The potential of market-based models for reaching the base of the economic pyramid

The Potential of Market-based Models for Reaching the Base of the Economic

Pyramid

An initiative ofthe Private Sector in Health Symposium

@psinhealth#healthmkt

www.pshealth.org

Symposium: Sydney – 6 July 2013

• Since 2009 a group of researchers and policy analysts working on health markets in low and middle-income countries have organised a pre-congress symposium at the biennial conferences of the International Health Economics Association

• The aim has been to encourage and disseminate high quality research on the performance of these markets and on practical strategies for improving access to safe and effective services by the poor

• The Future Health Systems Consortium is responsible for organising the 2013 symposium with financial support from the Gates and Rockefeller Foundations and USAID through the SHOPS project

www.pshealth.org

This webinar series provides opportunities to set the

scene before the Sydney meeting and to ensure that

those who may not be attending the Symposium

have the opportunity to participate in debates about strategies for improving the

performance of health markets in meeting the

needs of the poor.

Webinar series

• Facilitated by the Future Health Systems Consortium

• Organised by a number of institutes

• Publicised widely to involve a wide audience

• The next SHOPS project webinar will be held June 6

Organisation of webinar

• Introduction to the webinar (Caroline Quijada)

• Presentations from:

- Arunesh Singh, Abt Associates

- Colm Fay, Abt Associates

• Question and answer session

Questions?

How to submit• Via the ‘Questions’ box in

the GoToWebinar Control Panel

• Via Twitter using the hashtag #healthmkt

Be sure to include your name, organisation and location with your question!

What Is a Market-based Model?

A market-based model is scalable, commercially viable and socially beneficial to the BoP

Scalable

Socially Beneficial

Commercially Viable

Monitor Group

BoP refers to the population segment at the base of the economic pyramid in a country

SHOPS Approach to Market-based Models

• Understand the landscape – what is range of promising market-based business models

• Carry out research to identify barriers to scale and long-term viability

• Provide technical assistance to support promising models, document and share lessons learned

Promise and Progress: Market-based Solutions to Poverty in Africa

• Monitor-led study financed by Gates, Rockefeller Foundation, USAID, IFC, Actis and others– 9 SSA countries: Ghana, Kenya, Senegal, South Africa,

Tanzania, Uganda, Nigeria, Mali and Zambia– 439 initiatives identified across all sectors with a focus on BOP– Field visits included interviews with over 500 customers,

distributors, executives as well as impact investors

• 13 Model types; 4 with most potential impact for health– Distribution and sales through informal shops– Low frills, high volume service delivery– Distribution through dedicated sales agents – m-Enabled businesses

Sharing Knowledge on these Models

Arunesh SinghAbt Associates

Reaching Base of the Pyramid Health Markets in India

Colm FayAbt Associates

Health Care Innovation at the Base of the Pyramid: A Challenge Fund Model for Addressing the “Missing Middle”

Market-based Partnerships for Health

Reaching Base of the Pyramid Health Markets in India

Arunesh SinghAbt Associates

April 11, 2013


Click to edit Master title style

• Click to edit Master text styles– Second level

• Third level– Fourth level

» Fifth level

What are Market-based Partnerships for Health?

Market-based partnerships for health are defined as commercially viable partnerships between the commercial sector and other public or private sector actors in order to tap into and expand distribution, service delivery and information networks to improve public health outcomes in selected areas.





» Fifth level

Market-based Partnerships for Health: Context

• Lack of access to quality products and information is a barrier to use, especially in BoP markets

Barriers to Entry in BoP Health Markets in India - Consumers





» Fifth level



– 85% of rural women are aware of OCPs but use is only 14%

– In rural India, lack of proper knowledge and correct information on ORS leads to low use






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• Affordability barriers are result of limited resources and irregular cash flows






» Fifth level





• Affordability barriers are result of limited resources and irregular cash flows– Especially true for durable goods and services

– Some MNCs (Unilever) have successfully introduced smaller packaging

Barriers to entry in BoP Health markets in India - Consumers





» Fifth level

Reaching the unreached: Key challenges • Lower demand for health products and services so often markets need to be created

