Bringing Medicines to Low-income Markets – a guide to creating inclusive business models for pharmaceutical companies
An estimated 4 billion people live on incomes less than $3,000 per year in local purchasing power parity (PPP) terms. Their spending on health constitutes an estimated market of $158.4 billion PPP per year. More than one-third of this health spending goes to pharmaceutical products. Even with very limited disposable income, people spend a considerable proportion of their resources on health care and medicines. The ongoing need for quality medicines and medical care within this population is immense. Driven by rising incomes and a growing population, demand for medicines and health can be expected to increase strongly in coming years. Why have pharmaceutical manufacturers not run to take advantage of this significant opportunity?
Reaching into these markets is not business as usual. Health systems are typically not functional. Key structures and actors that companies usually rely on are missing. Qualified doctors and pharmacists, proper regulation, logistics systems, insurance and other financial services – all these market enablers are frequently lacking or are of poor quality. As a result, traditional business models just don’t work.
To overcome the challenges prevalent in low-income markets, pharmaceutical companies may cooperate with “unusual” partners in the health ecosystem. However, setting up mutually beneficial partnership is not easy either. They require an honest self-examination – and a thorough understanding of the potential partner.
The objective of the study is to support organizations to develop (or enhance) a business model that addresses low-income consumers in developing and emerging countries. It aims to support practitioners in developing an understanding for this challenging market environment – and to think out of the box to develop suitable solutions. To do so, the study developed the “4 As+1 tool”. The tool helps create a value proposition that meets low-income patients’ needs – and identify potential partners to deliver it.
The study builds on in-depth research on more than 100 business models (or business model components) and more than 30 expert interviews. Its findings shall trigger action within pharmaceutical companies and help them create “inclusive business models”, thus improving the medical situation of people living in poverty.
The findings have been condensed in a report and serve as a basis for a workshop. The report will be launched on January 23, 2012.
The interactive workshop for practitioners in the field will take place on January 23 and 24, 2012. Both end products shall support pharmaceutical companies to develop suitable business models in cooperation with partners in order to profitably serve the low income market
Register for the workshop at www.medicines-for-bop.net