Cup Russia 2013
Development Strategy Design of SMS for Life Project Alexander Kravchenko
Svetlana Krechetova George Nichkov Anna Gibaeva
Executive summary
Solution
Our team
Goal: sustainably develop SMS for Life system to the benefit of Novartis’s distribution and sales in emerging markets preserving its social value Distribution model • Open up second stream of the project to make it profitable • Target different groups to reach more patients • Cooperate with other pharma companies
Current situation analysis • • •
Health system factors reduce the patient impact of antimalarial drugs by more than 60% Challenge of applying low-cost, simple-to-use technologies and infrastructure to solve More than 2 BN people are threatened by dangerous diseases, and their lives are dependent on essential medicines and basic infrustracture
Partners network • Leverage capabilities of charities • Use large vendors • Establish long-term relationships
3 2
Generic Originator Price per treatment course, USD
2010
2009
2008
2007
2006
2005
-2x
2004
Number of treatment courses, M
The economy of scale enabled Novartis to halve the price per treatment (6x4 regular tablets) 160 120 80 40 0
Economic effect • Save lives • Overall profit is $80 M • 2.4 BN people sheltered from dangerous diseases by spending less than 50 cents per person
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Scope and coverage
0
• Expand in other 20 countries by 2020 with coverage of more than 1.5 BN people • Enter new markets in two waves • Use DALY’s approach
Structure & risks • Use resources timely and coordinate joint efforts • Single out subdividion which monitors the development of projects, emulates best practices and trains IT partners • Make rigorous risk assessments
Source: Swiss TPH, Sublime analysis
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Executive summary
Our team
Solution
Scope and coverage
By 2020, SMS for Life is planned to expand into 20 other countries where infectious diseases cause the most burden for its citizens
Ultimately, resolves the “last mile” problem of critical drugs availability
…enabling it to tackle the most serious diseases… • This supply chain problem is observed in low-income developing countries • The number of DALYs per 100,000 with a cut-off level of 10,000 DALYs is used to select target countries* Distribution of burden of diseases as % of total DALYs by broader causes (2010) 100.00% 7.84% 11.22% 23.75% 75.00% 53.88% 50.00% 25.00%
68.46% 34.98%
0.00% Injuries
Sub-Saharan Africa Non-communicable diseases
Global Communicable diseases
Better health care system + presumably better communication infrastructure in place
High
Forecast the day when the store would run out of stock
Technological penetration High Low
Little need for SMS for life
Low
Tracks the availability of drugs of certain kinds through SMS
…but not in all of 4 types of emerging markets
Health care spending
Increased functionality makes it powerful tool…
Thailand Malaysia
–
Indonesia Philippines
Ghana Pakistan Nigeria Mali Tanzania …
Some of these countries with extremely low mobile penetration (<10%) don’t suit either*
COUNTRIES IN FOCUS • The SMS for Life system is launched in two waves in other countries, spanning next 7 years** • On the first stage Sub-Saharan region remains the key for the expansion of the system • Later on the focus of program and marketing is shifted to India, Nigeria and Indonesia, covering more than 1.5 M people • Launch in the new market is preceded by 6-month pilot project
Source: Swiss TPH, WHO, IHME, Sublime analysis * For analysis of the countries see Appendix 1 and 2 **For depiction of target countries refer to Appendix 3
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Executive summary
Our team
Solution
Distribution model
The project is divided in two streams: one working as a social enterprise, and another one earning profit by means of segmentation SMS for Life can be partly monetized without jeopardizing its social value
2. Adequate drug supply
Data-processing center (by Novartis only) 3b. Tailored drug supply
Chain of warehouses in Africa
Hospital
Health post Big 3 diseases + 9 NTDs* Of Novartis
Of others
Poor remote areas
Diseases cured Drugs delivered Target group
3a. Confirmation of the delivery
Manufacturer (Novartis)
2. Request of drugs
Data-processing center
Commercial current
1. Registration info
1. Stock levels
Not-for-profit current
ADVANTAGES For patient: • No queues, exact timing • Protection from counterfeit For physicians: • Commissions for every drug sold using their prescription For Novartis: • Wider brand recognition • Larger sales
Chronic diseases SMS communication Galvus, Xolair, Onbrez** Wealthy urban districts
Delivery of physical good
