medical Director Dr. MANISH banker and his partner, Ravi Patel, we were convinced that this will work. It took heart time to convince the board. But the first step was defining I think in business model.

Griffin Jones 08:58

You had your reasons for wanting to go the pureplay IVF route when other traditionalists may have also wanted to include obstetrics, what were your reasons that you felt strongly this has to be purely fertility treatment.

Vinesh Gadhia 09:14

So Griffin it's very interesting if you if you analyze the full funnel approach, millions of couples in India suffering from infertility majority I'm talking about 2010 majority believes that their treat they can be treated by astrologers by cracks and they would of course, I'm a God believing person so they would go to church mosque temple. My belief was that if you are a God believing person suffering from infertility, which is a who classified medical disease, you have to fight God in a doctor an immunologist, and not in the temple because you will not get a cell there. Out of that few million couples who would not even come for medical treatment, the large segment of the funnel, who accept Did and understood in and largely in urban area that it's a medical issue. Sadly in India it is still considered woman's problem medical it's a couples problem. So, so out of these millions of couples many are most of them accepting it medical disease but woman's problem will go to gynecologist so 70 80% of infertile patient in India even today will first go to gynecologist medically right or show because GYN they can treat majority of infertility and not everybody requires IVF so, why in gynecology see 10 patient of infertility two or three will require IVF but they will not refer because the standard on IVF clinics in India are also doing obstetrician birthday. So basically it was not referring but it was losing patient to a competitor or your colleague right to get my point. So this ref net ne identify identifying patients requiring IVF we're never referring to another IVF specialist because the patient will never come back to the doctor because they themselves are competiting to the birthing and upsetting business. Now it took very long time, a long time for me to convince my board and my investors that the majority of untapped potential in India is live with gynecologist so we did a small Deep State study, meeting 500 gynecologist 500 is small in India and asking them do you see infertile patient? Do you see patients who require IVF? If yes, whether you refer or not. 100% doctor said that they get infected patient 90% of doctors said they have patients who need IVF. All 90% said we don't refer when we should why. So when we refer a patient, we lose our patient. Second, we don't believe IVF is great results. Third, we believe IVF is expensive. I had presented the study to the to the management and saying that this is where they can work. And we can explore untapped potential, get patient for our need, not from other IVF center because that's very small. But from the market, which is not, which is not tapped so far. So we were we were getting into an untapped potential of the IVF business. It took six months one year for me to prove that this is the model which will work for that business to come in from referral network or from gynecologist referring to IVF specialist, we cannot compete with them. So we cannot have no neighbor whom in our clinics we cannot do badly.

Griffin Jones 12:35

So you finally are able to prove this concept to the capitalists behind the private equity that are investing and you and Dr. MANISH banker ostensibly get your business proposal accepted, then what happens?

Vinesh Gadhia 12:51

So we started with the first clinic of Dr. Banker acquiring the clinic. And we had a very, very ambitious plan of starting a chain of 25 clinics doing 10,000 cycles in a in a year. When I used to say this to industry experts in India, and also across the world. I used to attend global IVF conferences. Yeah. Most people used to not believe it that this is possible. Half of them used to laugh not in front of me but behind me.

Griffin Jones 13:20

How many cycles was it that you were a plan

Vinesh Gadhia 13:23

was to reach 10,000 cycles in a year.

Griffin Jones 13:26

And that was laughable at that time.

Vinesh Gadhia 13:28

Nobody could believe that there was no group doing 1000 cycle. So when we were presenting our plan, most people thought that it's on paper and cannot be executed or it's difficult to give life to this pen. So we did our first clinic in Ahmedabad which was a brownfield acquisition. Then we started creating Greenfield clinics, hiring young doctors hiring young embryologist, a very young business t, which is sales and marketing and the ops team. And we progressed when, in the first three years, we really ignited the market growth. There were five change slots, which are now changed which were launched after success of Nova. In 2015. There was an EY report white paper on IVF potential in India, which was published by Ernst and Young, which which shows Nova IVF as the leader in the industry with nine clinics doing highest number of IVF cycles and having best in class students. I think if you asked me that was the igniting point in India, where more groups started investing shattered and visualizing the plan and from from practically zero organized business in 2020. In India we have about 35 to 40% of IVF cycles which are with organized change and now there are several chains in India.

