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

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/

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

  1. 1. @psinhealthwww.pshealth.org #healthmktThe Potential of Market-based Models for Reaching the Base of the Economic Pyramid An initiative of the Private Sector in Health Symposium
  2. 2. 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
  3. 3. 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 toparticipate in debates about strategies for improving the performance of health markets in meeting the needs of the poor.
  4. 4. 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
  5. 5. Organisation of webinar• Introduction to the webinar (Caroline Quijada)• Presentations from:- Arunesh Singh, Abt Associates- Colm Fay, Abt Associates• Question and answer session
  6. 6. Questions?How to submit• Via the „Questions‟ box in the GoToWebinar Control Panel• Via Twitter using the hashtag #healthmktBe sure to include your name,organisation and locationwith your question!
  7. 7. What Is a Market-based Model?A market-based model is scalable, commercially viable andsocially beneficial to the BoPBoP refers to the population segment at the base of theeconomic pyramid in a country Monitor Group
  8. 8. SHOPS Approach to Market-basedModels• 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
  9. 9. 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
  10. 10. Sharing Knowledge on these Models
  11. 11. Reaching Base of thePyramid Health Marketsin India Arunesh Singh Abt Associates
  12. 12. Health Care Innovation at the Baseof the Pyramid: A Challenge FundModel for Addressing the “MissingMiddle” Colm Fay Abt Associates
  13. 13. Market-based Partnerships for HealthReaching Base of the Pyramid Health Markets in India Arunesh Singh Abt Associates April 11, 2013
  14. 14. Market-basedWhat are Market-based Partnerships for Health? Partnerships for HealthClick to edit Master title style• Click to edit Master text styleshealth are defined asMarket-based partnerships for – Second levelcommercially viable partnerships between the • Third levelcommercial sector and other public or private sector – Fourth levelactors in order Fifth tap into and expand distribution, service » to leveldelivery and information networks to improve publichealth outcomes in selected areas.
  15. 15. Market-based Partnerships for Health: Context Market-basedBarriers to Entry in BoP Health Markets in India - Partnerships for HealthConsumers• Lack of access to quality products and information is aClick to edit Master title style barrier to use, especially in BoP markets• Click to edit Master text styles – Second level • Third level – Fourth level » Fifth level
  16. 16. Market-based Partnerships for Health: Context Market-basedBarriers to Entry in BoP Health Markets in India - Partnerships for HealthConsumers• Lack of access to quality products and information is aClick to edit Master title style barrier to use, especially in BoP markets• Click to edit Master text styles – Secondrural women are aware of OCPs but use is only 14% – 85% of level • Third level – In rural India, lack of proper knowledge and correct information – Fourth level on ORS leads to low use » Fifth level
  17. 17. Market-based Partnerships for Health: Context Market-basedBarriers to Entry in BoP Health Markets in India - Partnerships for HealthConsumers• Lack of access to quality products and information is aClick to edit Master title style barrier to use, especially in BoP markets• Click to edit Master text styles – Secondrural women are aware of OCPs but use is only 14% – 85% of level • Third level – In rural India, lack of proper knowledge and correct information – Fourth level on ORS leads to low use » Fifth level• Affordability barriers are result of limited resources and irregular cash flows
  18. 18. Market-based Partnerships for Health: Context Market-basedBarriers to entry in BoP Health markets in India - Partnerships for HealthConsumers• Lack of access to quality products and information is aClick to edit Master title style barrier to use, especially in BoP markets• Click to edit Master text styles – Secondrural women are aware of OCPs but use is only 14% – 85% of level • Third level – In rural India, lack of proper knowledge and correct information – Fourth level on ORS leads to low use » 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
