Impact No. 22 by Impact Magazine

No. 22

Cutting edge global health coverage from

Are we thinking

enough?

Fix health markets + reduce poverty

Why Arenâ&#x20AC;&#x2122;t Markets Working? Page 8

The Business of Malaria Page 16

PSI in Transition Page 32

We seek to help those who have been overlooked

At PďŹ zer, our vision is clear: that all people, everywhere, deserve to live healthy lives. Pfizer.com/IndividualVoices ÂŠ2016 Pfizer Inc.

Printed in USA/October 2016

Check out past Impact issues and subscribe today at psiimpact.com/subscribe.

THE MAGAZINE OF PSI EDITOR-IN-CHIEF Marshall Stowell Vice President, External Relations and Communications mstowell@psi.org MANAGING EDITORS Karen Sommer Shalett Senior Manager, External Relations and Communications kshalett@psi.org Sandy Garçon Manager, External Relations and Communications sgarcon@psi.org ARTISTIC DIRECTOR Sophia Greenbaum Graphic Designer, External Relations and Communications sgreenbaum@psi.org CONTRIBUTORS Fareha Ahmed Patrick Aylward Margaret Cohen Maria Dieter Kaylin Fabian Nicolas Gloeckl Blair Hanewall Karl Hofmann Alia McKee Yasmin Madan Pritpal Majara Justin Matheson-Turner Cate O’Kane Julia Roberts Shannon Rosenberg Alena Sims Beth Skorochod Abigail Winskell Tarine Wright PSI is a global nonprofit organization dedicated to improving the health of people in the developing world by focusing on serious challenges like a lack of family planning, HIV and AIDS, barriers to maternal health and the greatest threats to children under five, including malaria, diarrhea, pneumonia and malnutrition.

www.psi.org

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EDITOR’S NOTE

It’s Time to Change the Conversation Rhetoric drives funding. For decades, the development community has focused on developing effective health solutions like anti-retroviral therapy, better treatment for malaria, improved long-acting contraception, mobile technology and other life-improving goods and services. We’ve made the arguments for an AIDS-free generation, the elimination of malaria and meeting the unmet need for contraception of 220 million women. Each effort has effectively shaped policy, driven government funding decision and moved the public to action. We’ve made incredible progress. Yet the success bears the risk of being unsustainable. One reason is that aid programs survive off government donor subsidy, which often has the unintended effect of crippling the market for health products and services. And, programs are funded for relatively short periods of time, mostly from three to five years. Funding gaps, changes in implementing organizations and shifting donor priorities make continuity challenging and efforts are often rewarded based on short-term gains. The question we need to be asking is how can we better invest in market-shaping so that we’re building a model that is sustainable. While talk of health system strengthening and integrated delivery is common, funding hasn’t followed suit at the same pace. And, there’s even less talk and less funding for addressing health market failures. It’s time to change the conversation from touting the development of innovative health solutions to how we build sustainable health markets. Yes, it’s more esoteric. It’s harder to explain. And it’s not sexy. But it’s the right thing to do. The graph on page 9 is an obscene reminder of how living in a country with a well-functioning health market allows near instant access to health solutions. The fact that the introduction of oral rehydration salts took less than five years to reach 100 percent coverage in developed countries, while decades later we’re at little more than 50 percent coverage in developing countries, borders on unethical if you believe access to health is a basic human right. Let’s hit the reset button on how we talk about solving tomorrow’s greatest health challenges by first talking about building tomorrow’s health markets.

@psiimpact

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MARSHALL STOWELL EDITOR-IN-CHIEF, IMPACT @MarshallPSI

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THE MAGAZINE OF PSI | NO. 22 | 2016

AROU ND PSI From 80k toilets to commodity-carrying drones, from a new COO to a WHO roadmap, learn the latest news about PSI’s people, programs and interventions.

L EADI NG VOI CES

6 7 Questions With Lelio Marmora 8 Why Aren’t Markets Working? By Yasmin Madan 12 Solving for Tomorrow’s Global Health Markets By Blair Hanewall 13 Changing Policy Unblocks an Obstacle With Amit Kumar Ghosh

FEATURE STORIES

The Business of Malaria BY ALIA MCKEE, KAYLIN FABIAN AND KAREN SOMMER SHALETT 16

Putting the Consumer at the Center

14 Moving Beyond Yesterday’s Markets By Cate O’Kane

M ARKET AL L I ES

26 Is (Social) Enterprise the Future? By Abigail Winskell, Julia Roberts and Fareha Ahmed

BY BETH SKOROCHOD 21

Six Reasons to Make Health Markets Work Now BY NICOLAS GLOECKL 22

PSI in Transition BY KARL HOFMANN 32

2 impact | No. 22

30 4 Social Enterprises You Should Know About By Sandy Garçon

PSI NET WOR K

AROUND PSI

Expanding Access to HIV Self-Testing BY SHANNON ROSENBERG & PATRICK AYLWARD What got us here won’t get us there. The HIV community is in agreement that new strategies and technologies will be needed if we are going to meet UNAIDS’ 90-90-90 first target that 90% of people living with

HIV know their status by 2020. HIV self tests (HIVST) — rapid diagnostic tests designed for unassisted use by consumers — will be an important part of reaching that goal. PSI is doing exciting work through two global projects to understand and develop the HIVST market under the UNITAID-supported Self-Testing in AfRica (STAR) program (see more on page 7) and the Bill & Melinda Gates Foundation supported HIVST Market Dynamics Project.

currently failing? How can HIVST offer a way to address these failings? What would a healthy HIVST market look like? What actions do we, the global HIV community, need to take to ensure a healthy HIVST market develops? PSI’s HIVST Market Dynamics Project answers these questions and many more in the newly published “Expanding Access to HIV Self-Testing: A Market Development Approach.”

FIND THE REPORT AT

We’ve researched what HIVST products are out there. Who and how is the HIV testing market

WWW.PSI.ORG/PUBLICATION/ EXPANDING-ACCESS-TO-HIVSELF-TESTING-MDA/

Delivering Goods from the Sky BY JUSTIN MATHESON-TURNER How do you quickly and effectively get medicine and commodities to hard-to-reach communities? In Madagascar, where 80 percent of the population lives in remote rural communities, physical access to healthcare is often limited by impassable road conditions. To solve this, PSI is employing a quick and easy way to ensure timely delivery of lifesaving health products: drones. With support from the United States Agency for International Development (USAID), PSI is using unmanned aerial vehicle technology to deliver medical supplies to areas where delivery of care is hampered by poor or non-existent roads. The small, fully autonomous drones are able to carry up to six supply capsules weighing one kilo each within a flight range of at least 100 km. With 20 take-off points across the country, the drones will serve over 500 rural districts representing over 1 million people. Set to launch to scale in 2017, this innovative approach will ensure thousands of people in vulnerable remote communities throughout Madagascar get the care they deserve. Cover credit: psi.org | impact Sophia Greenbaum

AROUND PSI

A Kit to Combat Zika BY MARGARET COHEN Less than a year after Zika was declared a global health emergency, the mosquito- and sexually-transmitted virus is present in more than 30 countries and territories in Latin America and the Caribbean. With no vaccine or treatment in sight, prevention remains essential to halting the spread of the disease. Through awareness campaigns, provider training and commodity distribution, PSI is mobilizing communities to protect themselves from infection. With support from USAID and corporate partners, PSI is folding these strategies into its existing health programs in Honduras, Haiti, Nicaragua, Dominican Republic, El Salvador, Panama and Guatemala: With just a click, you can honor a mother you admire and help protect a pregnant woman from the Zika virus. Dedicate a Healthy Mother Kit today: zika.psi.org

Launching a regional communication campaign about the most effective ways of preventing Zika.

Providing accurate information about post-abortion care and the prevention of unsafe abortions.

Distributing starter safe pregnancy kits containing bug spray, condoms and Zika prevention educational materials developed in coordination with local ministries of health.

Developing prevention workbooks and other tools for community health educators and providers, including doctors, nurses, pharmacists and lab workers.

Counseling women of reproductive age about their short- and long-term contraception options to delay pregnancy.

Training private clinics to educate and counsel patients, refer Zika cases for diagnosis and provide follow-up support.