• Highly fragmented demand among BoP markets– Over 600,000 villages across India of which 50% have less

than 2000 inhabitants

• High discovery cost– BoP markets are not conventional and require a deep

understanding

Barriers to entry in BoP Health markets in India – Manufacturers/Marketers





» Fifth level

Profile of the unreached in India • The BoP includes the following sub-groups– Over 700 m people in rural India encompassing a range of

income and economic profiles and over 80 m urban poor

Size and Profile of the BoP Market in India





» Fifth level

Profile of the unreached in India • The BoP includes the following sub-groups– Over 700 m people in rural India encompassing a range of

income and economic profiles and over 80 m urban poor

• Public health indicators are lower among the BoP:

Indicator Urban non-poor The BoP

Urban poor Rural (all)

Total unmet need for FP (%)* 10.0 14.1 14.6

Current use of any modern method (%)*

58.0 48.7 45.3

Children with diarrhea in the last 2 weeks who received ORS (%)

36.3 24.9 23.8

Home deliveries (%) 21.5 56.0 71.1

* Currently married women, age 15–49 Reference: National Family Health Survey -3 (2005–2006), Census of India 2001

Size and Profile of the BoP Markets in India





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USAID-funded Market-based Partnerships in India

• Market-based Partnerships for Health (MBPH) project (October 2008 - May 2012)

• To forge commercially sustainable partnerships with the private sector on a range of public health issues

• Strengthening Health Outcomes through the Private Sector (SHOPS) project (June 2012- September 2014)

• To refine and scale-up 5 successful partnership models tested in MBPH

• BoP models implemented under SHOPS:• Dimpa (FP), ITC eChoupal (FP, CS), ORS Rural Health Initiative

(CS), and Advanced Cook Stoves Initiative (CS)





» Fifth level

Snapshot SHOPS BoP models Intervention Type

Programs Description

Distribution-Demand Focused Intervention

ITC eChoupal &ORS Health Initiative

Commercially viable rural distribution and demand generation models to increase access to health products

Distribution-Demand and Financing Led Intervention

Advanced Cook Stoves (ACS) Initiative

A model to increase awareness, access, and affordability of ACS in rural areas through commercial partnerships

Private Provider Focused Intervention

Dimpa Expanding access & demand for injectable contraceptives through the private sector & advocating for expanded contraceptive choices

Snapshot: MBPH/SHOPS BoP models

For further information kindly refer to www.mbph.in and www.shopsproject.org

http://www.mbph.in/

http://www.shopsproject.org/





» Fifth level

Advanced Cook Stoves Initiative: Model (ACS manufacturer)Envirofit

Village-level entrepreneur

(Distributor)S-mart

MFI members

n-MFI members

(MFI)SONATA

Access fee

Insta

llme

nts

Loan Product for ACS

• Competitive margins• Product training • Brand-specific marketing• Last-mile minus one supply

• Block level retailer• VLE recruitment • VLE compensation• Inventory management

• Final sale • Order placement• Demonstration/promotion

• Access to groups• VLE monitoring• Access to finance

Title transfer

Payment for title Loan repayment

Consumer Loan

Advanced Cook Stoves Initiative: Model





» Fifth level



(Distributor)S-mart

MFI members

n-MFI members

(MFI)SONATA

Access fee

Insta

llme

nts






Title transfer


Consumer Loan






» Fifth level



(Distributor)S-mart

MFI members

n-MFI members

(MFI)SONATA

Access fee

Insta

llme

nts






Title transfer


Consumer Loan






» Fifth level



(Distributor)S-mart

MFI members

n-MFI members

(MFI)SONATA

Access fee

Insta

llme

nts






Title transfer


Consumer Loan






» Fifth level



(Distributor)S-mart

MFI members

n-MFI members

(MFI)SONATA

Access fee

Insta

llme

nts






Title transfer


Consumer Loan






» Fifth level



(Distributor)S-mart

MFI members

n-MFI members

(MFI)SONATA

Access fee

Insta

llme

nts






Title transfer


Consumer Loan






» Fifth level

Key Lessons

Key Lessons





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• Build cross sectoral partnerships that leverage core competencies of each partner• The Advanced Cook Stoves partnership is a tripartite

commercial partnership focusing in consumer financing, distribution, and marketing

• Partnerships enable risk-share and allow the commercial sector to explore new and difficult markets • The Advanced Cook Stoves partnership has allowed the

manufacturer to enter a new market in Northern India

1. Build Cross Sectoral Partnerships





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• Investing in the creation of a dedicated rural distribution network is challenging for health product/service companies

• Many non-health companies have created robust distribution platforms for the rural market