  19. 19. –Barriers to entry in BoP Health markets in IndiaMarket-based Partnerships for HealthManufacturers/MarketersReaching the unreached: KeyClick to edit Master title style challenges• Lower demand for health products and services so often markets need to be created• Click to edit Master text styles – Second level• Highly fragmented demand among BoP markets • Third level – Fourth level – Over 600,000 villages » Fifth level across India of which 50% have less than 2000 inhabitants• High discovery cost – BoP markets are not conventional and require a deep understanding
  20. 20. Market-basedSize and Profile of the BoP Market in India Partnerships for HealthProfile BoP Master the styleClick to editincludes title following sub-groups• The of the unreached in India – Over 700 m people in rural India encompassing a range of• Click to edit Master text styles over 80 m urban poor income and economic profiles and – Second level • Third level – Fourth level » Fifth level
  21. 21. Market-basedSize and Profile of the BoP Markets in India Partnerships for HealthProfile BoP Master the styleClick to editincludes title following sub-groups• The of the unreached in India – Over 700 m people in rural India encompassing a range of• Click to edit Master text styles over 80 m urban poor income and economic profiles and – Second level• Public health indicators are lower among the BoP: • Third levelIndicator Urban non-poor The BoP – Fourth level » Fifth level Urban poor Rural (all)Total unmet need for FP (%)* 10.0 14.1 14.6Current use of any modern 58.0 48.7 45.3method (%)*Children with diarrhea in the last 2 36.3 24.9 23.8weeks who received ORS (%)Home deliveries (%) 21.5 56.0 71.1* Currently married women, age 15–49Reference: National Family Health Survey -3 (2005–2006), Census of India 2001
  22. 22. Market-basedUSAID-funded Market-based Partnerships in India Partnerships for HealthClick to edit Master title style• Market-based Partnerships for Health (MBPH) project (October 2008 - May 2012)• Click to edit Master text styles partnerships with the private • To forge commercially sustainable – Second level sector on a range of public health issues • Third level• Strengthening Health Outcomes through the Private – Fourth level Sector (SHOPS) project (June 2012- September 2014) » Fifth level • 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)
  23. 23. Market-based Snapshot: MBPH/SHOPS BoP models Partnerships for Health Click to editPrograms title style Intervention Snapshot SHOPS BoP models Master Description Type Distribution- ITC Commercially viable rural •Demand to edit Master Click eChoupal & text styles demand distribution and – SecondORS Health Focused level generation models to increase Intervention Initiative access to health products • Third level Distribution- – Advanced Fourth level A model to increase Demand and Cook Stoves » Fifth level awareness, access, and Financing (ACS) affordability of ACS in rural Led Initiative areas through commercial Intervention partnerships Private Dimpa Expanding access & demand Provider for injectable contraceptives Focused through the private sector & Intervention advocating for expanded contraceptive choicesFor further information kindly refer to www.mbph.in andwww.shopsproject.org
  24. 24. Market-based Advanced Cook Stoves Initiative: Model Partnerships for Health (ACS manufacturer) Advanced Cook Stoves style Title transfer Click to edit Envirofit title Initiative: Model Master Consumer Loan Payment for title Loan repayment• Competitive margins• Product training•• • Click to edit Master text styles Brand-specific marketing Last-mile minus one supply Loan Product for ACS – Second level • Third level (Distributor) Access fee (MFI) – Fourth level S-mart SONATA • Block level retailer Fifth level » Installments • VLE recruitment • Access to groups • VLE monitoring • VLE compensation • Access to finance • Inventory management Village-level MFI entrepreneur members • Final sale • Order placement n-MFI • Demonstration/promotion members
  25. 25. Market-based Advanced Cook Stoves Initiative: Model Partnerships for Health Click to (ACS Envirofit title Initiative: Model editmanufacturer) Advanced Cook Stoves style Title transfer Master Consumer Loan Payment for title Loan repayment• Competitive margins• Product training•• • Click to edit Master text styles Brand-specific marketing Last-mile minus one supply Loan Product for ACS – Second level • Third level (Distributor) Access fee (MFI) – Fourth level S-mart SONATA • Block level retailer Fifth level » Installments • VLE recruitment • Access to groups • VLE monitoring • VLE compensation • Access to finance • Inventory management Village-level MFI entrepreneur members • Final sale • Order placement n-MFI • Demonstration/promotion members
