Atomico’s take on female and reproductive health in Europe through a consumer lens
Female and reproductive health has been a topic of conversations for many years in VC circles. Everyone more or less agrees on the trends that drive this market - things like the increasing economic power of women and their growing influence on healthcare decisions, amongst others. Yet investors often disagree on where areas of opportunity lie and what it takes to move the industry forward and drive return on investment.
This is made more complicated by the fact that the European and US markets have very different dynamics when it comes to female and reproductive health, and these differences have profound effects on how investors view opportunities on both sides of the Atlantic. Now, we thought it was time to share what we learned and how we think about what it takes to win in this market.
A deeper look: The market is massive, but putting a number on it is not straightforward
There are lots of ways to size the opportunity in this space. When people Google the size of the market, they often find reports that put the market at $23bn today and growing to $65bn by 2027.
When it comes to sizing the consumer opportunity, another way to approach it is to look at the addressable population and their needs. Let’s look at the three largest countries in Europe: the UK, Germany and France. There are approximately 65 mn women across these countries between the ages of 15 and 60. Close to 17 million of them are on the birth control pill, between 15 and 30 million are of perimenopausal and menopausal age. In addition, close to 2.5 million babies are born every year across these three countries alone, while 1 in 6 couples are struggling with infertility.*
Many of the sub-segments of the market are already very sizeable, and we see exciting European companies emerging that target these sub-segments:
The European feminine hygiene products market is worth $7 billion annually. We have been excited to see how companies such as Daye are reinventing this market and creating a new and better product for women.
The European contraceptive market is worth $6.3 billion, growing to c. $9 billion in 2027. As this market continues to grow, companies such as Tuune and Lowdown, are looking at ways to make the journey of finding the best contraceptive more seamless for women.
Approximately 900k IVF cycles are performed in Europe annually, with the potential to be a much greater number given the prevalence of infertility and issues of access to fertility treatments. We’ve been excited to see European start-ups emerging in this space, focused on helping people understand their fertility better and / or solve issues of access, with companies such as Gaia, Hertility, and Bea Fertility focusing on the space.
But not all sub-segments are easy to assess; with some areas of opportunity that appear nascent today harbouring the potential to expand dramatically.
Although we hear a lot about egg-freezing these days, in 2018 only c. 2,000 egg-freezing cycles were performed in the UK with a further 13,275 in the US, translating to estimated consumer-level market size of $150-200mn annually between these two markets. At the same time, the median age of motherhood continues to increase, and researchers have proven that egg count begins to drop dramatically for a woman after she reaches her 30s. As a result, it is reasonable to conclude that the total addressable market could be much bigger than where it currently stands!
Menopause is another interesting example. Millions of women around the world experience perimenopausal and menopausal symptoms that can interfere with their daily life, as well as leading to negative health outcomes as they get older. Women do spend significant amounts of money on products and services meant to help combat menopause symptoms, but, with the exception of Hormone Replacement Therapy, there are very few direct menopausal treatments receiving significant spend. And while sizing the market opportunity therefore is trickier, there is no doubt in our minds that it remains a sizable market given the large number of women who go through menopause every year and how severe the symptoms can be. We’ve been excited to see companies such as Peanut, Vira and Alva in Europe focusing on reframing the conversation around menopause.
We believe that the opportunity in female and reproductive health is both real and highly significant. And this is just the beginning: in many sub-segments we have to take a significant long-term view to imagine what the market might look like as companies in the space continue innovating and building their consumer go-to-market strategies.
The drivers of this market are only getting stronger
1. Changing social demographics
Average age of marriage for women has increased from 29 to 36 from 1990 to 2018
Average age of motherhood has been rising steadily since the 1970s
Gen X and baby boomer women are currently approaching menopausal age, have a high capacity to pay for healthcare services and are very receptive to digital health products and services
2. Economic empowerment of women
Women influence 83% of all consumer spending in the US, and control $30 trillion in worldwide spending
Approximately 30% of US working women now out-earn their husbands
3. Women are drivers behind healthcare decisions
- Women are disproportionately the primary healthcare decision makers for their family
- Working-age women spend 30% more per capita on healthcare compared to men in the same age group
- Women are 75% more likely to use digital tools for healthcare than their male counterparts
4. Greater awareness of lack of research on women-specific health issues
- Women have historically been underrepresented in clinical studies and health research. With greater awareness of that fact, there is greater focus on changing this status quo now than ever before
The Challenges, however, are real
Reimbursement differences and issues of affordability
In Europe, each country has different regulations when it comes to reimbursement of female and reproductive health issues, leading to more complex go-to-market considerations and varying willingness to pay by consumers and employers.
