Prescription medication – 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, are diagnosed, go to our local pharmacy to fill our prescriptions (paying only a copay of course, as health insurance pays the rest), and pick them up soon after. Our medicines are of high quality, make us better, 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% of those drugs are no longer patented. The time and expense involved in visiting a doctor often leads these patients to self-diagnose, and pharmaceuticals are frequently out of stock, carry high mark-ups, or are counterfeit.
While these facts show a great need for improvement, the main questions is: Is there a demand for reasonably-priced, high quality medicines in developing countries? Interestingly, numbers gathered by the IFC and the WRI show that aggregate annual household spending on health of those living on less than $3,000 per year is more than $150 billion (PPP). A third of this health budget is spent on pharmaceuticals. Much of the world’s future growth is expected to come from emerging and developing markets. Companies who want to unlock the potential of these countries need to rethink business models.
So what has to be done to tap this market – and improve health situation of four billion consumers? The report Bringing Medicines to Low-Income Markets aims to inform pharmaceutical companies and other actors looking to more effectively form business models suited to serve low-income patients, specifically those earning less than $3,000 per year. The guide was commissioned by GIZ. The Federal Ministry for Economic Cooperation and Development of Germany (BMZ) and Sanofi jointly financed the publication that was developed and written by Endeva and supported by Planet Finance Germany. It provides an overview of the market for medicine at the “base of the economic pyramid” (BoP), and describes challenges in the current market environment. With insights derived from an analysis of over 100 case studies and 30 interviews, it proposes solutions to address these challenges.
To support companies in putting these solutions into practice, the report presents the 4As+1 tool. It is structured along four dimensions: Facilitating acceptance means developing an understanding for the target market and adapting products according to patients’ needs. Providing information and education, ideally in conjunction with neutral partners, can enhance awareness. Proper dispensing and distribution need to be put in place to ensure availability of medicines. Innovative financing mechanisms and pricing methods make products more affordable. Further, a fifth A is needed to realize the full potential of the 4As, as working with key actors in the health ecosystem can contribute the success of a business endeavor. While there are currently only a few sustainable business models implemented, more and more organizations are interested in and willing to find new ways to better serve low-income patients with medicine and health services. We want to help them do it!
Note: I would like to thank Solveig Haupt and Alyssa Rivera, who co-authored this blog post