Griffin Jones 14:50

You live in Mumbai did your original financiers also come from Mumbai? Did they come from other parts of India? Did they come from Spain? Did they come from other parts of the world? world where were the original people that bought into your idea with their dollars come from

Vinesh Gadhia 15:06

the first seed investment came from an American venture capitalist GTI capital, global technologies investment. Second major investment came from a, again a venture capitalist from us, any new enterprise associates, third came from Middle East, which was born exist, it was submit a Middle East based venture capitalist. The turning point was when we launched our fifth clinic, Dr. Banker also realized that to run one clinic of excellence is a different ballgame. But to run a chain is very different in terms of having all the standard edition inishbofin protocols in place, so we got in touch with world's largest chains, which were based out of Australia and Europe. And we finally zero in partnered with Spain, which at that time was also needed in the world. So Evie spent came as our technology partner and after that, we got Goldman Sachs on board as our private equity investment leading investment was was from Goldman, which gave us a lot of confidence on our modern on our progress, which was made in in the first couple of years and gave us definitely a ability to invest in quantity and in infrastructure and standardization. So, we took off from from Ed coming in and Goldman coming in. So there were basically five investors put together it was also backed by one individual doctor from Bangalore as a promoter along with the CD and Misha Doctor nationality. So, we had good mix of venture capitalists and private and large private equity like Goldman Sachs.

Griffin Jones 16:48

It was so as Nova is growing and then eventually merges with Evie in Spain and is financed by Goldman what what other groups are merging? You said that five other chains came after Who are they and when did they come about?

Vinesh Gadhia 17:03

So I would just clarify that it was never a merger with TV Evos our technology partner we had a royalty agreement with them and a sweat equity diverse chatted for or whatever they were helping us and they were very valuable partner for our quality improvement in their IVF currently India's largest IVF Qi one of the largest in the world, there are more than 100 Plus clinics across the country. And they have they have done some very very I would say phenomenal execution of of plan entire to tie efficiently largely was next they started their journey from a very small town in India you know the poor which is in upper upper west western region. And after naoise initial success Indira started expanding when there was another health care healthcare group, which was Manipal health, which is again eat today also is number one number two health care group in India they folded into IVF with a chain called encore Manipal there was another encore player in India backed by private equity their company name is healthcare global at CG they forward into IVF chain called a teaching the lab the biggest healthcare group in India is Apollo Apollo forward into IVF shade or depo fertility at present as we speak, in last three years in spite of COVID time, there are four or five new chains which are launched in India and they all are expanding, expanding robust and doing investment of millions of dollar in north there is a new chain which has come up with 16 connection as to your CKB luck, there is a chain in southern region called 49 Do we have seven clinic there is a chain in southern most state in India and Kerala HRMC there is you name it and in India you will find find them mid level change chains. And it just took off. And as I said in 2016 17 16% of clinics were organized part of organized change. But 30% of IVF cycles were done in the organized change to 16% clinic 3% in ownership 30% in cycles at present as we speak 35 to 40% of India's IVF cycles are part of organized chain and the rest 60% is still fragmented unorganized. So starting from zero to 40. It only took one decade.

Griffin Jones 19:42

What do you think is going to happen in the next decade? And perhaps before I ask that you may have answered my question about consolidation but maybe not so 60% of the market is still being done by those clinics, not within a network. In the US and Canada networks are running out of clinics to buy and it's not because they've consolidated all of the clinics, there's still plenty of independent clinics, but there aren't so many 4567 etc Doctor clinics left in the US in Canada that are independently owned. Is that problem on the horizon yet in India? Or do we have a long way to go before we run into the problem of not having enough sizable clinics to buy

