• The rising age of mothers at childbirth, health stressors, and high costs of living are boosting the global need for fertility services.
  • In response to these trends, Private Equity firms are deploying capital to push for industry consolidation.
  • Other fertility-related services, such as egg freezing, genetic testing, and insurance packaging are seeing growth as well.

Aging is advancing dramatically in high- and middle-income countries across the world. By 2030, the demographics of 34 countries are expected to see more than one in five of the population aged 65 or over. Leading the pack will be Germany, Japan, and Italy.

Total Fertility Rate (TFR) — the average number of children borne by a woman — is the key indicator of the rate of aging. Worryingly, there are countries with even lower TFRs than Germany (TFR=1.59) and Japan (TFR=1.44). Singapore’s fertility rate stands at 1.20 while South Korea is even lower at 1.17. Populations are plunging at alarming rates in these East Asian countries.

The dive in fertility rates is typically driven by the higher age of mothers giving birth and soaring cost of urban living. Due to the huge influx of women into the labor force across all developed countries in the last 70 years, women are getting married much later — if at all. The net result is that women are having children later. On average, the mean age at which women first get married in the rich countries of the OECD is now 30, while for men it is 32.3. Yet at the start of the 1990s, the marriage/children mean was much lower — between 22 and 27 (women) and 24 and 30 (men). Much of the decrease in fertility rate and increase in the mean age of mother at first birth in the United States can be accounted for by lower birth rates in the 15-19-year-old age group, as well as, to a lesser extent, the 20-24 age group. For the first time in history, mothers in their 30s are having more children than women in their 20s.

In advanced economies, intense economic competition in the labor market means fewer parents have the time or money to have children. Relatively flat wage growth in many developed countries (e.g., U.S. real wages were only 10% higher in 2017 than in 1973) has combined with the increasing cost of urban living and parenthood. Adults are being pushed to reconsider having children. The average couple in the U.K. pays an astounding 34% of their family income on childcare, and the U.S. over 25%, compared with 13% as an average across OECD countries.

Nations have made a wide variety of efforts to boost fertility rates, including cash payments for births, tax incentives, generous parental leave, free childcare, free healthcare, and other inducements. Germany has had some success in boosting fertility rates, with 2016 seeing the highest fertility rate since 1973, pushing TFP up to 1.59 from 1.5 just a year earlier. Increased migration contributed, but it does not explain all the increase — a series of childcare reforms have been powerful drivers, including the tripling of childcare facilities over the last 15 years. In South Korea, couples pay nothing for childcare since it is provided by the state as part of its efforts to improve the low fertility rate. Russia recently expanded its program to encourage births in spite of its fiscal troubles.

The higher age of women giving birth and the growing incidence of infertility in general — a trend ascribed to smoking, alcohol, obesity, falling sperm counts, and various environmental issues – are highly supportive of market growth in-vitro fertilization (IVF) treatment. In addition, the falling cost of fertility services and the higher rates of insurance coverage are making IVF treatments more affordable. As a result, the global IVF market is expected to grow at CAGR of 12% [^9] from roughly $410 million in 2015 to $880 million in 2022.

Back in 2004, Japan started offering subsidies for IVF with couples eligible for ¥150,000 ($1,362) towards their first attempt and a limited number of follow-ups. Couples with higher incomes are not covered, but the government is considering expanding the benefit to all. Japan has the highest rate of IVF treatments but the lowest success rate due to the higher average of the mothers. It is hoped that the universal coverage will also encourage some mothers to avail of the benefit at an earlier age.

In the U.K., four out of every ten IVF cycles is funded by the National Health Service (NHS) and the national healthcare guidelines agency recommended the NHS fund three full IVF cycles per patient. German, French, and Spanish governments also fund IVF treatments, with Spain having a particularly liberal regime and lower cost of treatment which attracts meaningful medical tourism.

In the U.S., IVF is not subsidized by government programs, but a growing number of companies offer it as an employee benefit. Spotify, for example, offers unlimited coverage, while Pinterest and Facebook offer coverage of up to $100,000 for up to four cycles and preimplantation genetic screening.

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