Medtech Business Opportunities: There’s Plenty of Room at the Bottom
Monday, April 13, 2015
There is a huge underserved market for medical technology—roughly two-thirds of the global population—that is largely ignored by the medtech industry. That market sits at the base of the pyramid (BoP), and it is composed primarily of populations in the emerging global markets. A report from global business consultancy PWC, “Quality healthcare for all: Starting from a strong base,” considers this market to be a tremendous opportunity for companies to do good, both in business terms and for the human condition. “There may be no better place to look than the BoP healthcare market to seek new business,” write PWC analysts. “Companies that do may find huge revenue potential combined with the opportunity to improve the lives of billions of people through access to better healthcare.”
Conventional wisdom is a foe of clear thinking when it comes to emerging economies. The authors of the report note, for example, that foreign direct investment has outpaced foreign aid in Africa during the last decade. While economic distortions remain—the Ebola outbreak was a painful reminder of the inadequate health services in West Africa, where the overall economy nevertheless is projected to grow almost 8% this year—50% or more of all health infrastructure available in BoP countries is managed by private entities, notes the report. Many governments and nongovernmental organizations are looking for willing business partners to rapidly expand public health priorities.
One stumbling block for private enterprise in these countries is the status of health insurance. A quarter of households in low and middle-income countries have to borrow money or sell assets to cover their healthcare expenses, according to a paper published by the International Labour Organisation, which is cited in the PWC report. When finding the means to pay for food and shelter is a priority, paying for health insurance that you might not need is a luxury. Consequently, medical device manufacturers and healthcare providers cannot expect to apply Western economic models to these populations. That does not mean there are no business opportunities, but companies will have to recontextualize their business practices to succeed.
For example, microinsurance schemes specifically designed for low-income populations, pioneered by Muhammad Yunus and Grameen Bank, dual recipients of the Nobel Peace Prize in 2006, have achieved success in expanding the availability of healthcare in very poor countries. This is one example of the new thinking that is required to reach BoP markets, notes the PWC report. Another is rethinking the use of technology.
“Technology will be the key to bringing scale and capacity to healthcare for the BoP,” write Chan Harjivian, Brian Dunch and Therese McCabe, who authored the PWC report. In concrete terms, that can be as simple as leveraging text messaging to deliver health information cheaply and efficiently to an underserved population, which is being used to great effect in some African nations. It can also be realized through the application of frugal engineering, a concept I have written about before in PlasticsToday.
- Health Care