Vinesh Gadhia 20:28

very in cushion Griffin again, some demographic detail piece today across the world we talk about India being the growth engine of the world economy IVF is also very similar or even better. India has highest young population in the world. As of 2010, we had 247 million couples in reproductive age, as of 2010, can you imagine in 2020 are expected we still have to do our population census which we do once in 10 year because of COVID. This time, it was delayed in 2020 10 years later expected couples in reproductive ages 434 million from 230 to 47 to 430 4 million. It's a huge demographic shift. Even if you consider same infertile patient, which was recorded and published by Indian government in 2010, acknowledged by EY report in 2015, which is 9% infertility, it has increased in fertility in India, but even if you consider safe from 30 million infertile couple in 2010, we are now 62,000,050 2 million infertile. So, we have a huge demographic dividend ifcn population in the world highest one of the highest urge of parenthood in the world, which is not there in most developed countries in India. I would say 9.9 out of 10 people in their in their young age will get married and nine out of 10 people will opt for becoming parent. It's a societal cultural strength in India that we are very high urge of parenthood. Now, highest in population highest urge of parenthood, but ever changing lifestyle. There is a published study in fertility sharing dream it's an indoor Spanish study done by Nova AV Indian woman peaks fertility potential at the age of 25. Whereas in Caucasian woman, its fertility potential at the age of 31. There is an inherited genetic and difference of six years. Why concerning we used to marry early is because of this. Now, while we try and copy western lifestyle, our genes don't change. This brings very high burden of infertility in India because we are now marrying late in India, copying western lifestyle, whatever genes remain the same. This all put together even if we have 2000 plus IVF clinics now. We do 250,000 cycles in India now, which is number two, number three in the world. We are still under 10% of the real potential so far as the market which looks very big, but we are just taking off. answer to your question. Our cruising altitude or saturation is 1015 20 years away. So current growth in agribusiness is launching new clinics launching new chain every week. We add 60 to 70 IVF clinics every year, which is one clinical week. So consolidation in India as I would say, just from where I am seeing it is just beginning. So we have 1000s of clinic in India to vie shortage of IVF clinics to consolidate or IVF chains to get consolidated. That shortage is 10 years of at least 10 years away. Because we have a long runway in front of us too.

Griffin Jones 24:10

Is it more common to consolidate clinics? Or is it more common to start a clinic de novo if we're one of these six or seven chains? Are we more likely in the course of a year? Are we buying more independently on clinics and bring them into our group or are we creating more clinics de novo

Vinesh Gadhia 24:30

so all the chains today including Nova Indira Mila Apollo 14 Nine PRMC you name all the chains I would have missed a couple of names sir I'm sorry about that.

Griffin Jones 24:43

I do I always miss a couple of names initially I know that a couple people will curse me and and maybe your contemporaries will curse you for leaving them out too but welcome to The Club.

Vinesh Gadhia 24:55

So all of them today are are are launching in you Kleenex organic, because that's that that's enough market for everybody still to be tapped. I would I give you once very small I mean, not inside example. So I am at present working on an IVF platform story where I am in discussion with four or five mid, mid level organized chain to acquire them for the platform. And my strategy is to buy and built by four or five chain that is certify 40 clinics and wait maybe 3540 clinics in next seven a year and have an exit insight in 2030 or 2030 278 years to 10 years of business plan. I think even though I started looking at some assets is they want to add to their portfolio. Choi is Indira and other chain. This has just begun in last I would say sick since 2022. Largely because now there is an ARD regulation in place. So government has passed ARD Regulation Act. And because regulation is enforce many single doctor on clinics believe that it is better to be part of organized network where there is a bandwidth, there is management bandwidth, there is professional handling of all the department including quality departments and audit departments. So that when there is a regulation in place, there is better bandwidth to handle the larger business. Also, it's just last one or two year, most senior doctors are many successful IVF clinics, led by doctors have realized that organized chains are growing much faster compared to single doctor on clinic because of the management bandwidth and because of capability of investment. So they also started believing that joining hands with an organized chain. Current chain is basically a good idea. And it's Win Win partnership for both. So the word consolidation just started shortage 10 years away.

Griffin Jones 27:01

I'm catching my breath because this is a order of magnitude that we haven't totally seen. And when I'm seeing my colleagues, LinkedIn posts of them visiting Indiana I'm seeing this more than I've ever seen it before, partly because no one could travel for two years, but also partly because something's clearly happening in the country. And you're starting to give numbers to that story of what's happening there. How are you getting doctors in the US and Canada people are consolidating, but then they're running into challenges, staffing them with REI, as I talked with Dr. Bheeshma pushed us er in that episode, that's the REI fellowship doesn't exist in the same way in India that it does in the US, but how are you finding enough physicians to be able to staff these programs?