DISTRIBUTION STRUCTURE • Alongside the non-profit model, SMS for Life will be launched in cities in the same countries of presence as profit generating project • Middle and upper-class city dwellers will be able to register in the system with their doctor to buy Novartis patented products. Orders will be confirmed by the SMS, which would specify the date and time of collection at the patient's hospital. After 5 successful order customers will receive cash-back, covering their SMS costs. Physicians will be incentivized by 3% margin from each sale • On the non-profit side, the range of monitored drugs will be enlarged; other firms could add their drug in the system if they paid for the incremental costs associated with this addition in form of periodic fee Source: case data, Sublime analysis * For analysis of the diseases refer to Appendix 4 **For analysis of the drugs see Appendix 5
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Executive summary
Solution
Our team Partners network
Work with partners on a continuous basis enables project team to cut costs and reach more people with a help of charities
Funding partners
Charities*
Contracts & money transfers
Development partners
SMS services
Ongoing support
COLLABORATION WITH PARTNERS • • • • • •
Assuming SMS cost being $0.1, SMS account for 5% of average operating expenses NGOs and international charity organizations working in Africa can be of great help to SMS for Life project and bear little or no cost It’s preferable to use large vendor as it’s able to develop, test and supply new functionality to existing platform on an ad hoc basis Before entering new market it’s necessary to place a bid for services to achieve best price for the upcoming year Credit incentive for doctors is viable for the first year only Usage of free number can solve the hassle with credit top-ups
Source: case data, Sublime analysis * For comparison of the charities refer to Appendix 6
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Executive summary
Our team
Solution
All divisions of the company gain from the SMS for Life project with the risks being at manageable level NIBR – Novartis Institute for Biomedical Research
Actions •
Company overall Pharmaceuticals Alcon, Sandoz, Consumer Health, Vaccines and Diagnostics NIBR
•
Help secure contracts with governments and large partners
Organize supply of pharmaceuticals to the site of the project
Increased brand recognition in the emerging markets 200 millions potential new middle- and upper class clients
•
Increase in sales by $... in developing countries
•
Improve communication between division heads
•
Easier entry to market in other countries, better purchasing power
•
Create a supply of new solutions to develop into life-saving drugs. Follow WHO guidelines
•
Treatments for malaria and dengue fever reach the population of the troubled regions
Disseminates best practice; Help introduce IT-partners to the system Establishes his own division
•
Fully operating central database, covering over 1.5 BN people by 2020
• •
Jim and his IT team • Risk description
Benefits
• •
Structure & risks
Exposure
Mitigating measures
Counterfeit and pilfering
Effective monitoring, thorough investigation into logistics partners
Partners abandonment
More frequent contract renewal
Political instability / regime change
Limiting interaction with government to the required minimum
Patent breach
Check local laws for expiry dates
Source: case data, Sublime analysis
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Executive summary
Our team
Solution
Economic effect
Project shows the strong incentive to spread SMS for Life on the greater scale 13’ 1
14’ 2
1
15’ 2
1
16’ 2
1
17’ 2
1
18’ 2
1
19’ 2
1
20’ 2
1
2
Not-for-profit current New subdivision under Jim created
Leprosy defeated by 2020 1 BN people covered*
1st wave
2nd wave Commercial current First commercial project in Nigeria
Number of partners
10-15
13-18
First working system in Asia
18-25
25-27
$373 M Profit per year in 2020**
Source: case data, Sublime analysis * For details of the model refer to Appendix 7 **For the detailed model see Excel file
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Executive summary
Solution
Our team
Our team’s all necessary skills and experience for case problem solving
Svetlana Krechetova
George Nichkov
Alexander Kravchenko
Anna Gibaeva
Education: MESI’13, Economics and Finance / Statistics
Education: Financial University‘13 / UCL’13 / Finance and Credit
Education: LSE’14 / BSc Politics and Philosophy
Education: UCL’13/ BSc Information Management foe Business (ITMB)
Major achievements: Finalist of Technical Cup 2012; Semi-finalist of MedXpoint (2013) Case and SVAO Cup Case (2012); Chairman of MESI Student Scientific Society
Major achievements: Finalist of business case game BNP Paribas Ace Manager 4, 2012; Holder of the President of the Russian Federation scholarship
Major achievements: President of the Russian Society at the LSE Has lively interest in medicine, due to the sheer number of ancestors in this profession.