80K TOILETS AND COUNTING On November 19 — World Toilet Day — PSI and partners will reach 80,000 toilets installed in Bihar, India. Globally, 2.4 billion people do not have access to a toilet, so 1 billion of those souls defecate in the open. The resulting poor sanitation contributes to 1.5 million deaths from diarrheal diseases among children every year. In addition, not having a safe place to defecate puts women and children at risk and the lack of privacy is a source of shame and embarrassment for many women. In the state of Bihar, India, where 99 million people reside, more than 85% of the rural population practice open defecation. As part of the Bill & Melinda Gates Foundation-funded 4 impact | No. 22

MORE ONL I NE Beyond the pages of Impact magazine, PSI features news, videos like this one, audio and other new content every day. To get news of innovations delivered to your inbox, subscribe to The Five to get five mustn’t miss articles delivered every Thursday on psiimpact.com.

Supporting Sustainable Sanitation Improvements (3SI) project, PSI has partnered with Unilever’s Domestos Toilet Academy to increase access to toilets by developing the sanitation market in Bihar. This program addresses critical barriers to toilet ownership and use by: • Repairing the supply chain for toilets, • Increasing access to loans to purchase a toilet or to start a toilet business and • Conducting behavior change interventions that change attitudes and social norms related to toilet purchase and use. — Alena Sims Go to psiimpact.com to watch “More than a Toilet,”about the 3SI project and how the partnership with Unilever and the Bill & Melinda Gates Foundation works.

AROUND PSI

Q& A W IT H

Dr. Christine Sow @DrChristineSow

Dr. Christine Sow recently joined PSI as its Chief Operating Officer, bringing more than 20 years of global health leadership experience. She is responsible for overseeing PSI’s countrylevel operations, including health product and service delivery, as well global marketing. What brought you to PSI?

I’ve always admired PSI’s moxie, its willingness to push the envelope both technically and operationally. When I was working with USAID and the Global Fund’s Country Coordinating Mechanism in Mali, PSI was the organization I knew I could turn to for rapid high impact and effective response. While at the Global Health Council, I spent much of my time working at the global level on policy and advocacy issues. Although fascinating, I missed being able to do applied work at the country and local levels, which is really where I’ve spent most of my career. I’m looking forward to using many of the concepts I’d been previously exploring at significant scale, while ensuring that I am making a difference in people’s lives. What are some key lessons you’ve learned from your diverse and extensive experience in global health?

Working with a variety of partners has allowed me to explore global health challenges through various lenses and to better understand the motives and strategies adopted by different actors in the international development space. These experiences have allowed me to be selective and strategic in choosing how to respond to a particular challenge. I liken this to performing mental yoga. You stretch and challenge the way you think to achieve stronger and more appropriate outcomes and avoid complacency at all costs. How do you see your role as Chief Operating Officer?

I’m excited about this role, especially since PSI is thinking so creatively and strategically about how we will engage in the global health landscape in the years to come. I hope to facilitate the connections between our global aspirations and operational work, and help strengthen our systems and approaches to allow us to achieve high impact in improving the health and quality of life of people in the places we work.

PSIers embrace the concept of “making the market work for Sara” in the work they do. What does this mean to you?

PSI’s archetype, Sara, is for me a constant reminder that each beneficiary is a living, caring human being with many needs and a complex life. It’s exciting that PSI is moving from delivering commodities and services to shaping markets, especially since Sara will continue to be the centerpiece in all that we do. Women and girls cannot be truly empowered unless the social and structural determinants and influences that constrain them are adequately addressed. We must work to put the necessary resources and tools in Sara’s hands so that she can shape her own life towards a positive outcome. — Sandy Garçon

PSI and WHO Create Malaria Testing Roadmap WHO recommends that every suspected malaria case be confirmed by parasitological testing using microscopy or malaria rapid diagnostic tests (mRDTs) before treatment. The availability of high-quality, inexpensive mRDTs in the public sector has significantly improved and expanded diagnostic testing in the recent past. However, in the private sector, where over 40 percent of the population in malaria endemic countries seeks care and treatment for febrile illness, mRDTs are either non-existent or more expensive than the drugs used to treat malaria. To address this gap, PSI — in partnership with Malaria Consortium, FIND, JHSPH and the WHO and with funding from UNITAID — implemented a three-year project to stimulate private sector markets for quality-assured mRDTs in five malaria-endemic, countries (Kenya, Madagascar, Nigeria, Tanzania and Uganda). The “Roadmap to Optimizing Private Sector Rapid Diagnostic Testing for Malaria,” expected to be released December 2016, was led by the WHO with support from all partners and draws significantly on the experience and data from this project. The Roadmap provides action steps and links to practical tools to guide national malaria control programs and other key stakeholders in increasing both access to and demand for quality-assured RDTs. Practitioners can learn program planning, management and policy, procurement and quality in the private sector, supporting and sustaining the market and monitoring and evaluation in the private sector. For more information, or to receive a copy upon publication: malaria_RDT@who. int. The final product will be published on WHO’s website: www.who.int/malaria/areas/ diagnosis/rapid-diagnostic-tests/privatesector/en/. — A.S.

A provider uses an mRDT to test a patient.

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LEADING VOICES

7 questions with Lelio Marmora UNITAID’s executive director discusses the importance of developing and unlocking markets to accelerate innovations in global health. @LelioMarmora

LM: The poorest people are typically the most vulnerable in society and often the most directly affected by changing or underdeveloped market conditions — be it a change in prices, or the availability of a given health product. Stable, sustainable markets, where health products are available, adapted, quality-assured and affordable, are therefore a powerful tool for the benefit of the poor. Impact: What does it mean for a market to work? How does that apply to the health field? 2

LM: For a health market to work, it must be effective across a number of dimensions. Innovative health products, quality-assured by a regulator, must be available, affordable and fit for purpose. Within countries, demand and adoption are vital. The supply chain must reliably deliver the product from manufacturer to end user. 3 Impact: What’s distinctive about UNITAID’s approach?

LM: UNITAID aims to maximize the effectiveness of the global response by catalyzing access to better health products. This means enabling countries and partners to allocate resources efficiently by supporting improved access to innovative products, which are of a higher quality or fit the specific needs of different groups. We make time-limited investments to catalyse access to better health products and approaches. 6 impact | No. 22

We’re operating in a part of the value chain where few other organizations work. We connect innovators to end users, and scale up the use of innovative public health tools through our partners. We bring partners together to demonstrate solutions to public health problems and are focused on long-term sustainability. One example is through demonstrating a better health product or approach that ultimately leads to transition and scale-up by key funding partners and governments. 4 Impact: What are the common market failures you see in low- and middle-income countries?

LM: Just as there are many factors that make a market work, there are many factors that can make it fail. A lack of demand for a product in-country; lack of a suitable product for specific conditions in countries; a lack of evidence to secure the political will to adopt a given health policy; a company unwilling to adapt their products to markets with uncertain conditions; the challenges are diverse and numerous. 5 Impact: How can developing country governments, the private sector and NGOs complement each other to design appropriate solutions that make markets work for the poor?

LM: This is at the core of UNITAID’s business model. We enable and encourage collaboration between the key actors to identify opportunities, develop solutions and implement them. At an operational level, we bring actors together to

1 Impact: Are markets systems important to the poor?

LEADING VOICES

identify opportunities. UNITAID identifies areas for intervention that best reflect our expertise in addressing commodity-access issues, offer strong potential public health impact, are feasible in terms of the availability of innovation and demonstrate an optimal use of our resources. The best, we fund with a view to large-scale implementation through our partners. So bringing these disparate groups together is a key part of our operating model. This is where UNITAID adds value. 6 Impact: What role should international donors have? How should donor roles change in the future?

LM: International donors will continue to have a critical role meeting global health goals. Over the last 15 years, huge resources have been channeled to global health and great progress has been made. But we have reached a critical juncture: though there is still a huge health agenda to support, international funding will not continue to grow at the rates we have seen in the past. So we need to adjust to that change. Part of this will involve graduating countries off direct-donor support so they can take greater ownership of their health infrastructure. Donors can continue to provide technical support for the most critical areas of need. But they should also focus on accelerating access to innovation and efficiency. Eventually we may see donors working at smaller scales of investment, but taking greater risks to push technologies further. 7 Impact: How can market-based solutions accelerate the implementation of comprehensive, universal health coverage by 2030?

