ProjectBringing Medicines to Low-Income Markets
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. 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.
The objective of the project 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. Interactive workshops for practitioners aim to put these findings into practice - and co-create viable solutions.
The guide and practitioners' workshop built 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 study, which was launched on January 23, 2012 during a public evening event at the BMZ. The findings served as a basis for an interactive workshop for practitioners, which was held on January 23 and 24, 2012 at the GIZ - and which is being repeated on demand. Both end products intend to support pharmaceutical companies and other health-related organizations to develop suitable business models in cooperation with partners in order to profitably serve the low income market.