  26. 26. Market-based Advanced Cook Stoves Initiative: Model Partnerships for Health (ACS manufacturer) Advanced Cook Stoves style Title transfer Click to edit Envirofit title Initiative: Model Master Consumer Loan Payment for title Loan repayment• Competitive margins• Product training•• • Click to edit Master text styles Brand-specific marketing Last-mile minus one supply Loan Product for ACS – Second level • Third level (Distributor) Access fee (MFI) – Fourth level S-mart SONATA • Block level retailer Fifth level » Installments • VLE recruitment • Access to groups • VLE monitoring • VLE compensation • Access to finance • Inventory management Village-level MFI entrepreneur members • Final sale • Order placement n-MFI • Demonstration/promotion members
  27. 27. Market-based Advanced Cook Stoves Initiative: Model Partnerships for Health (ACS manufacturer) Advanced Cook Stoves style Title transfer Click to edit Envirofit title Initiative: Model Master Consumer Loan Payment for title Loan repayment• Competitive margins• Product training•• • Click to edit Master text styles Brand-specific marketing Last-mile minus one supply Loan Product for ACS – Second level • Third level (Distributor) Access fee (MFI) – Fourth level S-mart SONATA • Block level retailer Fifth level » Installments • VLE recruitment • Access to groups • VLE monitoring • VLE compensation • Access to finance • Inventory management Village-level MFI entrepreneur members • Final sale • Order placement n-MFI • Demonstration/promotion members
  28. 28. Market-based Advanced Cook Stoves Initiative: Model Partnerships for Health (ACS manufacturer) Advanced Cook Stoves style Title transfer Click to edit Envirofit title Initiative: Model Master Consumer Loan Payment for title Loan repayment• Competitive margins• Product training•• • Click to edit Master text styles Brand-specific marketing Last-mile minus one supply Loan Product for ACS – Second level • Third level (Distributor) Access fee (MFI) – Fourth level S-mart SONATA • Block level retailer Fifth level » Installments • VLE recruitment • Access to groups • VLE monitoring • VLE compensation • Access to finance • Inventory management Village-level MFI entrepreneur members • Final sale • Order placement n-MFI • Demonstration/promotion members
  29. 29. Market-based Advanced Cook Stoves Initiative: Model Partnerships for Health (ACS manufacturer) Advanced Cook Stoves style Title transfer Click to edit Envirofit title Initiative: Model Master Consumer Loan Payment for title Loan repayment• Competitive margins• Product training•• • Click to edit Master text styles Brand-specific marketing Last-mile minus one supply Loan Product for ACS – Second level • Third level (Distributor) Access fee (MFI) – Fourth level S-mart SONATA • Block level retailer Fifth level » Installments • VLE recruitment • Access to groups • VLE monitoring • VLE compensation • Access to finance • Inventory management Village-level MFI entrepreneur members • Final sale • Order placement n-MFI • Demonstration/promotion members
  30. 30. Market-basedKey Lessons Partnerships for HealthKey LessonsClick to edit Master title style• Click to edit Master text styles – Second level • Third level – Fourth level » Fifth level
  31. 31. Market-based1. Build Cross Sectoral Partnerships Partnerships for HealthClick to edit Master title style• Build cross sectoral partnerships that leverage core competencies of each partner• Click to edit Master text styles • The Advanced Cook Stoves partnership is a tripartite commercial – Second level partnership focusing in consumer financing, distribution, and • Third level marketing – Fourth level• Partnerships enable risk-share and allow the » Fifth level 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
  32. 32. Market-based2. Leverage Distribution Platforms to Aggregate Demand Partnerships for HealthClick to edit Master title style• Investing in the creation of a dedicated rural distribution network is challenging for health• Click to edit Master text styles product/service companies – Second level• Many Third level • non-health companies have created robust – Fourth level distribution» platforms for the rural market Fifth level• A distribution platform provides a cost effective option for aggregating fragmented demand
  33. 33. Market-based3. Create a New Class of Retailers Partnerships for HealthClick to edit Master title style• Operate as dual service points and are incentivized for both demand and supply functions• Click to edit Master text styles • Traditional distribution or communication channels do not reach – Second level the last mile, necessitating integrating demand and supply • Third level• Last-mileFourth level require selection, training and – retailers support » Fifth level • The VLEs in the Advanced Cook Stoves partnership provide last mile delivery of the product, and create demand