Major achievements: I’m graduating the 4th most prestigious university in the world. I self -taught myself 6 languages and now I am fluent in English, Spanish, Russian, German, Catalan and French.
Nearly won the backgammon championship at home university (2nd place) :D
My verbal intelligence surpasses my IQ :D
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Cup Russia 2013
Appendix
Alexander Kravchenko
Svetlana Krechetova George Nichkov Anna Gibaeva
Appendix 1. Analysis of the countries based on the DALYs
2015-2020 2013-2015
• DALY indicates that there are several major regions which are the most desperate in terms of the harm from the infectious diseases: – Sub-Saharan Africa (Western, Central, Easter and Southern) – South Asia – Oceania – Certain countries from other regions (Bolivia etc.) • The years show the start of the expansion of the project in particular region
The number of DALYs per 100,000 attributable to infectious diseases on the level of countries
Source: Global Burden of Diseases (GBD), IHME, Sublime analysis
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Appendix 2. Analysis of suitability of the countries for the project Assumptions • Low median availability of selected generic medicines in public sector is an indicator of the presence of the “last mile” problem • The uptake of mobile phones shows how easy it would be to use mobile technology for SMS for Life system • The size of the bubble is determined by the level of government spending on health. Larger expenses facilitate the negotiations with national government over the supply of drugs and project implementation Malaysia
Cellular subscribers (per 100 population)
140
Countries where the level of technology allows them to use more effective reporting systems
Thailand 120 Indonesia Philippines
100
Bolivia Ghana
80 Pakistan 60
India Nigeria Tanzania
Sao Tome and Principe
Target zone
Uganda 40
Cameroon Sudan
African countries Non-African countries
Mali Burkina Faso
Chad Ethiopia
20
Too low mobile penetration 0 0.00%
10.00%
20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% Median availability of selected generic medicines in public sector, %
90.00%
100.00%
The supply chain problem is less severe Source: WHO Health Statistics 2012, Sublime analysis
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Appendix 3. Expansion to the other emerging markets until 2020
Countries of presence as of the end of 2012 1st wave of expansion (2013-2015) 2nd wave of expansion (2016-2020)
Source: Sublime analysis
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Appendix 4. Choice of infectious diseases targeted Leading causes of burden of diseases as % of total DALYs, 2010 0.00%
5.00%
10.00%
15.00%
20.00%
Communicable diseases Non-communicable diseases
25.00%
Diarrhea, LRI and other common infectious diseases Malaria and NTDs
Included in list of monitored diseases
HIV and TB Neonatal disorders
N
Diseases that Novartis produce medication for
Potential to grow By 2030 non-communicable diseases are projected to account for more than 50% of disease burden in Africa due to improved economic conditions
Cardiovascular and circulatory diseases Mental and behavioral disorders Diabetes, urogenital, blood and endocrine disorders
Big 3 diseases
Unintentional injuries
Attract the majority (around 80%) of world R&D expenditures for diseases of poverty: • HIV/AIDS • Malaria N • TB N
NTDs
List of monitored diseases
Nutricional deficiency
TOTAL
Injuries
17 diseases, 9 of which represent more than 90% of the global NTD burden: • Sleeping sickness • Chagas disease • Lymphatic filariasis • Soil-transmitted helminthiases • River blindness • Schistosomiasis • Leprosy N • Fascioliasis N • Dengue N
~80%
STRATEGY FOR NOVARTIS • In compliance with WHO commitment to eliminate NTDs Novartis should allow other companies specializing in treatment of particular NTD participate in SMS for Life project if they reimburse project budget for additional costs • Anticipating future trends it’s advisable for Novartis to start selling their protected drugs for non-communicable disease in Africa using SMS for Life capabilities
