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Tuesday, March 19, 2013

Shaping a Market for Nutrient Economies – Part 1: The zinc conundrum

By Lisa Smith

Editor's note: This post is part of our week-long collaboration with Ashoka Changemakers on their Nutrients for All campaign

The concept of supply and demand is the backbone of a market economy. And it seems pretty straightforward:

  • Consumers have a need
  • Different companies compete to meet that need with products or services
  • The price of these product/services settles at a point where the quantity demanded by consumers equals the quantity supplied by producers

So consumers get their needs met, companies make money and everyone’s happy, right?

Not always.

 

Why isn't the zinc market thriving?

Diarrheal disease is the seconding leading cause of death among children under five in developing countries. Even in less serious cases, it impacts millions of adults and children by causing them to miss work or school. The demand for an effective treatment is clear.

Years of research have identified zinc supplements as a cheap, effective treatment for diarrhea that, along with an oral rehydration solution (ORS), can save millions of lives. But zinc supplements are poorly utilized and scaled inadequately in many parts of the world, despite the availability of basic technology to manufacture them, and their proven efficacy in practice.

The reasons for this are unclear. While there are a number of studies that examine the medical efficacy of zinc supplements, there are fewer that explore the market impact of strategies to increase both the supply of zinc treatments and consumer demand for them within a country. So it’s not evident which factors (demand or supply) are driving the underwhelming market performance of these treatments.

Many of the existing studies have focused on education campaigns and health communication marketing - demand generation activities that work to increase public awareness among the general population of a particular treatment. Generally, these interventions have improved uptake of zinc and ORS treatments, though there is less evidence about whether these effects will last in the long term.

More recent interventions have focused on supply-side factors, or on a combination of demand and supply interventions. Supply-side activities may include:

  • Ensuring zinc is affordable to patients, particularly when combined with other recommended treatments like ORS. (This is often done by ensuring that the cost of zinc and ORS is less than that of a competitive treatments like antibiotics or anti-diarrheals, or by conducting studies that look at how much people believe they should pay for a treatment, then pricing products accordingly.)
  • Improving supplier awareness of appropriate prescribing practices, leading to more frequent recommendations of zinc treatment to patients
  • Increasing supplier use of zinc through financing or co-financing the purchase of product supply, or directly incentivizing suppliers to reach specific sales volumes. (These incentives can be paid by NGOs, or by suppliers further up in the supply chain, like national wholesalers and drug manufacturers.)

Unfortunately, there is a poor understanding of the impact of these types of supply-side interventions, and of how they interact with demand factors to promote the usage of zinc as a treatment for diarrheal disease. To design the optimal mix of investments in zinc utilization – and to craft any effective market-shaping initiative – a greater understanding of the underlying market dynamics is needed.

But there’s another factor that’s important to many market-shaping initiatives – particularly those that involve nutrient products. We’ll explore it in part two of this series.

Read more about how an understanding of market dynamics may help improve health investments and outcomes for populations in low- and middle-income countries. 

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