LM: Universal health coverage includes financial risk protection, access to quality essential healthcare services and access to safe, effective, quality and affordable essential medicines and vaccines for all. Markets are critical to achieving this aim. You can’t provide such coverage to the poorest people without fixing the underlying market failures. Incentives to manufacturers, governments and the end users themselves, can go a long way to help reach this goal. n

— Sandy Garçon

WATCH FOR MORE In the film “What Got Us Here, Won’t Get Us There,” PSI Global Ambassador Debra Messing travels to Malawi to see how UNITAID, PSI and partners are building the market for HIV self tests, thereby making HIV testing easier and more accessible to rural communities. psiimpact.com/star-hiv-self-testing-africa

HI V SEL F -T EST I NG Fewer than 50 percent of all people living with HIV worldwide are aware of their status. Increased HIV testing, particularly in areas where HIV prevalence is highest, would bring those infected into treatment and achieve epidemic control. With funding from UNITAID, PSI and its partners are working to catalyze the market for HIV selftesting and reach more people who face limited access to conventional testing. The multi-year UNITAID/PSI HIV SelfTesting AfRica (STAR) project is generating vital information on how to safely and effectively deliver HIV self-testing, how to generate demand and how HIV self-testing can improve public health. The project will generate evidence to inform WHO normative guidance and support development of national-level policies on HIV self-testing. The data will also inform estimates of market size, encourage market entry among potential manufacturers and inform the future scale-up of HIV selftesting globally. Funder: UNITAID | Consortium Partners: WHO, London School of Hygiene and Tropical Medicine, Liverpool School of Tropical Medicine and University College London | InCountry Research Partners: MalawiLiverpool-Wellcome Trust Clinical Research Programme, ZAMBART and CeSHHAR Zimbabwe.

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LEADING VOICES

Why Aren’t Markets Working? BY YASMIN MADAN

WHAT SHOULD AMAZON, UBER and Airbnb have in common with a nonprofit? After all, these businesses do more than deliver products and services. They harness the power of market players and use consumer insights in innovative ways to deliver better products and services to their customers. Not-for-profit organizations working in the developing world can learn from these organizations, which understand market failures and convert them into opportunities to do business in new ways. When markets perform well, they create value and meet consumer needs. To make markets work, we need to make the market players work effectively. We need to broaden behavior change from focusing on consumers alone to the behavior of all market players. That means aligning their incentives and capacities to create value at every step of the healthcare delivery process. Progress in global health has been tremendous over the last few decades. But health markets in developing countries still fail those most in need.

These failures come in many forms: limited access, lack of affordable and quality options — and inadequate innovations to improve consumer experience. Very often, those most in need pay for necessary healthcare, but don’t get value in return. Basic market forces don’t generate increased value for consumers, or increased value for the market in general.

action results in trade-offs. Even as incidence of non-communicable diseases increases across developing countries, the public health infrastructure still caters mostly to basic healthcare needs around child health illnesses like diarrhea and pneumonia, and routine health needs like family planning.

From nascent markets for new medical technologies and innovations — like HIV self-testing — to mature markets — like oral rehydration salts and contraceptives — markets fail because demand and supply don’t come together efficiently. Much of the health need is not converted into demand at the consumer level, nor is demand met by efficient supply.

The private sector delivers services as well, but its work only benefits the entire market when it joins the public sector to align around a shared agenda of quality, accessible and affordable healthcare. All players in the private sector market must address market failures to make healthcare work for those in need. As long as the demand for quality health products and services exceeds their use, something must change. But what?

To solve serious health problems, emergency parallel markets have sprung up. Governments have taken on a large portion of the service delivery in developing countries, from primary healthcare for routine needs to more sophisticated treatments for increasingly complex issues. Sometimes government

Do we invest more in supply and demand? Or should we encourage the public and private sector to drive supply and demand? Markets today are much more sophisticated than they were even a few decades ago. There are more players in the market, more types of technology and healthcare products and services

Core Functions: Demand and Supply Direct market players across the value chain, from manufacturers to consumers, perform the core functions of demand and supply. PSI measures these core functions through the 4Ps of marketing:

PRODUCT

The full range of products (types, brands) available in the market

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PRICE

The full range of consumer price points in the market as well as trade margins across all products in the category

PLACE

Locations of delivery points, including outlet and service providers in the market

PROMOTION

The role of each market place in demand creation, including business-tobusiness marketing and business-toconsumer marketing

LEADING VOICES

Coverage of New Technologies in Developed and Developing Markets Coverage rates of vaccines, drugs and diagnostics are dramatically more expansive in high income markets like the United States and

Europe. Yet, within a five-year period, new products are widely disseminated into these markets. Unfortunately, the picture is quite

different for lower- and middleincome country markets as they have a much slower uptake for the same innovations.

100%

Percent of market covered

Hepatitus B vaccine 75

Global coverage in high-income countries: Vaccine Drug Diagnostic

Oral rehydration solution Artemisinin-based combination therapy

Haemophilus influenza type B vaccine

Global coverage in lowerand middle income countries: Rotavirus vaccine Antiretrovirals

Sourch of graph: IDEA TO IMPACT, A Guide to Introduction and Scale of Global Health Innovations, USAID Center for Accelerating Innovation and Impact

and more purchasing power at the consumer level. At PSI, to respond to this changing environment and increased number of market players and to accommodate the growing needs of consumers across a range of health areas, we have transformed our approach. Instead of focusing on demand and supply alone, we understand markets as ecosystems. As a development organization that looks for sustainable solutions to make markets work at scale, we realize it is not enough to simply solve the immediate problems. We need a sophisticated understanding of why something is not working. Like those in for-profit industries, we need to design interventions to remedy market failures by addressing their root causes. To achieve scale and sustainability, we

must work with market players across the board to improve delivery of health products and services. To understand their capacities and incentives in the market, we must examine all direct market players in the value chain: manufacturers, importers, wholesalers, distributors and different levels of healthcare providers, from clinics to pharmacies. To understand the enabling environment that supports or inhibits market performance, we must also take into consideration the indirect players: government partners, implementing organizations, donors and regulatory bodies. Like any health problem, much comes down to behavior change. But the focus can no longer rest with the consumers

Years from launch 25

alone. We must consider the whole ecosystem of the market and support the behavior of all players in the market. The analysis of failures begins with the consumers and uses consumer insights to better understand how to make these markets function more effectively in the long run. As PSI evolves into a development enterprise of the future, we aim to create value by designing business models that address market failures. We have learned to better understand markets as a whole, so as to generate market-driven solutions for social enterprises. We are now investing in these models to make markets work in developing countries and on a global scale. With funding from the Bill & Melinda

psi.org | impact

LEADING VOICES

Gates Foundation (BMGF), PSI recently partnered with Accenture Development Partners to analyze the markets for HIV self-testing to better understand current and potential obstacles to getting this new technology in the hands of those who need it. Our findings will inform recommendations to donors on appropriate market interventions for securing a global supply of quality-assured, appropriately-priced

HIV self-testing kits (see pages 3 and 7 for more). Similarly, in large and mature markets like India, with funding from BGMF, PSI has partnered with FSG Consulting to understand why the family planning market is not on track to deliver on Indiaâ&#x20AC;&#x2122;s FP2020 targets, even though India has some of the best domestic manufacturing and marketing capacity. The current

market is failing women in all income classes and geographic areas. Based on our findings, we are adjusting our own strategy for PSIâ&#x20AC;&#x2122;s portfolio of family planning products and recommending to donors and governments what areas of the market need further investment (see page 13 for more). With funding support from UNITAID, PSI also worked with the Malaria

Making a Health(y) Market Also called the value chain, the production-to-use spectrum maps all players directly involved in getting a product or service from its producer to its consumer.

MANUFACTURERS

IMPORTERS

DISTRIBUTORS

START HERE

Rules Rules govern and restrict the 4Ps, and help make up the enabling environment. Policies, regulations, taxes and tariffs will influence each market player.

Enabling Environment The enabling environment is made of factors, institutions and players who come together to shape the market. The most common and impactful market players fall under two categories: rules and supporting functions.

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POLICY

REGULATION

TAXES & TARIFFS

LEADING VOICES

Consortium, FIND and the World Health Organization to provide much-needed evidence on how to safely introduce malaria rapid diagnostic tests to the private sector in five countries where malaria is endemic: Kenya, Madagascar, Nigeria, Tanzania and Uganda. In addition to increasing access to and demand for diagnostic kits, PSI’s research has contributed to a WHO roadmap for public-private engagement that will

inform other countries seeking to develop markets for correct febrile case management (see page 5 for more).

YASMIN MADAN is the Global Marketing Director at PSI.

These initiatives have demonstrated the need to prioritize consumers’ insights, understand how market players see their work and take our analysis to deeper levels, nationally and globally. Only then can we identify the best levers to pull to make markets work for those in need. n

@YasminMadan

When a product is manufactured, it is sold to an importer (if manufactured outside the country) and then purchased by a distributor or a wholesaler. From there, it is bought by a provider and finally distributed to its final destination — the consumer. Each of these actors adds value to a product: from the manufacturers that produce it, to the providers that offer it and to the consumers who use it.