LRI = lower respiratory infection, TB = tuberculosis, NTD = neglected tropical diseases, DALY = The disability-adjusted life-year Source: IFPMA, WHO, IHME, Sublime analysis
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Appendix 5. Analysis of Novartis’ pharmaceutical products Primary, critical care and established medicine
Ophthalmics and neuroscience
Oncology
Integrated Hospital Care
Additional products
Business franchise
Most prospective drugs for sale in Africa
Cured diseases
Percentage of total DALYs in Sub-Saharan Africa
Active patent Patent expired
Hypertension, diabetes, asthma, COPD, osteoporosis
Leukemia, cancer, other chronic diseases
Sclerosis, eyerelated diseases, dementia, Parkinson
Organ transplantation
Acute pain, attention deficit disorder
7%
2%
3%
<1%
10%
All of the leading Novartis’ pharmaceutical drugs are against non-communicable diseases Source: Novartis statistics, IHME, Sublime analysis
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Appendix 6. International charity organizations with focus on Africa Help for Humanity - A 501 (C) (3) public charity organization incorporated in the state of New York. Its purposes are to provide food, clothing, transportation, educational, health and medical supplies to children and youths in developing countries. HELP FOR HUMANITY IS A 501 (C) (3) public charity organization incorporated in the state of New York. (USA) Empower Tanzania, Inc. Works in partnership with Tanzanians to develop models that sustainably improve the quality of life and resilience of rural areas through health improvements, education and economic development. (USA, Tanzania) African Society for Quality in Healthcare ASQH works in Africa training on Six Sigma TQM and CME All information about Health in Africa countries you need all services are totally free. Non Profit Organization working in Africa to improve quality in health care (Egypt) The Ufosa Foundation Uniting aid in Education, Family Wellbeing and Health across South Africa. (UK, USA, South Africa). It has many big invest partners (such as DHL, British Airways, Flamingo Casino and others). Helps International (HINT) a community development NGO situated in Buea, Cameroon whose mission is to improve the social and economic well-being and health of the poor and under privileged in our society through education, skill development and job creation. Works with collaboration with huge international organizations from UK, Italy, USA and the Netherlands Health & Education 4 All International is a United States 501(c)(3) public charity working primary in the United States and the Republic of Cameroon whose mission is to enrich the lives of unprivileged children, youths and women through Education and Healthcare. (USA, Cameroon)
Sublime Source: companies web-sites, Sublime analysis
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Appendix 7. Research in areas of NTDs Company
R&D Center
Location
Disease
Since
AstraZeneca
Bangalore Research Institute
Bangalore, India
• Tuberculosis • Malaria
2003 2009
GlaxoSmithKline
Tres Cantos Medicines Development Campus
Tres Cantos, Spain
• Malaria • TB • Kinetoplastids
2002
MSD/Merck & Co.
MSD Wellcome Trust Hilleman Laboratories
New Delhi, India
• Rotavirus
2009
Novartis
Novartis Institute for Tropical Diseases (NITD)
Singapore
• Denge fever • Malaria • TB
2002
Novartis
Novartis Vaccines Institute for Global Health (NVGH)
Siena, Italy
• Diarrheal diseases • Salmonella
2008
Novartis
Genomics Institute of the Novartis Research Foundation (GNF)
• Chagas disease • Leishmaniasis • Malaria
2010
Novartis
Novartis Institutes for Biomedical Research (NIBR)
• Infectious diarrhea
2009
Horsham, UK
Novartis is a leader in research devoted solely to diseases that disproportionately affect people in low- and middleincome countries
Source: IFPMA, Sublime analysis
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