The prescription medication industry: It’s all relatively simple, isn’t it? Pharmaceutical companies carry out research and development, produce, and deliver medicines through established distribution channels. We go to a health care professional if something isn’t right with our health or for regular check-ups covered by health insurance, are diagnosed, go to our local pharmacy to fill our prescriptions, and pick them up soon after. Our medicines are of high quality, reduce our suffering, and are generally accepted in society as a good thing.
That’s not how it works for the estimated 4 billion people at the bottom of the economic pyramid who live in the urban slums and rural villages of developing and emerging countries. Approximately 1.7 billion of them lack access to essential medicines, even though 95 percent of those drugs are no longer patented, according to the 2008 UN Millennium Development Goals task force report. Seeing a doctor can mean spending a considerable amount of time and money going to a city, so patients often opt to self-diagnose instead. If they go to a pharmacy or outlet, chances are their medicine will be out of stock, outdated, counterfeit and thus potentially harmful, or carry high mark-ups.
While these facts show a great need for improvement, the main question is: Can these low-income communities really factor into core business activities? Interestingly, numbers gathered by the International Finance Corporation and the World Resources Institute show that those who earn less than $3,000 per year allocate a fairly high share of their income to health expenses: collectively they spend approximately US$158.4 PPP per year on health and around US$56.7 billion on pharmaceuticals. Much of the world’s future growth will come from emerging and developing markets. Companies who want the first-mover advantage and volume in these countries need to rethink business models and how they serve low-income patients.
Tapping the wealth of markets found in slums and villages of developing countries requires innovative business models and partnerships. Where can one begin?
The “Bringing Medicines to Low-Income Markets” workshop, set for Oct.18-19 in Berlin, is a great way to take the first step toward an inclusive business model in the pharmaceutical market, to expand current efforts, or find a suitable partner. This highly interactive workshop aims to support pharmaceutical companies and other actors looking to more effectively form business models suited to serve low-income patients. It provides an introduction to the unique challenges of the market and promising approaches to meet those challenges, guidance on developing or enhancing a business model and how to identify the right partners. Interactive sections allow participants from different professional backgrounds the opportunity to exchange ideas and experiences, and provide valuable networking opportunities.
The workshop uses the 4As - Awareness, Acceptance, Availability, and Affordability – as a framework for discussion and identification of challenges and solutions.
(Left: The 4As+1 Framework, which is featured in the BMZ report focused on creating inclusive business models for pharmaceutical companies.)
The workshop, first held in January 2012, drew positive reactions from delegates, who came from backgrounds as varied as multinational pharmaceutical companies, international organizations, private health providers, and NGOs. To read about previous participants’ experiences, please click here.
This workshop builds upon a study by the same name. The workshop was commissioned by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and who also host the workshop. It is implemented by Endeva, a Berlin-based research and consulting institute that aims to foster inclusive business and supported by PlaNet Finance Deutschland e.V.
For more information on the study or workshop, including the registration and agenda, please visit medicines-for-bop.net.
We would like to extend a special thanks to Alyssa Rivera (Endeva) and Susann Seifert (PlaNet Finance), who assisted us in the writing of this article. We would also like to acknowledge Jonas Naguib and Matthew McDermott of the GIZ, who have provided great support in the development and implementation of the project and workshops.
Aline Krämer is a founder and managing director of Endeva, Solveig Haupt an Associated Expert at Endeva. Read their full profiles here.