• A distribution platform provides a cost effective option for aggregating fragmented demand

2. Leverage Distribution Platforms to Aggregate Demand





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• Operate as dual service points and are incentivized for both demand and supply functions • Traditional distribution or communication channels do not reach

the last mile, necessitating integrating demand and supply

• Last-mile retailers require selection, training and support

• The VLEs in the Advanced Cook Stoves partnership provide last mile delivery of the product, and create demand

3. Create a New Class of Retailers





» Fifth level

• Due to low margins and low demand it is difficult to make a viable business model through public health products alone

• Important to have a secondary basket of easy-to-sell, high-margin products that can contribute to entrepreneur profitability

• Incentives need to be designed to ensure focus on primary public health products

4. Optimize Basket of Products





» Fifth level

• Long term, personalized engagement with consumers

• High engagement marketing processes that allows the user to “experience” the product

• Customize the retailer profile to account for cultural and/or product related sensitivities

5. Products Targeted at BoP Consumers Need High Engagement Approaches





» Fifth level

Summary

• Partnerships that leverage each other’s networks and retain focus on core competencies are more sustainable

• BOP markets need a specialized class of retailers who deal is a basket of products and play the dual role of creating awareness and last mile delivery

• Sales formats need customization for BOP consumers that permit ‘experiencing’ the product


Questions

[email protected]

SHOPS is funded by the U.S. Agency for International Development.Abt Associates leads the project in collaboration withBanyan GlobalJhpiegoMarie Stopes InternationalMonitor GroupO’Hanlon Health Consulting

Health Care Innovation at the Base of the Pyramid: A Challenge Fund Model for Addressing the “Missing Middle”Colm FayAbt Associates

April 11, 2013

Market Based Models in Africa

Challenge Fund

Diffuse Demand

New and Existing

Business Models

Financing Gaps

Need for TA

What is a Challenge Fund?

Capital Awards

Competitive selection

Enterprises apply

Donor challenge


Capital Awards


Enterprises apply

Donor challenge


Capital Awards


Enterprises apply

Donor challenge


Capital Awards


Enterprises apply

Donor challenge

What is the Missing Middle?

Small and Growing Scaling

Donor

Programs

?Micro-financeFounder’s CapitalAwards

Early Stage

Commercial Capital



Donor

Programs


Early Stage

Commercial Capital



Donor

Programs


Early Stage

Commercial Capital



Donor Programs


Early Stage

Commercial Capital



Donor

Programs


Early Stage

Commercial Capital

HANSHEP Health Enterprise Fund

• Ethiopia and Kenya• Grants up to $200,000• Seeking innovations in:

• Service delivery• Technologies• Partnerships• Business models

• Funded by USAID and DFID through the HANSHEP Group

• Focus on SHOPS project priority health areas: family planning, reproductive health, maternal and child health, HIV/AIDS

What makes the HANSHEP Health Enterprise Fund unique?

Capital

How are Winners Selected?

Eligibility• Revenue

model• Enterprise

stage• Health area

targeting• Geographic

and socioeconomic targeting

Innovation• Scalability• Sustainabili

ty• Replicabilit

y

Awards

• Multinational organizations piloting low-cost health care devices

• Partnerships between multinational organizations and local manufacturers

• Social enterprises providing high quality health care services in peri-urban areas

• Faith based organizations delivering revenue generating health services to the poor

• Technology companies partnering with health care delivery organizations to pilot and scale low-cost IT systems and platforms

What Types of Organizations Have Applied?

Awardee Support

Investor Readiness

Monitoring and

Evaluation

Shared Learning

Technical Assistance

Further information

• http://www.healthenterprisefund.org

• Facebook.com/HealthEnterpriseFund

• Twitter: @Health_Ent_Fund

Summary

• Market based approaches in Africa can be challenging to scale

• Challenge Fund model mitigates some of this risk

• Incentivizes greater private sector involvement in BoP markets

• Important to provide technical assistance as well as capital

• Investor engagement from the start creates a pathway to scale

SHOPS is funded by the U.S. Agency for International Development.Abt Associates leads the project in collaboration withBanyan GlobalJhpiegoMarie Stopes InternationalMonitor GroupO’Hanlon Health Consulting

Questions

[email protected] www.shopsproject.org

Date post:	30-Oct-2014
Category:	Health & Medicine
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The potential of market-based models for reaching the base of the economic pyramid

Health & Medicine