[Page 4]

Not all of these people seek treatment, of course. In fact, in the United States, only 36 percent of infertile women seek treatment for their infertility. [1] However, for this 36 percent—or a total in 2002 of about 2.8 million women—the quest to conceive becomes an endless, bottomless demand, driving them in many cases to pay whatever they can: to take out a second mortgage, wipe out their savings, or give up a lucrative job. [2] At the extreme, some couples will pay as much as $100,000 for round after round of high-tech treatment. More commonly, they will pay whatever their own, more limited funds will allow, choosing between fewer or less-expensive treatments.

Thus demand in this market is not exactly what economists would call price insensitive: fertility customers care about price, and they purchase more services when the price goes down. But frequently, people buy on hope rather than on performance, and they base their spending largely on their available resources. Or to put it somewhat more crudely, when would-be parents enter the baby market, they don’t necessarily think about the value of a particular service or treatment. They can’t, because the value of what they are buying has no price. Instead, they think much more simply about what they can afford to pay.

And thus demand in the fertility trade clusters into three linked but separate segments. First are those for whom money is truly no object— wealthy couples or individuals who are willing to pay almost literally whatever the market will bear. Second are equally determined clients with more limited means. And third are those armed with generous insurance plans, able to “afford,” like the wealthy, whatever their insurance covers. What binds these segments is their shared determination to do whatever it takes to produce a child. What differentiates them is their precise bottom line—the point at which they run out of the funds or the energy to continue.

Meanwhile, supply in this industry also bears its own distinctive contours. It has, first of all, been growing over the past two decades at a dizzying rate. In 1986, there were roughly 100 fertility clinics in the United States, performing a total of 10,000 cycles of assisted reproductive technology (ART). By 2002, there were 428 clinics performing as many as 115,000 cycles. In 1986, U.S. revenues from fertility treatment totaled approximately $41 million. [3] By 2002, these same revenues were approaching nearly $3 billion. And this number doesn’t include the ancillary players in the trade: consultants, lawyers, equipment suppliers, and various types of counselors.