Why workplaces could unlock huge growth for fertility startups in Europe

The fertility market is changing rapidly. Driven by a crop of exciting new startups, pioneering researchers, and forward-thinking clinics and employers, there’s been a dramatic rise in the number of services available for the millions who need help trying to start a family. While this is clearly good news, access remains limited.

This is principally down to a ‘payer’ problem. In other areas of health, the cost of treatments and other support is typically covered by publicly funded health services or private health insurance. When it comes to fertility, however, the situation is a little more complicated.

Take the UK, where a single round of IVF costs between £5,000 and £10,000 if paid for privately. The state-funded NHS does make some funding available for treatment, but access varies from region to region – and eligibility criteria are strict.

Public health guidelines in the country recommend funding for women under the age of 43, who’ve been trying for two years. This delay ignores the proven correlation between age and live birth rates, creating an inequality of opportunity between prospective candidates. If someone does manage to secure funding for treatment through the NHS, individuals over 40 can only expect to get one round of IVF paid for – in spite of the fact that most people require at least two.

In other areas of medical health, insurance might be expected to step in – but in fertility that’s not the case. Private medical insurance rarely covers the cost of fertility treatments, even in the US, where healthcare remains a private-sector concern. The huge financial burden this places on individuals puts treatment out of reach for most people.

As we outlined in our recent report looking at the fertility sector, this is a space in which the shifting role of employers could have a huge, and transformative, impact. With companies investing more heavily in benefits packages, including fertility treatment and support, huge opportunities are opening for the growing number of startups in this market.

The changing role of employers

The emergence of health-related benefit packages can be traced to the US, where a cultural shift in the employer’s offering, and the employee’s expectation, has been spearheaded by the tech giants. Their disruptive approach extends beyond business, into the norms governing employee benefit packages, and other organisations are now starting to follow their lead.

This has coincided with a shift at the employees end. Where previous generations may have treated a benefits package that includes fertility treatment with suspicion, today’s workers are less cynical. Organisations and individuals have come to recognise the mutually-beneficial impact of support that was previously understood to fall well beyond a given employer’s remit.

Today, 50% of candidates in the US say that they will actively look for fertility treatment as part of a benefits package. Almost two thirds, meanwhile, will switch jobs because of it. The pandemic has seen a shift in individual priorities that has led to a mass-resignation unparalleled before in history. At the same time, talent is more competitive than ever, with organisations vying for highly qualified candidates to fill specialised roles.

Companies that want to recruit and retain great talent have recognised that they need to go further than ever to do so. Beyond the standard box-ticking, they need to actively engage with employees’ welfare and wellbeing.

The return on investment

At a US healthcare conference I attended a couple of years back, many corporate CEOs and COOs explained that employee healthcare was often the second-largest operating expense on their balance sheet after salaries. Whether they planned it or not, many US companies are in essence also health companies, stepping in to fill the gap opened by a lack of publicly-funded healthcare. For organisations providing health coverage to thousands of employees, emerging businesses that offer a fresh approach to wellness are an attractive proposition.

An Octopus Ventures portfolio company, QuitGenius, is a great example of a business that’s made a huge success operating in this space. It offers a ‘digital addiction clinic’ providing employees with a digital therapeutics solution to break harmful addictions. For employers, this doesn’t just mean an improvement in productivity and wellbeing, it represents a major saving on the cost of health cover.

The need to tackle some health issues has, historically, been harder to measure. But shifting societal norms have changed the debate around previously taboo topics, such as mental health, creating opportunities for other digital health tech startups.

Big Health, another of our portfolio companies, has found an eager market in US companies hoping to support their employees. It’s not just altruism: studies have found that without access to mental health care, employees can incur medical costs 300% higher than their counterparts.

Fertility is at an earlier stage on that same journey. One in seven couples will have difficulty conceiving, while one in four might go through a miscarriage. The average IVF cycle requires seven or eight in-person visits to the clinic and the time spent researching and consultation can be considerable.

In the UK, Apricity offers a service which partners with clinics to provide a digital solution with at-home testing. It streamlines the process, helping patients to cut their visits from as many as nine, to as few as two, while providing support along the way. The benefits for the individual seeking treatment are obvious, but the value-add for employers is also considerable. The time saved from trips to the clinic represents a significant return on investment, never mind the reduced strain on employees’ mental health.

A new frontier in distribution

As things stand, fertility treatment is predominantly a direct-to-consumer proposition in most of Europe. As we’ve seen, its cost is prohibitive, which limits the size of the market. Employee benefits, however, represent an entirely new distribution channel, towards something that better resembles B2B2C.

The global healthcare industry is highly complex, managed by large and seemingly impenetrable institutions. Despite the sector’s growth, many businesses still struggle to find a route to market. 

This B2B2C strategy offers an alternative approach, allowing startups to sidestep the often byzantine bureaucracy of established healthcare providers and insurers. It’s an approach which is already paying off in the US, as we’ve seen with the likes of QuitGenius and Big Health, and Progyny and Carrot in the fertility sector.

That being said, the European market is still nascent, and there are some obstacles. An organisation offering fertility treatments to a US-based company, for example, will likely enjoy automatic access to its workforce across the country.

Whereas, a rollout model across European nations may not be as straightforward, each with their own health systems and regulations. There are no guarantees that a fertility benefits provider working with an organisation headquartered in Berlin will be able to roll out an identical service to its employees in Madrid.

Moreover, companies are still counting the cost of the coronavirus pandemic, and with budgets slashed for non-essential activities, this sort of benefit may be a challenge. But even as Europe remains an unproven market, the lessons from the US are clear. Progyny’s market cap of $5.7bn doesn’t just reflect a shift in employee expectations; it highlights the fundamental attraction of a service that adds value for businesses too.

The longstanding taboo around fertility is giving way. As attitudes shift, mental health, addiction and fertility may prove to be only the first health areas improved with a B2B2C distribution channel. Issues like the menopause and chronic conditions could be brought into the open – and the real benefits will be felt by more than just the workforce.