  34. 34. Market-based4. Optimize Basket of Products Partnerships for HealthClick to edit Master title style• Due to low margins and low demand it is difficult to make a viable business model through public health• Click to edit Master text styles products alone – Second level• Important level • Third to have a secondary basket of easy-to-sell, high-margin products that can contribute to – Fourth level » Fifth level entrepreneur profitability• Incentives need to be designed to ensure focus on primary public health products
  35. 35. 5. Products Targeted at BoP Consumers Need High Market-basedEngagement Approaches Partnerships for HealthClick to edit Master title style• Long term, personalized engagement with consumers• Click to edit Master text styles• High engagement marketing processes that allows the – Second level user• to “experience” the product Third level – Fourth level » Fifth level• Customize the retailer profile to account for cultural and/or product related sensitivities
  36. 36. Market-basedSummary Partnerships for HealthClick to edit Master title style• Partnerships that leverage each other‟s networks and retain focus on core competencies are more• Click to edit Master text styles sustainable – Second level• BOP markets need a specialized class of retailers who • Third level – basket deal is a Fourth levelof products and play the dual role of » Fifth level creating awareness and last mile delivery• Sales formats need customization for BOP consumers that permit „experiencing‟ the product
  37. 37. Market-based Partnerships for Health Questionsarunesh@abtindia.net www.shopsproject.org
  38. 38. Health Care Innovation at the Baseof the Pyramid: A Challenge FundModel for Addressing the “MissingMiddle”Colm FayAbt AssociatesApril 11, 2013 SHOPS is funded by the U.S. Agency for International Development. Abt Associates leads the project in collaboration with Banyan Global Jhpiego Marie Stopes International Monitor Group O‟Hanlon Health Consulting
  39. 39. Market Based Models in Africa New and Existing Financing Business Gaps Models Diffuse Need for TA Demand Challenge Fund
  40. 40. What is a Challenge Fund? Donor Enterprises Competitive Capital challenge apply selection Awards
  41. 41. What is a Challenge Fund? Donor Enterprises Competitive Capital challenge apply selection Awards
  42. 42. What is a Challenge Fund? Donor Enterprises Competitive Capital challenge apply selection Awards
  43. 43. What is a Challenge Fund? Donor Enterprises Competitive Capital challenge apply selection Awards
  44. 44. What is the Missing Middle? Micro- finance Founder‟s Capital Donor Programs ? Commercial Capital Awards Early Stage Small and Growing Scaling
  45. 45. What is the Missing Middle? Micro- finance Founder‟s Capital Donor Programs ? Commercial Capital Awards Early Stage Small and Growing Scaling
  46. 46. What is the Missing Middle? Micro- finance Founder‟s Capital Donor Programs ? Commercial Capital Awards Early Stage Small and Growing Scaling
  47. 47. What is the Missing Middle? Micro- finance Founder‟s Capital Donor Programs ? Commercial Capital Awards Early Stage Small and Growing Scaling
  48. 48. What is the Missing Middle? Micro- finance Founder‟s Capital Donor Programs ? Commercial Capital Awards Early Stage Small and Growing Scaling
  49. 49. 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
  50. 50. What makes the HANSHEP HealthEnterprise Fund unique? Technical Assistance Capital “Missing Investor Middle” Engagement
  51. 51. How are Winners Selected? Eligibility • Revenue model Innovation • Enterprise stage • Scalability • Health area Awards • Sustainability targeting • Replicability • Geographic and socioeconomic targeting
  52. 52. What Types of Organizations Have Applied?• 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
  53. 53. Awardee Support Technical Assistance Shared Learning Monitoring and Evaluation Investor Readiness
  54. 54. Further information• http://www.healthenterprisefund.org• Facebook.com/HealthEnterpriseFund• Twitter: @Health_Ent_Fund
  55. 55. 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
  56. 56. Questionscolm_fay@abtassoc.comwww.shopsproject.org SHOPS is funded by the U.S. Agency for International Development. Abt Associates leads the project in collaboration with Banyan Global Jhpiego Marie Stopes International Monitor Group O‟Hanlon Health Consulting

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