Vinesh Gadhia 27:50

So good. Again, anything you asked to me? I sound very ancient. It's very interesting possibly because I love to speak about IVF business in India. My first designation in an organized chi no IVF was Director Dr. empanelment. Because the my it was the same question. My private equity investor or my board believed that finding the doctor will be difficult. Recently I was working with the art fertility clinics again a Middle East based very high quality IVF chain again backed by a private equity capital. When I was sitting with the board before joining presenting my business plan, the only question was asked to me by the management team of Gulf capital is that from where would you find out? So all questions are similar my answer is very, very simple. In India, they have 40,000 gynecologist for zero 40,000 highest number of medical consultant across the world. We are blessed with talent in our country. Out of these 40,000 gynecologist 10,000 diagnosis actively practice infertility and all of them aspire to become a specialist. In India, we have plenty of organized chains who are doing fellowship course starting from three months to six months to one year to two years. Some very good fellowship course which are led by Milan Dr. Kamini route and led by Dr. Norma the shockcraft. Very very good fellowship course led by EV along with Dr. Banker in Nova. Fellowship courses are done in small chains with mid level change even in 49 Even in Oasis. Now to train a gynecologist who is already doing good level of surgery, incision injections and large endoscopic surgery, on skills for own pickup is if you ask me, I don't know if doctors will like listing this. It's not difficult. It's a three month training. A gynecologist who is already practicing Infertility can be trained to become a specialist. We have enough plenty of one year courses in India. So there there will be no challenge and I'm repeating no challenge in finding good is specialist key like a specialist. Absolute No. The challenge will be in finding right embryologist we never had any university in India who offers embryology nobody in India understood the potential of requirements of embryology which will come money fall. The Health Care Group which I referred before started IVF chain is one of the most reputed medical university they started embryology course, seven, eight, maybe nine years before but they were they were giving six embryos a year now, I think they are doing some 20 or 30. Now, in India, there are six or seven universities who have MS in clinical embryos, but it is thin skin shortage in India. Severe skill shortage is embryologist, not doctors. What can

Griffin Jones 30:54

be done to solve that embryology shortage Can the same solution that was done with the chains themselves starting these three month to two year training fellowships Can the same clinic networks also create the infrastructure for embryology training, because if you're creating at least one fertility clinic a week in the country, and it sounds like with six or seven embryology programs at the university, and maybe a couple others that you're not on pace to fill that clinic growth with embryologist staffing the labs behind them can the clinic networks offer the same training that they did to cover the DR solution.

Vinesh Gadhia 31:37

In 2013 14 we when we were on the journey of a very robust growth in Nova, we realized this challenged that we cannot depend on acquiring empanadas from market. First thing we did was we joined hand with the first university and we used to offer internship course to all the students of Manipal who are passing out MSc in embryology and we used to have the first look at them and do and pick up the best talent from that but that also not enough. The alongwith EV Kochi co curated 180 day course for a master's in life science student whichever which which you can find in plenty in India. And we had 180 days of logbook training program co curated supervised by embryologist from eenie so we created our own bench strength and we never face shortage because of these two things, join hands with universities and took all of them as our intern and absorbed most of them as trainee in our in our clinics and out of our say Soviet 19 clinics one and I when we divested to TPG 910 large clinic can have two embryologist anytime which can be trained in our logbook training program supervised by EB so we created our own band strength in there actually cracked it even better. They have a company training school in their headquarter for Dr. And Mr. Rajesh and they have a crash course of three months. Any ml Masters in Science student can be trained under simulators, excellent training ecosystem, very documented, they churn out their own embryologist and own doctors IV specialists. So two large chain wide Indira cracked it very well. The way forward is either all the chain have there is one clinic as their training training hub, take science students in India, which are available in plenty and trade create a training ecosystem. Second is I mean, I have this dream in my mind that we should have a school of embryology in India having 50 100 students every year of coming from science master's in science and we have best of the minds in the world who can be brought in as faculty and we can develop a very robust training ecosystem in India. I mean, we have students from Oxford University in India, many from Oxford doing MSC Ammirati that we have students from Monash University in India from Nottingham from ICL from UC and you name reputed universities offering MSc in embryology. We have students in India from the who are practicing embryology. So it's high time that in India, we create more infrastructure for embryology training program, which is very doable.

