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. At least 10 per cent of its revenue, on average, goes 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 – 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 $US4 billion next year. Genea, who have about a 15 per cent share of the Australian fertility market, is aiming 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 chief financial officer 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, which are manufactured in Melbourne, for the fertility industry commenced in December 2015 through distributor Merck and reached $6.5 million for the financial year 2016. Growth was expected to continue in full-year 2017 as further sales territories will be added for these products and new products will be introduced to market.
In full-year 2016, Genea Biomedx - Genea's medical devices arm - invested a further $12m in research and development and was projected to invest $9m in full-year 2017. This will be partly funded by Merck through the ARTinnovations vehicle, which aims to rapidly move ideas through to commercially viable products that serve the fertility community.
Mr McArthur says the next area of focus will be non-invasive pre-implantation diagnosis.
“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,” he says.
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By Ben Young
Head of Fraud and Financial Crime Insights