siliconindia | | June 20189tres over the past few years. It is little wonder that such centres have become the darling of investors, considering that they tick all the right boxes, with low capex, low-operating expenses and a mere 12-18-month break-even timeline. A significant clutch of in-vestors have already pumped mon-ey into the industry and have gone on to create reasonably good brands. NOVA (invested by GTI, Goldman Sachs), Ankur (invested by Manipal), Milaan (invested by HCG) are prime examples of investor-led brands in this space. Early-mover organized chains that captured considerable market share since their genesis have only been challenged by a handful of strong individual doctor-led brands like Dr. Doshi & Dr. Nadkarni (Blos-soms, Surat) and Dr. Hrishikesh Pai (Bloom Fertility, Mumbai, Delhi), who have been successful in penetrat-ing the organized player landscape. Today, the ART industry stands as a reasonably mature segment and is faced with two new challenges: mac-ro-factors of regulation and dynamics of the business model.Challenge 1: Macro-Factors of RegulationThe latest ART Bill, passed in 2014, tightened regulations on ART centres. The bill mandated that all ART clinics be registered with the Indian Council of Medical Research (ICMR). It also prescribed standards on record keep-ing and advocated transparent clinic proceedings. Although, the ART Bill introduced much-needed regulation in the Indian ART market, it was classi-cally silent on commercial surrogacy, paving the way to the emergence of the Surrogacy Regulation Bill in 2016. This bill is currently being surveyed in parliament and is expected to become an act very soon. The trouble is, once that happens, commercial surrogacy will be banned in India and only al-truistic surrogacy will be allowed. In the advent of the act, foreign nationals and single and same-sex parents are already being dissuaded from availing surrogacy services in India. Presently, various surrogacy regulation mea-sures have been instituted. Child cus-tody norms, for example, have been tightened, to mitigate the risk of child trafficking syndicates abusing the sur-rogacy arrangement. The Surrogacy Regulation Bill is expected to impose more binding terms on ART centres, to ensure that surrogacy contracts are clearly honored and are undertaken exclusively for altruistic purposes.Challenge 2: Dynamics of the Business ModelTraditionally, there have been two main models with respect to ART centres: stand-alone and shop-in-shop. The Indian market has typical-ly skewed towards stand-alone ART centres, due to a perception that such centres offer superior privacy and non-conflict of interest. This percep-tion has been affirmed by the growth of stand-alone brands like NOVA and Indira IVF. That being said, the shop-in-shop model has also gained consid-erable traction, although such success stories have been eclipsed in the me-dia. The growth of Bloom IVF (a col-laboration between Dr. Hrishikesh Pai and Fortis) and Cloudnine Fertility are evidence of the thriving potential of the shop-in-shop model. In a broad-er sense, considering macro-factors like the tightening of medical norms, it is worth evaluating the benefits of shop-in-shop. This model offers cost synergies, opens a spectrum of career paths for existing employees, and allows for the effective handling of emergencies, unlike stand-alone 9AM to 6PM fertility centres. Shop-in-shop is also advantageous in augmenting the customer life cycle. While con-ventional fertility centres clock a cus-tomer life cycle of 6-12 weeks, a cen-tre that plugs into a mother-and-child hospital (another favorite of investors) could potentially elongate this time-line to 15 months. In recent times, the shop-in-shop model has gained an equal share of the spotlight as its stand-alone seg-ment counterpart. This trend is likely to drive consolidation in the fertility market as hospitals across the board scramble to equip themselves with ART centres through acquisitions. The future promises to unfurl tremen-dous change in the Indian fertility realm that will only elevate India's standing on the global fertility map. Brace yourself for the action ahead. The spiraling infertility rate in India is fanned by an array of factors, including late marriages, a delayed decision to conceive, habitual alcohol and many others
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