For example, when it comes to fertility, each country in Europe has different rules governing who can get reimbursed and up to how much. Consider the UK where reimbursement is actually decided at a local level, which makes the situation even more complex. In general, in the UK, the NHS funds only 35% of IVF cycles and wait times can be up to 3 years, depending on where you live. In France, IVF is only reimbursed for heterosexual couples with a diagnosis of infertility, while in Germany, in addition to other criteria, IVF is reimbursed only for heterosexual married couples in which a woman is not older than 39. For those paying out of pocket, IVF often poses a significant financial burden, as average cost of IVF cycle is steep (£5-10k per cycle in the UK) and success rates vary.
Fertility is not the only example of this complexity. Contraceptives are another area of difference between countries. While in the UK, many contraceptives are fully reimbursed by the NHS, in Germany, contraceptives are generally not reimbursed at all.
Navigating this complexity is not only difficult for any company wanting to start a business in the space in Europe, but it also creates different consumer expectations and varying levels of willingness to pay out of pocket.
Cultural differences
Different countries have different levels of awareness and cultural acceptance of discussing female and reproductive health issues openly. Openness is important as it correlates with demand and the ability to market more easily through both B2C and B2B channels. Until countries across Europe and beyond accept more open conversations about the topics that affect more than half of the population, building a strong consumer business will not be easy. The good news is that we see this changing in Europe and are excited by the speed and direction of travel!
Limited data
In certain segments, where data or meaningful research is particularly scarce, creating a differentiated USP and successful GTM strategy can be challenging, especially where we might be starting from a limited clinical base. For example, there is very limited historical research into menopause. It does not mean there is no data at all, but the products we can build for consumers today are limited by what’s available. Creating engaging experiences to continue encouraging data collection can not only help with personalisation but also lead to positive overall outcomes for society by collecting valuable data sets that did not exist before. As a result, we believe that limited data is both a challenge but also an opportunity.
What would winning consumer propositions in Europe focus on?
Leveraging existing data and collecting new proprietary data
Using existing data and research is important, but building a product where ongoing data collection can be encouraged is a huge plus as well. This is especially important because we are still dealing with so many research or data gaps when it comes to female and reproductive health. Focusing on data collection can therefore have meaningful long-term positive consequences both from the business perspective but also from an overall medical research perspective.
Scalable GTM strategy
We cannot underestimate a scalable go-to-market strategy when it comes to consumer health. Scaling a consumer business today is not easy; scaling one in markets that might be taboo, nascent, and/or highly regulated is even harder. We believe, however, that regardless of the strategy you end up pursuing (B2C or B2B2C or both), building a product focused on your end customer is absolutely crucial.
It’s ok to iterate and it’s ok not to get everything right immediately. What is important, however, is to listen to your users, invest in brand and obsess over consumer metrics. Even if your go-to-market strategy is focused on selling to enterprises or selling through healthcare providers or insurance companies.
Building a community can also not be underestimated. In many of the areas of female and reproductive health, consumers are not only looking for information and treatment, but they are also looking for a safe place to meet other people dealing with similar issues. Not only is having a community side to your product useful in that regard, it is also a wonderful opportunity for the founders to learn more about what their users are interested in, what other products they might enjoy, and receive product feedback.
Finally, there is significant value in the education of a market where, in many areas, awareness is still low. Awareness about the impact of menopause on women’s quality of life and productivity is low. Awareness around how hormonal changes can affect overall health is low. Awareness of how to go about understanding your fertility is low. There are significant opportunities for founders to shape the markets they are targeting by educating their target audiences and giving them access to information and insights they did not previously have. Whether it’s through content, PR, events, or working with key opinion leaders or consumer influencers, the value of information (trustworthy information!) in this space is huge.
Put simply: if you are building a consumer business in this space, invest in your marketing team early because there is a lot of work to do.
High Lifetime Value potential
Monetisation has been a big area of debate in consumer health in general. We do believe that in the case of female and reproductive health, creating a proposition with significant LTV potential is important for a few reasons. In an area where many health costs are reimbursed, creating a proposition that consumers or businesses would pay for sets a high bar and might truly differentiate between “nice to have” and “need to have” propositions. Given the barriers for adoption we discussed above, marketing and sales can end up being a non-trivial part of the business in this space. As founders look towards the future and focus on creating a sustainable business model, focusing either on long-term engagement with perhaps a lower willingness to pay monthly or high-ticket shorter-term revenue opportunities is important for investing in the foundation of a sustainable business.
Seamless user-friendly customer experience
A seamless user experience is the foundation of any successful business in this space. Consumers are not used to user-friendly customer experiences when it comes to female and reproductive health (average length of GP appointment in the UK is 9 minutes!), and they are finally ready to demand more. Making sure that you are building a delightful overall consumer experience is paramount, especially in a for-profit health space. Customers are looking for answers, support and concrete positive outcomes. Having these pillars in mind as you are building your product is key to creating a delightful consumer experience.
We want to hear from you…
We are so excited about the impact that companies in the space will have on millions of people globally. If you are building a business targeting female and reproductive health, please get in touch with our team. We are passionate about the problems you are solving and we would love to hear from you!