WHOLESALERS

PROVIDERS

CONSUMERS

Supporting Functions Supporting functions allow market players to improve the core functions of the market across the value chain. These are external agents including government, multilateral agencies, donors and other partners.

INFORMATION

GUIDANCE

COORDINATION

FINANCING

QUALITY ASSURANCE

LABOR CAPACITY

psi.org | impact

LEADING VOICES

Solving for Tomorrow’s Global Health Markets BY BLAIR HANEWALL

right products to the right people at the right price. As a global community we have been more effective at addressing market barriers for what we think of as more responsive markets — markets where products are bought by a small number of entities, policy and regulatory pathways are clear, established delivery channels exist and minimal coordination

A woman purchases antimalarials at a pharmacy in Cambodia.

overcoming market barriers to increase access to health products in low income markets. My colleague Susan Nazzaro, as part of the Markets Matter blog series, highlighted several: bed nets, HIV treatment and long-acting contraceptives. There are, likewise, many examples among vaccines, including successful efforts to make rotavirus, pentavalent and meningitis vaccines more affordable. These examples underscore an area where PSI is a leader: understanding the needs of populations and the demand for these important health products. This allows for smarter negotiations on product pricing, supply and quality in order to get the

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or interaction is required with other interventions. Yet we believe that these kinds of markets are going to be less common in the future. These changes are exciting. We anticipate stronger primary healthcare systems that strategically purchase products and services independently, context-specific policy decisions, increasing diversity of service delivery channels — including vending machines, mobile orders and self-managed care — and primary care systems aiming to meet holistic needs of patients from preventive to communicable and noncommunicable diseases.

But we also see challenges with this more diverse and fragmented market. For example, if we can’t estimate strategic demand or coordinate purchasing among independent buyers, how do we create pull mechanisms to incentivize innovation for the next pandemic? How do we coordinate purchasing to secure affordable pricing for new, expensive health products? How do we coordinate the deployment of drugs or insecticidal chemicals to minimize development of resistance? In short, how do we find global, regional and country strategies that will still allow us to influence health markets in this future? Some organizations are already taking up the challenge. PSI’s ACTwatch and FPwatch are platforms that provide market intelligence to understand demand; others are tapping mapping and mobile data. Buyers like GFATM and GAVI are exploring online buying and more sophisticated forecasting. More countries are using a common health technology assessment methodology to facilitate strategic purchasing. We aren’t starting from scratch. The plea is that, as we design local solutions, let’s consider how these approaches can help solve tomorrow’s global market failures as well. We’ve got a good thing going. Let’s not lose it. n

BLAIR HANEWALL is the Deputy Director for Integrated Delivery at the Bill & Melinda Gates Foundation.

THERE IS MUCH TO CELEBRATE in global health in the last two decades: cutting child mortality in half, nearly halving maternal mortality, increasing global DTP3 immunization coverage to more than 85% in 2015 and much more. While these successes can be attributed to many factors, a key driver has been leveraging market dynamics to drive uptake of health products and services. There are many recent examples of

Changing Policy Unblocks an Obstacle

INDIA AND 68 OTHER DEVELOPING countries pledged to make contraceptives available to an additional 120 million women and girls by 2020. To reach the FP2020 goal, the most populous state in the country, Uttar Pradesh (UP), must make a large contribution.

The UP government turned to PSI-India to help implement the Hausala Sajheedari program, incentivizing private-sector family doctors to offer contraceptive services once available only from public hospitals. Recently, PSI-India Country Director Pritpal Marjara sat down with Amit Kumar Ghosh, a senior member of the Indian Administrative Services, to discuss what happened when they removed a market obstacle using private sector allies. WHY PUR SUE T H E H AU SA L A SAJHEE D A RI IN T ERVE N T I O N ?

India has committed to contribute 48 million new users of family planning under FP2020, which is about 40 percent of the global commitment. UP aims to contribute 26 percent of the national commitment. The public sector alone cannot achieve this task, so we need the private sector. HOW D OE S H AUSA L A SAJHEE D A RI WOR K?

Under the Hausala Sajheedari program, private sector hospitals and nursing

homes can apply online for accreditation to offer family planning services. Qualified private surgeons can apply for empanelment for sterilization surgeries, which in turn indemnifies them. Once accredited, these hospitals may provide services under a standard reimbursement package from the government. The entire process — from application, verification, accreditation, reporting service data/ MIS upload, submission of claims and reimbursement of claims — has been simplified online through a web portal. The State Innovations in Family Planning Services Project Agency (SIFPSA), an autonomous body under the Ministry of Health in UP, is responsible for implementing Hausala Sajheedari under the UP government. PSI led the technical assistance and worked with SIFPSA and other development partners such as the Uttar Pradesh Technical Support Unit (UPTS), Marie Stopes International (MSI), Hindustan Latex Family Planning Promotion Trust (HLFPPT), Parivar Seva Senstha (PSS), among others, to streamline government guidelines, conceptualize, design and develop the web portal and train state and district health personnel. H OW W I L L T HI S HEL P I NDI A R E A C H I T S F P2 02 0 G OAL S?

The Hausala Sajheedari program was formally launched by the Chief Minister of UP in April 2015. In less than one year

LEADING VOICES

we saw over 717 private sector hospitals accredited and about 550 private sector surgeons empaneled. The private sector performed about 34,000 tubal ligations and about 2,000 non-scalpel vasectomy procedures for men in the state, which is about eight percent of the state’s overall contribution. This is a 16-fold increase in a short period. The accredited facilities have reported over 25,000 insertions of intrauterine contraceptive devices, 9,700 women using injectables, 13,000 women receiving oral contraceptives and over 34,000 men receiving condoms. I believe over 1,000 private hospitals can be accredited in the state. If the potential is fulfilled, it will be a substantial contribution from the private sector to the global goals. WHAT ’ S NEXT ?

We have received positive feedback from the National Ministry of Health and several state governments on this intervention, and inquiries about replication to other geographies. We have forged partnerships with professional bodies like the Indian Medical Association and Federation of Obstetric and Gynecological Societies of India. Hausala Sajheedari has become a template of success for public-private partnerships in providing family planning services in Uttar Pradesh and the rest of the country. This program provides an innovative way to connect public programs with private sector capacities to achieve universal coverage. n

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LEADING VOICES

Moving Beyond Yesterday’s Markets

In Uganda, PSI and its partners drive shipping containers of long-lasting insecticidal nets to Kampla, ensuring timely access to health products daily.

BY CATE O’KANE

For the lucky ones among us who live higher up the socioeconomic pyramid, this is today’s market experience thanks to services like Amazon Prime and Uber. Despite these models working so well for those of us living in western countries, we are still struggling to devise strategies that work as well for so many others around the world. Corporations, practicing a form of selfish altruism, are increasingly focused on this issue. Great minds do spend time wondering why they can ensure access to products in Oslo, Norway, but not in Oyo State, Nigeria. They ask why prices may work for customers in Denver, but not Delhi. They question why people accept the need for their product in developed markets, but can’t understand its use in emerging ones. Teaching an old market dog a new trick is hard. As Mark Kramer, Managing Director of FSG, acknowledges: “The business models that most major companies operate on today were developed years ago with the idea of serving rich customers in developed nations. Those models simply don’t work for reaching low income populations and emerging markets.” It’s time to move beyond traditional approaches and devise models that work for a new market base and a new consumer. 14 impact | No. 22

B E YO N D PRODU CT A P P R OVAL TO P R OTOT YPE DESI G N

Henry Ford once said, “If I had asked people what they wanted, they would have said faster horses.” Maybe in 1908 his consumers couldn’t conceive what was to come. But today’s new market makers aim to engage their consumers at the start of the design process, not simply at the end. Philips1 and SC Johnson now base research, design and innovation teams in emerging markets to take advantage of local talent and enterprise. But they are still the minority. Are enough pharma companies going beyond normal medical research to gain consumer insights that would fuel future product R&D? Are fast-moving consumer goods companies sourcing new packaging ideas from the markets where they are most needed? Are designers hired from the very communities that need these innovations, or do we too often introduce the final product for their approval? B E YO N D OL D VALU E CHAI NS TO N E W VALU E G ENERAT I ON

Successful companies know how to compete in existing markets by streamlining their value chains. Yet when a market still requires development, it often requires a reworking of traditional competitive strategies and an openness to new methods that may raise eyebrows at headquarters. It’s important to remember that controlling 100 percent of a non-existent market isn’t going to make shareholders happy. New market makers know that investing in unusual opportunities can yield surprising rewards. Yara, a global fertilizer company, helped expand the Southern African Growth Corridor of Tanzania, a multi-stakeholder effort to develop agriculture and in doing so

increased its market share by 50 percent. They built transportation infrastructure, helped link supply chains and included even their competitors, to make sure the market worked first and foremost.2 After that, it’s in everyone’s best interest to ensure the market functions. B EYOND TODAY ’ S PRI CE TO TOM ORROW’ S I M PACT

“When markets are commodity-based with price as the determinant of what is being purchased, other determining factors tend to get pushed aside,” says

1. For more, visit https://www.annualreport.philips.com/#!/about-sector_ innovation | 2. For more information, visit https://hbr.org/product/yarainternational-africa-strategy/715402-PDF-ENG

WHAT DOES A FUNCTIONING market actually look like for those at the bottom of the pyramid? Is it a utopia where everyone has their needs met at a price that doesn’t unduly lighten their wallets? Are products available in a convenient location just up the street? Is there enough clear information available to make a choice?