Griffin Jones 34:35

I would say it's high time as well, because there could be another vulnerability that there's already an embryologist shortages in India. But what if some richer countries namely the United States figure out their visa mass that they have been struggling with the last few years? What if they figure it out and say okay, we are going to start taking this seriously and get some more skilled people from the sciences. With embryology being a focus, then you would certainly want to make sure that you had enough embryologist, if something like that would happen.

Vinesh Gadhia 35:08

I think you are giving secret sauce for the US IVF industry. I was talking to one of colleague in IVs business in us about a month before. And I was saying that they keep seeing me that we have a shortage of embryologist in us. And I said if there is a special visa visa for embryologist in the US at least I know 100 People from India will apply. So I completely agree that if this happens, so there are many embroiders in India, who go to UK and to Canada but not in us because getting visa is not east,

Griffin Jones 35:42

our embryologists able to buy into the equity of clinic groups.

Vinesh Gadhia 35:50

Wow. Again, interesting point, which has a strong belief system in India. Now, with more it becoming organized with more shortage, the venue of employees have increased in the last five years recently. Not to the extent of what that they can buy equity or they are offered Aesop's in India still. But I strongly believe that it's not a very fact that this will happen in India, because it was largely a doctrine lead. And now I think, at least in organized ecosystem of IVF the value of embryos this is when understood, still not to the level of being a critic. But

Griffin Jones 36:34

how does the track look for young doctors? Are they buying in at the practice level that the local clinic level are they buying in at the network level are both happening neither happening? What does it look like for young fertility Doc's

Vinesh Gadhia 36:50

a young guy, Nick Norris, who is doing birthing practice does not have work life balance in India, it's a huge business, and potentially very high because we deliver the highest number of babies in the world. So I don't need to dive deep dive into the numbers. There is a current trend in India, which is changing that the young inequalities who are who are passing out, they want, they are the current generation, right. So they want work life balance. So they we have more and more doctors who want to be in IVF rather than going into birdie. and taught them if they want work life balance is a fixed time job. And there is an men management ecosystem. Well, well trained operation staff, well trained nurse so that once the name clinic, they don't have to keep bothering about anything. So the young talent, who doesn't want to be in birding practice, but in IVF, are more attracted towards organist because you have a better work life balance. And you can learn and you can grow in an organization, you can learn a lot of things.

Griffin Jones 37:58

So younger dogs might also not have the leverage or the focus, or there's other things we offer that they're not totally focused on buying in yet. What about those that are medical directors? How are those folks building their career, so you have a number of OB GYN who are just simply happy not to be practicing obstetrics, they're happy to have office hours, maybe make some more and be part of the growth, it's happening within their continued education as well as in the field. But then you're going to have some of those that are deeply entrepreneurial. And they say, I want to start a network, I want to become this chief medical officer of this network, what are their career tracks look like?

Vinesh Gadhia 38:39

So in an organized setup, there is a structure in place where if you're heading a clinic, so in clinic, the the org structure is that there is IV specialist, and there is a medical director, or the or the chief, the cdmos doctor in the clinic. And there are a large change which are shaping up in India. So there are regional directors who look after five, six clinics, they also practice in one of the clinic, and they look after as leader in in five, six clinics, around 10 to 15 doctors, and then there is a national medical director. So there is a career path for a doctor to grow. But at the same time, it's not very clear. It's not very visible. For a doctor to like any other employee visionary, there is a very visible career path. For a doctor. It's not very visible or not very easy to grow in the career. Most doctors in India tend recently believe that increasing that practice and increasing their commercial take home is that growth, not they never look at career growth of handing more clinics or being in leadership position. I would say in the last 10 years it has started evolving, but still it's not very established. So for a doctor if they're doing five cycles, 10 cycles a month, it grows to 25 a month, or it goes to 50 a month. So their professional growth is more work. And they take home more money, rather than growing up in the ladder, that desperation not many doctors have in India,

Griffin Jones 40:16

I can hear a lot of American doctors groaning and saying, Oh, don't worry, nice, you're gonna have to deal with this problem. 10 years down the line when they want all of it and the American doctors that grew up with the career path that you just talked about and worked really hard on it sometimes feel that some of the younger doctors now want to skip that path and move into where they are. So that'll be a barrel of monkeys that comes as part of the fruits of the labor of having a growing market. It's a it's a good problem to have, I guess, because that means that the companies and the marketplace has gotten to a certain point, I want to ask you about other growth challenges. But we've spent a lot of time talking about the clinics, I really wanted to have that understanding tell us what's going on elsewhere in the fertility industry. In India, we talked a lot about the network's coming up, how 10 years ago, they had almost no chair of the market today, they have 40% of the market, there's a lot more growth, there's a clinic happening at least once a week with 60 or 70 a year. But what's happening on the industry side genetic testing lab manufacturing pharmaceuticals, what artificial intelligence other things that I'm not even thinking to ask you what's what's happening on the industry side.

