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The Business of Babies
The demand for babies by infertile couples and other would-be parents is huge and little discussed. HBS professor Debora L. Spar addressed the market realities of adoption and scientific conception at the 2003 Alumni Health-Care Conference in November.
The topic, Spar admits, is controversial. We have a business that doesnt feel like a business, she noted. Nobody wants to acknowledge the extent of commercialization. Yet Americans alone spent $2.7 billion on fertility treatments in 2002. Procedures such as egg and sperm donation, in vitro fertilization (IVF), surrogacy, and adoption demand payments of $10,000 and up. Were not talking about demand for potato chips, Spar added. This is the kind of demand that becomes an obsession. Price is less of an issue than it is in other markets.
Despite the classic components of supply and demand, this market does not function normally, said Spar. Pricing inequities (90 percent of couples conceive for free), inconsistent insurance coverage for fertility treatments, and ambiguous legislation around property and privacy rights all create a unique market environment.
Until there is more clarity around issues of ownership (does a surrogate mother have the right to change her mind and keep the baby shes carrying?) and the political climate becomes more accepting of the role science can play in creation (with cloning the most radical example), the market cannot thrive. If advances in biotechnology are to reach their full commercial and scientific promise, sustaining legislation has to be put in place to allow the market to achieve its potential, Spar commented. The best technology in the world wont help you if its illegal to use it.
Another determinant of success in the baby business is the ability to sell and deliver on hope. Providers of fertility treatments are selling the promise of a child, the dream of a family, but at some point they have to come through, said Spar.
Privacy is a factor as well. Acquiring a child is an intimately personal transaction, yet in many instances, people dont want to be involved with the ultimate suppliers. Its a market suited to intermediaries such as brokers, lawyers, and agents, she observed.
The emphasis in egg and sperm donor profiles on intelligence and physical attributes also raises the specter of eugenics, the science of creating a superior race through selective genetics. In order to succeed, providers will have to walk a fine line between making the customer happy and avoiding controversy.
One thing is for sure, as Spar pointed out, You cant be politically naive and do well in this business.
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