LEADING VOICES

Tom Putzer, managing principal of SC Johnson’s Base of Pyramid Learning Laboratory. “Success is so often measured in terms of distribution, but maybe a true metric of success should be how many people are using the product and ultimately, what long term impact is being created.” New market makers are thinking beyond short-term numbers and instead to longer-term success measured by positive change and healthy outcomes for both their sales and their consumers.

like for consumers at the bottom of the pyramid? There is no one answer, because a functioning market serves consumers first and foremost. New partners bring in new skills that focus on long-term success for both the maker and the buyer. We look forward to seeing a plethora of new models. n

CATE O’KANE is the Director of Corporate Partnerships and Philanthropy at PSI. @cate13

So what does a functioning market look psi.org | impact

F E AT U R E

ASAQ Winthrop

(Artesunate amodiaquine) Manufacturer: Sanofi-Aventis Group Manufactured: Morocco

Coartem

(Artemether lumefantrine) Manufacturer: Novartis AG Manufactured: Turkey

Artefan

(Artemether lumefantrine) Manufacturer: Ajanta Pharma Ltd. Manufactured: India

Lumiter

(Artemether lumefantrine) Manufacturer: Macleods Pharmaceuticals Ltd. Manufactured: India

Lumartem

(Artemether lumefantrine) Manufacturer: Cipla Ltd. Manufactured: India and Uganda

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Rapid Diagnostic Test (SD Bioline Malaria Ag P.f/Pan)

Manufacturer: Standard Diagnostics Manufactured: Republic of Korea

The Business of Malaria

By Alia McKee, Kaylin Fabian and Karen Sommer Shalett DESPITE RECENT PROGRESS, THE DEMOCRATIC Republic of Congo remains the second most malaria-affected country in the world, with upwards of 10 million cases reported each year. PSI and its partner network member Association de Santé Familiale (ASF) want to ensure that all Congolese have access to better diagnostics and care by creating a thriving business for treating malaria.

and for lower duties on ACTs to ensure that low prices outlive subsidies. To transform the market and give consumers access to quality medication, all market players must make the supply chain work. Here’s a look at who those players are and why they believe the effort will succeed.

“We are making the market smart,” says deputy project director Katie MacDonald. “This is a systems-level change.”

A rapid diagnostic test (RDT) manufacturer and five ACT manufacturers are branding their products with Global Fund’s Greenleaf symbol and shipping to importers in Kinshasa.

The drugs commonly used to treat malaria in Congo aren’t artemisinin-based combination therapies (ACTs), the best medication for malaria. And people with fever using ACTs without testing may not have malaria and should be treated for something else all together. To reverse these trends, PSI/ ASF, with support from the Department for International Development (DfID), are creating a market for quality ACTs. Medications are pre-qualified by the WHO and marketed with a stylized Greenleaf logo. The product line is subsidized so drug manufacturers, importers and pharmacists have incentives to drive its use. ASF generates demand for the brand with TV ads, billboards, radio spots and door-to-door promotion and advocates to allow malaria testing in private pharmacies

The Manufacturers

“Sustainable profits are required for new product development, for registration in new territories and for increasing manufacturing capacities,” says Business Development Director Vijay Agarwal at Macleods Pharmaceuticals Ltd., which manufactures the Lumiter ACT. “We expect this venture to be profitable.” Rachel Hinder, a malaria specialist at Novartis Pharma AG, which manufactures the Coartem ACT, agrees. “The ultimate goal of the ACT access program in the DRC is to create a sustainable market for quality assured ACTs, gradually removing donor funding,” she says. “We expect it to become profitable within five years.”

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The Importer

Kareem Pabani at Pharmex.

Kareem Pabani owns Pharmex, a 20-yearold drug importer and wholesaler in Kinshasa that distributes to over 5,000 pharmacies in the city. In 2014, he was identified by ACT manufacturers to import WHO-qualified anti-malarials. “Why we’re doing this is simple,” he says. “Malaria is Congo’s biggest problem. It’s not new. It’s not a lot of up front investment for us considering the possible return.”

Faustin prepares medication in his pharmacy.

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Still, it takes six to eight months to get medicines from the manufacturers to importers and pharmacies. Competitors with substandard products have complicated ASF’s efforts. But Kareem and leaders at PSI/ASF have high hopes for the long-term success of the project because they see the wholesale demand for the products.

Even so, ASF subsidized Kareem’s wholesale purchase, letting him sell the drugs at a reduced price so that his customers — pharmacists — will stock the quality product long enough for their consumers to see its value. The partnership with ASF helps lower marketing costs and the Congolese trust ASF. “They are never substandard and their seal of approval gives confidence,” Kareem says.

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Pharmacists

Faustin doesn’t want a boss. The pharmacist got into the field so he could make a good living without reporting to anyone. “In Congo, it’s best to be independent,” he says. His pharmacy, in a bustling part of Kinshasa, brings in long lines of people for consultation and medications. His office, located up a steep green spiral staircase, provides some respite from the activity below. “Most people who come into the pharmacy come because they have a fever,” he says. “That’s the primary ailment I see.” But fever might not actually be caused by malaria. Faustin requires a test for anyone seeking malaria medications. “If they need the medicine, then I’ll give it. But I won’t hand out malaria treatment without doing a test first.” He sells a WHO-approved test, provided by ASF, that detects malaria antibodies in blood samples. Faustin heard about the project through a former schoolmate and staff member of ASF. “I knew them before primarily because they give out mosquito nets,” he says. “But they are now helping me with other things like training.”

In order to get the product, Faustin orders supplies through an ASF-approved importer, like Kareem. Faustin buys the product less expensively than he would otherwise and passes the savings on to patients.

Ambassadors They walk the streets of Kinshasa in pairs. Green shirts. Big smiles. Open hearts. “This isn’t health work,” Christian says. “It’s love work.” He’s one of two ASF-trained “ambassadors” standing outside of a door in a concrete fence. They knock. An older gentleman opens the door. He’s seen them around and he lets them in with a handshake and a warm greeting. “Our role is to spread the word, door to door, to encourage people to stop taking poor quality malaria medications without guidance,” Christian says. “They first need to go to a pharmacy or clinic to find out if they have malaria. If they do, they need to buy a drug that has this sign.” He points to his green shirt with the huge Greenleaf logo, a simple way for Congolese people to identify quality medicines easily. If it has the Greenleaf, it’s a go.

Because manufacturers pass subsidies down the supply chain, the logo also signals that the medicines are more affordable than inferior competitors. Why isn’t it free? By charging a price, they encourage manufacturers and importers to enter and compete in a crowded market. But profits only come if there’s demand. That’s where Christian and his partner Thethia come in. They are part of a largescale campaign that includes TV ads, billboards, radio spots and door-to-door promotion in which they see 100 people each day. “We visit families, old people, everyone,” says Thethia. “We were given communications training and training on how Greenleaf works.” The work is challenging. “Most people think the price is right,” says Christian. “But the malaria tests and the medicines need to be in every pharmacy. And right now, they aren’t. It can be frustrating for someone who has talked with us and can’t find the medications.” ASF is combatting this challenge by unblocking supply channels so customers can find the medications they are hearing so much about.

Greenleaf ambassadors Christian and Thethia make a home visit.

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The Beneficiaries Beatrice, a mother of four, gets an early start each day. After her husband leaves for work and the children are off to school, she goes to market to sell beignets. In the early afternoon, she returns to cook dinner. When Beatrice or her husband, a local van driver, are sick they need to rebound quickly. “If I can’t work or my husband can’t work, it paralyzes the family,” she says.