Vinesh Gadhia 41:37

So India, as a country is the to date in adopting new technologies. What has changed in the last five years is adoption of fitness systems by 234 chains in India, which is an onshore alarm systems. Genetic testing in India is a very interesting curve, it's going through a very interesting curve from nothing about five, seven years before. Today, it's about 5% of the cycle, genetic testing. Now, very quickly, I will I would, I would try to address this as a patient if you have for for good quality embryo slash blastocysts. And if you what, what is the dynamics in India, I'm not saying scientifically what is right or wrong. If I if I if I offer patient genetic testing that out of these four, which is the best embryo which I can transfer to you, so that you are time to pregnancy is reduced. And we identify the best genetically the most normal embryo where a patient believes that if you transfer two out of four, if I don't get pregnant, and the next cycle in frozen embryos transfer, you transfer the remaining two. So what is the advantage of going through genetic testing where I'm spending so much of money. So it's difficult in India because 95% patient pays out of pocket and the cost of genetic testing. When we launched the first genetic test India, which was Evie company launched through novice legal entity, it was as good as one IVF cycle, it was very difficult for a patient to spend four to IVF cycle for genetic testing other they will, they will, they will do more frozen embryo transfers. Now the genetic testing percentage is going up, the price of egta is going down once the surprise of PGT even match to the frozen embryo transfer price which is very close now. This will suddenly flip it's a tipping point from the current five 7% of cycles undergoing pcta It will go up to 25%. By next five years is what I believe. Now there are 10 companies who are offering genetic testing. There are good pgti models available in India. And the pricing is going down as the number of testing is going up. We are still about a year or two away from the tipping point is what I believe I keep advising to some large global companies that this is a great business opportunity in India. If you can burn money for one or two year or not earn much one or two year. This one's cake. This is a business of scale. about artificial intelligence. Two companies are launched in India to change they're adopted as a trial method one is embryonic another is nightmarish but I think it will grow it will start going well. Genetic testing artificial intelligence sickness system alarm system, standardized high quality lab protocol I think are now prevalent in most organized CI but it are these are at very different levels. If I can speak at fidelity in India as only six clinics, it is based out of Middle East backed by private equity is at a very different and noon, if you see any arts fertility clinic you will not feel any difference between the clinic in New York, London, Tokyo or India. Indira Noah up to the notch of international standards, other chains are following to that standard. So over on lap parameter quality parameter or standardization, IT infrastructure is being growing very fast in India but led primarily by organized cheats.

Griffin Jones 45:26

What's causing the price of PGA to drop?

Vinesh Gadhia 45:30

It's basically sequential know if you are if you are running more sample in one cycle, it will reduce the cost per sample. I'm not a genetic specialist, but I can in business sense I know I was one of the member who had developed the Strategy Board for first genetic company in India, which was EVs company, it was known Evie omics at that time. Now, it is very popular e genomics, why it's no money the company now show the more tests you do, your fixed cost remains the same. And your consumable costs remain the same. Because it is cycle of sequencing, it will reduce the cost of testing for that provider. So you can offer less cost to the IVF service droid. Are the

Griffin Jones 46:15

networks doing deals with the genetics testing companies to be their either exclusive or the preferred group. And so when you talk about scale, is there a risk that of not winning the scale game because I think of in vitae, closing their fertility division and some of for closing their fertility division. And they talked about lack of insurance reimbursements in the United States. But another thing that people talk about is that they're losing the game of profitability with the MSOs with the network's than the network's are negotiating deals that are ultimately not profitable for most and so they have to lose money, as you said for some time, but maybe they can't do that. Maybe it could could have been the case that in vitae couldn't do that, that semaphore couldn't do that. So is that is it a dangerous game to try to win. And I'm not just picking on PGT companies here, but really anybody that thinks about scaling in this way and thinks about having to lose money for a little time, that's always a risk is that risk greater in India that you you don't actually win and you just lose money and go out.

