the potential of market-based models for reaching the base of the economic pyramid
DESCRIPTION
he private sector have the potential to be an effective provider of health care products and services for populations at the base of the economic pyramid. This webinar presents two investment models: a market-based initiative and a challenge fund. The presenters will address the impact of these models with examples from programmes run by the Strengthening Health Outcomes through the Private Sector (SHOPS) project in India and sub-Saharan Africa. Arunesh Singh will discuss market-based partnerships and Colm Fay will present on a challenge fund recently launched in East Africa. Arunesh Singh, formerly of Market-based Partnerships in Health India, has over 14 years of development experience in corporate and social enterprises. He oversees market-based partnerships with private sector companies that address family planning, reproductive health, and child health. Colm Fay, a private sector specialist, focuses on business strategies for the base of the pyramid and impact investing. He manages the HANSHEP Health Enterprise Challenge Fund. This webinar is sponsored by Strengthening Health Outcomes through the Private Sector (SHOPS) http://www.shopsproject.org/ You can find out more about HANSHEP on their website http://www.hanshep.org/TRANSCRIPT
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
Market-based Partnerships for Health
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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.
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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Market-based Partnerships for Health: Context
• Lack of access to quality products and information is a barrier to use, especially in BoP markets
– 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
Barriers to Entry in BoP Health Markets in India - Consumers
Market-based Partnerships for Health
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Market-based Partnerships for Health: Context
• Lack of access to quality products and information is a barrier to use, especially in BoP markets
– 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
• Affordability barriers are result of limited resources and irregular cash flows
Barriers to Entry in BoP Health Markets in India - Consumers
Market-based Partnerships for Health
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Market-based Partnerships for Health: Context
• Lack of access to quality products and information is a barrier to use, especially in BoP markets
– 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
• 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
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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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)
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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» 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
Market-based Partnerships for Health
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• Click to edit Master text styles– Second level
• Third level– Fourth level
» 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
Market-based Partnerships for Health
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• Click to edit Master text styles– Second level
• Third level– Fourth level
» 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
Market-based Partnerships for Health
Click to edit Master title style
• Click to edit Master text styles– Second level
• Third level– Fourth level
» 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
Market-based Partnerships for Health
Click to edit Master title style
• Click to edit Master text styles– Second level
• Third level– Fourth level
» 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
Market-based Partnerships for Health
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• Third level– Fourth level
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Key Lessons
Key Lessons
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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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
Market-based Partnerships for Health
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• 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
Market-based Partnerships for Health
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• 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
Market-based Partnerships for Health
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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
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
What is a Challenge Fund?
Capital Awards
Competitive selection
Enterprises apply
Donor challenge
What is a Challenge Fund?
Capital Awards
Competitive selection
Enterprises apply
Donor challenge
What is a Challenge Fund?
Capital Awards
Competitive selection
Enterprises apply
Donor challenge
What is the Missing Middle?
Small and Growing Scaling
Donor
Programs
?Micro-financeFounder’s CapitalAwards
Early Stage
Commercial Capital
What is the Missing Middle?
Small and Growing Scaling
Donor
Programs
?Micro-financeFounder’s CapitalAwards
Early Stage
Commercial Capital
What is the Missing Middle?
Small and Growing Scaling
Donor
Programs
?Micro-financeFounder’s CapitalAwards
Early Stage
Commercial Capital
What is the Missing Middle?
Small and Growing Scaling
Donor Programs
?Micro-financeFounder’s CapitalAwards
Early Stage
Commercial Capital
What is the Missing Middle?
Small and Growing Scaling
Donor
Programs
?Micro-financeFounder’s CapitalAwards
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