Now Beatrice is prepared for the next time one of her children has a fever. She can get her child diagnosed in her neighborhood and get the right medication. “If the test is negative, then we get referred to the hospital where the doctor can do more tests to figure out what is wrong,” she says. “This saves time and money and helps the family get back to work and regular life.” n

When anyone in the family is sick everyone worries about the cost of proper care. Recently, Beatrice herself had a fever. She’d heard ads for Greenleaf products. “I wasn’t completely sure about it though so I went and asked the pharmacist,” she says.

Her pharmacist tested her with an RDT. She was positive for malaria so he treated her with a Greenleaf ACT. The cost: about $2 for the test and medication. “Sometimes at the clinic have to pay $9 or $10 for the consultation and the medications,” she says.

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Putting the Consumer at the Center

BETH SKOROCHOD is Senior Technical Advisor, Social and Behavior Change at PSI.

BY BETH SKOROCHOD

DURING ITS 40-PLUS YEAR HISTORY, PSI has continually refined its approach to understanding our beneficiary. We have learned that saddling the burden of behavior change solely on our beneficiary is neither fair nor effective. We know we must understand the entire ecosystem around if we want to design practical solutions with real people at the center. If, for example, we hope to increase uptake of modern contraception among young, rural girls in Zambia, we must not only understand that young girl, her drivers and barriers to the behavior on an individual level, but we must understand who influences her behaviors: peers, boyfriends, parents, community elders; what social, cultural or gender norms affect her actions; and what policies and laws impede or encourage her behavior around sexual and reproductive health. We know we must also understand the market and how our beneficiary interacts with it. PSI believes that to make the market work for our beneficiary, we must understand the market structure and performance from the beneficiary’s perspective. Who are the players across the spectrum from production to use and how do they act in our beneficiary’s favor, or not? Does our young, rural girl in Zambia have access to modern contraception at the provider level? Are there enough manufacturers of a product to make it affordable to our beneficiary?

Are importers bringing in the mix of methods that will best serve our young beneficiary? To best answer these questions, PSI now uses different approaches and methodologies. I N C R E A S I NG EM PAT HY W I T H O U R B ENEF I CI ARY

It is not enough to understand literature reviews or research reports on our beneficiary and the desired behavior. From researchers, to programmers, to technical experts, PSI is sending multi-disciplinary teams out to engage with our beneficiaries and to shadow them. Beneficiaries are able to let their guard down in a way that doesn’t often happen in a research setting. PSI teams collect stories and observations that complement traditional research and help keep our beneficiary and their needs and experiences at the center of our program design. Refined research methods, such as mapping the evolution of beneficiary behavior and segmenting beneficiaries by behaviors, rather than simple demographics, are additional ways to understand and empathize with the consumer. P R OTOT Y PI NG

To continually sharpen consumer insights, PSI has begun prototyping solutions with our beneficiaries. These

rough outlines of a solution are presented to beneficiaries for their feedback and critique. Prototypes represent the very early thinking of a potential solution, whether it be an experience, a product or even a message. It provides something tangible — a story board, a role play, or a physical representation of a product — that helps beneficiaries articulate reactions they might not otherwise be able to verbalize. In short, we can build and refine potential solutions as well as continually collect beneficiary insights. B ENEF I CI ARY ENGAG EM ENT

With more comprehensive engagement, beneficiaries become a part of each and every step of solution design and implementation. In programs such as Adolescents 360, funded by the Bill & Melinda Gates Foundation, youth members of our target audience are engaged as researchers and data collectors, helping PSI teams analyze research and field results, creating and testing prototypes and helping to design and implement solutions. Learning how to be more effective is a challenge at the individual level, to say nothing of the organizational one. But PSI has always put its beneficiaries at the center of its work. To better serve them, we must never shy from this challenge. n

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Six Reasons to Make Health Markets Work Now BY NICOLAS GLOECKL, MANAGER OF SURVEY & ADVISORY SERVICES AT DEVEX

Health professionals favor addressing market failures over more aid. But they know they need all stakeholders to do it.

SINCE ITS INCEPTION, international development assistance has always been intended to aid, not replace, the private and public sector by addressing acute market failures. As President Barack Obama puts it: “Foreign assistance is not an end in itself. The purpose of aid must be to create the conditions where it is no longer needed.” A critical question for development is therefore how can we make markets work better? While current models have helped millions, health data worldwide shows that we need new innovations to help us reach the onethird of the world that still doesn’t have access to quality health products and services. In partnership with PSI, the Abraaj Group and Philips, Devex set out to find some answers. Through in-depth interviews, we tapped the minds of over 40 health market experts working at the United Nations and donor agencies, private foundations, corporations and NGOs. Interviews were supplemented by an online survey of nearly 900 senior development professionals. Here is what they have to say:

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1. Markets “versus” aid or markets “with” aid? Integrating market-driven approaches is growing in prominence in global development. As traditional sources of funding dwindle and health gaps in developing countries remain unaddressed, donors and private sector actors are diversifying their approaches. Functioning health markets are perceived as critical catalysts towards closing these gaps.

85% of development professionals surveyed believe that to tackle health gaps in developing countries, we need to systematically address market failures... ... while only 15% think that increasing aid levels is the answer to confronting health challenges in developing countries.

“It is important to leverage the impact we get from aid funding with private sector resources. They are not competing forces but a way to enhance the tool of aid funding.” – A MY LIN (@AM Y HL I N), U SAI D’ S CENT ER F OR ACCEL ERAT I NG I NNOVAT I ON AND I M PACT (@CI I I M PACT)

2. Market failures are risks. In many low-income countries, health economies are beset by distortions, policy issues and inefficiencies, all of which lead to market failure. Unsurprisingly:

The vast majority of development professionals — 98 percent — perceive well-functioning markets as important in addressing the health challenges of developing countries.

“The incentives have to be figured out beyond subsidy. You can create impact with money but you can’t create investment or sustainability.” – RO N ASHK I N , T EA M L E A D AT T H E P R I VAT E SECTOR I NNOVAT I ON PROG RAM M E FOR H E A LT H ( PS P 4 H ) psi.org | impact

F E AT U R E

3. Market concepts: Revolutionary or more of the same? There is a growing appreciation of the role of market approaches for improving healthcare and health systems. Novel concepts — such as market shaping, market dynamics and making markets work for the poor (M4P) — reflect a renewed interest in improving the relationship of health systems to functioning markets. Our health market experts explain why these new concepts are seen by many as game changers: 53% Approaches have demonstrated effectiveness and successes 25% Shifts in the attitude of donors have led to the use of these approaches

“[Social enterprises] are great for innovations but they are very hard to scale. [These] can really do great experimentation that large organizations struggle to do.” – GREG WIDMYER, D E P U T Y D I R E C TO R O F VACC I N E D E L I V E R Y AT T H E B I L L & M E L I N DA G AT E S F O U N DAT I O N

19% Concepts encourage better multi-stakeholder partnerships and collaboration 16% A total market approach is needed to make markets work

4. Promote public-private synergy By engaging the private sector in improving health outcomes in lowincome countries, the social enterprise approach helps meet the needs of underserved communities. About 88 percent of health market experts agree that social enterprises hold promise for addressing many of the challenges in developing countries in a manner that is sustainable. They reason that: 43% Social enterprises bring new approaches to solving development challenges 23% Social enterprises have demonstrated capacity to address health gaps 14% Social enterprises are closer to communities and know their consumers better 14% Social enterprises leverage private sector models effectively 24 impact | No. 22

“The use of social franchising to ensure inclusion of private providers in the delivery of quality health services should be an important element to reach universal health coverage. All actors of health markets should work in a coordinated manner by taking into consideration the government’s stewardship role.” – EZ IZ G EL D I H EL L E N OV, D EP U T Y R EP R ESEN TATI VE TO YEM EN AT U N I T ED N ATI ON S P OP U LAT I ON F U N D ( U NFPA)

“Improving the functioning of markets is important, but in order to reach major goals like the SDGs, you have to acknowledge the role of aid and need for innovative financing to mobilize and catalyze additional resources for health.” – P RIYA SHA RMA , POL ICY A ND I NNOVAT IV E FINANCI NG A DV I SO R AT U SAID’S CENT ER F O R AC C ELERAT I NG I NN OVAT IO N AND IMPACT

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5. Consumer power, now Both health markets experts and development professionals agree that understanding and empowering consumers is critical for improving product and service delivery in health markets.