Vinesh Gadhia 47:32

So, you take example of numbers 250,000 cycles growing at 17 18% CAGR, we will be about half a million cycle in next five year expected to be million cycle by the end of this decade. From current 5% of genetic testing VG da it can go up to 20 25% which is largely still less less less compared to Japan or us or most of the country. The scale is is phenomenon in front of any genetic company now, where if your mix was launched in India, when it was an Eevee company not not invested by private equity after that, it was some private equity now, it is vitrolife company it broke even company level and second year most genetic company in India new companies are also making money even today. So, at 20% more cost per genetic testing compared to a frozen embryo transfer in India 20% More mostly genetic company and making money. What I'm trying to say is there if they bring down the cost and allow the market penetration to go up, and it crosses a tipping point of equivalent cost of frozen embryo transfer, this will boom it will go up phenomenon the company which can do this is Cooper fertility, they are a global company they have about close to a billion dollar revenue now highly profitable, they are still not launched their pgti model which they have launched in Europe and US in India now keep and keeps the question that if they can bring it x price and still either make very less money or no money, if not burn the skin and and tap into large groups who will ready to a pledge X number of testing. It's a good model it

Griffin Jones 49:27

Cooper's not in the business of losing money. So seems like they may not have figured it out yet. And I wonder is there a different model that these companies can do? So they you talked about the scale which is enormous and unprecedented anyplace else in the world? He talked about 243 million people of reproductive age, I believe it was over 50 million people who need assisted reproductive technology. Nine out of 10 of the young people are going to want to have children even at as their maternal age advances so that the scale is there, just the pricing model need to have these networks in place in order to be able to put forth a model that works for them to like, if we sell 100,000x, then the price is a if we sell 100, if we sell 1,000,000x, and the price is B, if we sell 10 million, then the price is C do that, is there a gradient model that they need to be able to work on in order to be successful? And do they need the networks to be able to do that?

Vinesh Gadhia 50:34

I think what you're seeing is is very right, at just let's take an example. Today, the one of the chain, which which say for an example, I'm reading a chain, it is doing 5000 cycles, IVF cycles, and we are doing genetic testing of two or 3% of patient at x price, I can go towards genetic service provider that at why price this to 3% Can I can pledge 10%. And there are five chains who can come together to work on the table, and pledge, all put together a huge number of genetic testing in one year, which is more than the total country which is doing a survey spread provider, a global service provider, it's a very good business model. It will help industry to do more testing, it will reduce time to pregnancy, it will reduce the current abortion, it will improve results. And it will help industry both the base and then I think there is no written it's a it's a it's a patch which will then go robust towards growth.

Griffin Jones 51:36

But as you've been a wealth of information during this conversation, you walked us through some of the history of consolidation in India, the formation of networks, the early days with private equity, the training of fertility doctors, and somewhat and soon to be more so embryologist, the expanse of the demographics the expanse of growth from clinics, you talk to us about the scaling potential that industry side companies have PGT just being one of those examples. How would you like to conclude with our audiences, mostly US based but it's increasingly global increasingly from India as well? How would you like to conclude about your prospects for the future of the marketplace?

Vinesh Gadhia 52:24

So Griffin I really strongly believe and I think everybody in the world that would have to have a great business. What is required is right market condition. Right capital, right people? Right? I don't think timing can be better than this in India. It is yeah and population one of the highest urge of parenthood changing lifestyle and increasing infertile patient in vignettes all want to become parrot timing is right. There is no shortage of global capital investment in India in sunsense sector like healthcare and IVF. We have enough talent in India accepting embryologist. I mean at 250,000 cycle number two number three in the world in India is on firm track to become fertility treatment capital in next two to three years.

Griffin Jones 53:12

I hope we get to have you back on a couple of times during those 10 years the nest Gadea thank you so much for coming on the inside reproductive health podcast.

53:22

You've been listening to the inside reproductive health podcast with Griffin Jones. If you are ready to take action to make sure that your practice thrives beyond the revolutionary changes that are happening in our field and in society. Visit fertility bridge.com To begin the first piece of the fertility marketing system, the goal and competitive diagnostic. Thank you for listening to inside reproductive health