80%

83%

80% of development professionals and 83% of health market experts believe that focusing on the role of the consumer is a critical strategy to improve product and service delivery in health markets.

6. Multi-stakeholder collaboration is key. Across the board, health market experts emphasized the importance of collaboration. Only through purposeful and strategic multi-stakeholder partnerships, they argue, can we make markets work more effectively. Initiating greater dialogue and engagement among stakeholders is critical for achieving for UHC and ensuring better access to quality health products and services. When asked how to make quality health products and services more accessible to poor consumers, health market experts’ top answers are: 34% Strengthen multi-stakeholder engagement and collaboration

“There’s a substantial unfinished agenda in public health. This requires more funding but we can also work more effectively, including helping markets work better.”

34% Strengthen the market systems, its components and address shortcomings 32% Understand consumers to better target health investments 29% Improve policies and regulations in the health market system 22% Leverage private sector models and business practices

– JANE T GI NNA RD, TE AM LEAD, S TR AT EGY AT UNI TAID psi.org | impact

MARKET ALLIES

Is (Social) Enterprise the Future? BY ABIGAIL WINSKELL

WHAT IS A SOCIAL ENTERPRISE? Profit for purpose or the double bottom line of impact and money? Applying commercial practices to deliver positive social impact? A for-profit entity with a strong focus on delivering social impact? Or simply an opportunity for non-profit organizations to diversify their funding for increased health impact? All of the above. Social enterprise models can take many forms depending on the social or environmental challenge they are trying to solve along with the actors involved. At PSI, we define the purpose of social enterprise as achieving sustainable health impact delivered through a commercial business model. How can social enterprise help to create stronger health markets? Social enterprise offers us the opportunity to deliver sustained health impact by growing health markets. We develop the market for a health product or service to exist beyond the life of donor funding. We increase access to more affordable products or services by filling a segment of the market where other commercial sector actors aren’t present. And we open up the market for a new health product or service. SCALIN G UP T H E FA M I LY PLA NN IN G M A R KE T

With a target of reaching 48 million additional users of modern methods of contraceptives by 2020, India represents 40 percent of the total global FP2020 goal — of reaching 120 million additional users of modern contraceptive methods in 69 of the world’s poorest countries.

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PSI’s market development approach analysis demonstrated that the market is failing women across all wealth quintiles in urban and rural areas, and particularly young women. Moreover, method mix is disproportionately skewed towards sterilization, with limited access to other methods. The family planning market in India traditionally has been highly subsidized and hindered by an inefficient government procurement process that impacted commodity security and supply. Restrictive pricing caps on some products also constricted the market. Recent changes in these market restrictions have opened the door for a new approach. PSI has established a family planning social enterprise that will drive growth of the family planning market, while building an efficient business model for sustained business operations. The India Limited Liability Company (LLC) will offer a basket of family planning products designed to grow the market by increasing access, improving distribution and expanding choice by diversifying the method mix. The LLC will operate as a commercial entity focused on driving operational efficiency to ensure that products remain accessible and affordable for our consumers. S U S TA I N AB L E M ODEL S F O R S E RV I CE DEL I VERY

Social enterprise also has a role to play in health service delivery. Many people in developing countries face significant challenges in accessing quality, affordable

health care. Public health systems are often overburdened, health providers lack incentives to offer quality services and there is low participation in the private sector market for preventative care. Traditional social franchising programs have been very successful in expanding access to a specific health service through an existing healthcare provider. However, health care markets are becoming more sophisticated and donors are increasingly focused on exploring greater financial sustainability of social franchising.

"health care markets are becoming more sophisticated and there is an increasing focus from donors on exploring greater financial sustainability of social franchising."

PSI is working on two different enterprise models for delivery of healthcare services. These two approaches are currently in pilot phase, to test and learn before considering how best to scale up. In Latin America and the Caribbean

MARKET ALLIES

1. A USAID Legacy: Smaller Families and Better Health; Kimberly Cole | 2. Ibid. | 3. U.S. Foreign Assistance to Latin America and the Caribbean: Recent Trends and FY2013 Appropriations; Congressional Research Service | 4. World Bank Data Reports; 2014 | 5. World Bank Data Reports PPP

region, PSI is developing a business format based on the franchise concept. This model provides a standardized experience to a customer and complete business model to the franchisee. The clinic provides high quality, affordable health services that support consumers’ health needs throughout their lives. An efficient business model that offers value to all involved — the consumer, the franchisee and the franchisor — underpins the enterprise. PSI is testing model clinics in four markets in order to develop the optimal operational set-up and ensure all the fundamentals are in place for success (see sidebar for more). In East Africa, PSI is exploring how to move towards financial sustainability of its Tunza Social Franchise network. This approach will develop the franchise business model to increase revenues and reduce costs, while improving health impact and maintaining quality standards. The value proposition is based on a clear understanding of the challenges that providers face. Moving forward, the primary focus will be on working with providers to become better business managers and to grow their health practices to serve an increasing number of people. PSI will continue to explore further opportunities to develop social enterprise models to deliver sustained health impact and shape health markets in developing countries. To achieve this, PSI works collaboratively with a number of donors seeking innovative business models for the long term sustainability of health markets. n

ABIGAIL WINSKELL is the Deputy Director of Global Marketing at PSI.

AN ANSWER TO SHI F T I NG RESOU RCES

IN THE 1960S, THE AVERAGE family in Latin America had six children and many women died in childbirth. Today, most women in the region have between two and three healthy children.1 Similarly, infant mortality has fallen faster than anywhere else in the world and child mortality has declined by 57 percent.2 Regionally, development assistance — primarily U.S. foreign aid — has declined in each decade since the 1980s.3 Additionally, out of pocket expenditure for health has reached over 30 percent of national health expenditure.4 Purchasing power has also increased, from just below $6,000 in 1990 to nearly $16,000 in 2014.5 This substantial growth in real income translates to market opportunities for health products and services. More and more, consumers are choosing and paying for the health care they want. The public health community’s responsibility is to provide high quality, integrated services with a focus on equity. To meet this goal we must better understand the primary care market. We also need to understand our consumers more intimately, including them in the development of solutions that work best for them. In doing so we enable health providers to create approaches that address market failures across the ever-expanding list of new and emerging causes of morbidity and mortality. F R O M SU B SI DY TO S U S TAI NAB I L I T Y

Ten years ago, our network member in Paraguay pioneered one of these opportunities to create a sustainable social enterprise model for

contraception after graduating from donor support. Today it offers a broad portfolio of sustainable products across the family planning and nutritional spectrum. Similarly, PSI’s partner in Central America, the Pan American Social Marketing Organization (PASMO), has built on years of donor investment to develop a profitable condom brand, Vive, that now boasts a 52 percent market share in the region. PSI and PASMO have continued this journey by diversifying their sustainable portfolio to include other affordable, quality health products across the region. Now, with investments from PSI’s philanthropic program Maverick Collective, foundations and corporate technical assistance, PASMO is again pushing forward by building a sustainable, clinical franchise, Red Segura. Red Segura is currently working to prove its business model. We are making exciting strides in addressing equity and quality while providing integrated, primary care services inclusive of sexual and reproductive health, non-communicable diseases and gender-based violence. The goal is to demonstrate health impact and sustainability. As Colleen Gregerson, Vice President of Corporate Partnership and Philanthropy at PSI and Director of Maverick Collective, acknowledges: “This is a lab for developing new approaches to improve the health of women and girls. What we learn here, we plan to scale up in partnership with other donors and replicate in other countries.” JULIA ROBERTS is the Regional Director of Latin America & the Caribbean at PSI

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MARKET ALLIES

A MODEL ENTERPRISE Global health and development are evolving, which requires PSIâ&#x20AC;&#x2122;s business model to evolve

as well. To offer sustainable health solutions for our beneficiaries in India, PSI created a partnership between two entities in that country: PSIâ&#x20AC;&#x2122;s newly established social enterprise, the PSI-India Private Limited (LLC), and PSI-India, which remains a non-profit entity. The LLC and PSI-India are distinct and separate, but they share interests and values.

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MARKET ALLIES

The LLC allows PSI to invest in and profit from relationships and opportunities that stimulate the market to achieve health impact at scale. The revenue generated, which is not tied to restricted requirements, will be reinvested into the projects and programs our beneficiaries need, making PSI able to nimbly apply subsidy where it’s needed most. Check out this graphic below to understand more how they will work together. — Fareha Ahmed

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MARKET ALLIES

Social Enterprises You Should Know About BY SANDY GARÇON

Over the past several years, we’ve seen a dramatic increase in the number of social enterprises — for-profit ventures with social objectives at their core — working to solve some of the world’s most pressing needs. These social enterprises often work in areas where the state is not able to deliver and traditional businesses and nongovernmental organizations don’t know how to provide the necessary services. Even worse, traditional actors might simply have no interest. In other words, social enterprises work where there is market failure. Social enterprises use a market-driven business model to address key social or environmental challenges. Entrepreneurs are tackling problems that long constrained the development of healthy 30 impact | No. 22

markets in low- and middle-income countries. They improve access, arrange financing, expand distribution and disseminate information to consumers and businesses.

to essential health products. Building on an existing volunteer network, Live Well has built a private-sector supply chain that delivers to previously inaccessible areas and creates jobs for thousands of door-todoor sales agents.

Working across different sectors, the following four locally-based social ventures are innovating to produce sustainable impact for their countries’ economies and communities’ well-being.

Sectors Health, Supply Chain

Impact Live Well has cultivated a network of 300 Community Health Entrepreneurs and operates in 10 rural and peri-urban communities. It offers consumers over 25 products, including over-the-counter medications, nutritional and hygiene products and contraceptives. It will add solar lamps and cook stoves this year.

Market Zambia

LIVING GOODS

Solution Spun off from CARE Zambia through its Impact Accelerator in 2015, Live Well provides rural communities with access

Markets Kenya, Myanmar, Uganda and Zambia

LIVE WELL

Sector Health

In Asia, Africa and Latin America, social enterprises are increasingly doing the work of shaping markets to the benefit of the consumer.

MARKET ALLIES

Solution Living Goods provides services in maternal and child health, nutrition and reproductive health. Community-based health systems tend to be under-funded, understocked and under-managed. Living Goods recruits, trains and supports networks of Community Health Promoters (CHPs) who go door-to-door to deliver health education, diagnose and treat illnesses, support pregnant mothers and newborns and sell products. They make a living from sales and incentives, addressing the key challenges of motivating and retaining community health workers. Impact Living Goods will grow to over 5,000 Community Health Promoters and reach over 5 million people by the end of 2016.

SOKOWATCH Sectors Logistics, Supply Chain Markets Nairobi, Kenya and Dar es Salaam, Tanzania

FARMDRIVE

F U NDAM ENTAL S

Sectors Agribusiness, Financial Services Market Kenya Solution FarmDrive is a Kenyan-based social enterprise that connects underserved smallholder farmers to lenders, while helping financial institutions expand lending. FarmDrive provides a digital record-keeping platform that enables farmers to track their activities using a mobile phone. Their information, combined with existing agricultural data, is used to develop a credit profile. Impact Since beginning operations in May 2015, FarmDrive has registered nearly 3,000 smallholder farmers in Kenya. Over KES 13 million (USD 128,000) have been lent. Finally, FarmDrive has partnerships with satellite companies, insurers, data analysts and development organizations to both scale and improve its impact. n

Get the value proposition right. How will your social enterprise grow the market? What is new and different about your enterprise solution? Is the value proposition compelling to your target audience? Successful enterprises fill a clear gap in the market with an offering that truly answers the consumer’s needs.

Build a realistic business plan. Develop a robust business strategy for how your enterprise will launch and grow. Use this plan to build a financial projection that takes account of realistic growth assumptions, along with a clear understanding of all costs involved and the level of investment required to get the enterprise up and running.

Recruit the right skill set.

Solution Sokowatch provides companies with a simple, consistent and reliable distribution channel to meet the demands of the informal market. Employing retrained street hawkers, Sokowatch allows shopkeepers to order products — from medicines to personal care items — via SMS for guaranteed 24-hour delivery free of charge. Sokowatch sustains operations through partnerships with manufacturers, including Unilever and GlaxoSmithKline. Impact The Sokowatch network has agents across Nairobi and Dar es Salaam. Sokowatch already supplies about 5,000 shops in the Nairobi area and is expanding to cover other key urban markets in East Africa in 2017.

ESSENTIAL RULES FOR CREATING A SUSTAINABLE SOCIAL ENTERPRISE

From marketing to operational finance expertise, identify the key skills and experience that your enterprise needs to be successful. Then go out and recruit!

Figure out how to scale.

SANDY GARÇON is Managing Editor of Impact and Manager of External Relations and Communications at PSI. @SanGarcon

For enterprises with a global footprint, think about how to exploit the worldwide scale of the organization while harnessing local know-how. For a small local start-up, explore potential partnerships or funding options to help scale up once the enterprise concept is proven.

Avoid mission drift. Be aware of built-in tension between a social impact mission and delivering on a commercial business model. And watch out for signs that the enterprise may be drifting from the core mission.

psi.org | impact

LAST WORD

activities that generate a surplus. This won’t work everywhere, but in countries where purchasing power is rising and where we are seeing a reduction in donor subsidies, transforming the NGO model to a social enterprise is a responsible way to continue to deliver health impact and meet the health needs of our consumers.

BY KARL HOFMANN

FOR THE PAST 45 YEARS, PSI HAS worked to improve the health of people throughout the world, mainly by making high-quality, affordable products and services available to people where and when they need them. Because of our deep, global roots, we have a good sense of how the health products and service markets work and where a market may fail. And we believe we know our consumers. But are we serving them as well as we could? To answer that, we’ve taken a step back to evaluate our business model and to think creatively about how we can have even greater and longer-lasting impact. As you’ve read throughout Impact magazine, the question that kept coming up for us involves markets as a whole. How can PSI be a better steward of health markets rather than just an actor within them? Shouldn’t our future involve understanding and structuring health markets in a way that our host governments and our funders need and that better serves health consumers? The answer is yes, so PSI is embarking on a shift in how we operate. Over the next decade, PSI will become an 32 impact | No. 22

organization that increasingly diagnoses and addresses market failures, while still continuing to provide much-needed health products and services. Our focus must be on how entire markets and systems meet peoples’ needs, not only on how we are acting in those markets. Donors and governments are asking pointed questions. After decades of investment, is there no more sustainable approach? One that requires less subsidy, but that doesn’t walk away from the progress we’ve made? This trend is particularly evident in parts of Asia, and Central America and the Caribbean and in some parts of Africa too where bilateral donors are moving countries out of assistance programs. The United Kingdom’s DfID, Sweden’s SIDA, USAID, The Bill & Melinda Gates Foundation, UNITAID and others are shifting assistance toward market shaping strategies, even as they pare down investments. Some donors are looking at an exit strategy. PSI is formulating an evolution strategy. One of the more promising approaches is to turn our nonprofit programs into social enterprises, which I’ll define here as mission-driven, subsidy-free business

The drive toward universal health coverage and opportunities to leapfrog the constraints of struggling primary health care systems through new diagnostic technologies and selfadministered therapies and treatments also offer transformational possibilities for us. HIV self-testing is one example. Right now we have more questions than answers about these shifts. But we trust that when we keep the people we serve at the center of our work and we focus on removing barriers to access for them, we’re on the right track. A consumer-centered, empowerment-driven, sustainably focused future looks big, exciting and different for PSI. n

KARL HOFMANN is President and CEO of PSI. @KarlHofmannPSI

PSI in Transition

PSI runs a social enterprise already in Southern Africa with a regional commercial condom sales entity called Company 158. We have been operating as a social enterprise in Paraguay for years. And we recently launched a social enterprise in India to take over all commercial aspects of our work there. With more intentional focus on market failures and total market dynamics and with the sharper discipline that comes from social enterprise and operating without a donor safety net, new perspectives for meeting health needs appear.

PSI added an estimated 44.9 million years of healthy life with the products we distributed and services we provided in 2015. LIVES CHANGED

PRODUCTS DISTRIBUTED

PSI PUL SE44,221,302 long-lasting insecticide-treated nets,

3,896,671 unintended pregnancies prevented.

protecting families from malaria.

9,246 maternal deaths prevented. 379,286 deaths due to malaria, diarrhea and pneumonia prevented. 234,367 HIV infections prevented.

1,137,857,646 male and female condoms, preventing transmission of HIV and other STIs. 3,395,326 diarrhea treatment kits, reducing the severity and duration of diarrheal disease.

>:J#-55%5#-2#%;$+,-$%5#PQ&R/O7##7*</1%9+$/*5/;%9#4;1/#75%## 24,298 courses of directly observed therapy, saving lives by treating tuberculosis. 694,301+2#/+$*#$*%#!+*:"84$#/%#5+;$)+K4$%5#-25#$%+L78%$#/%#')"L+5%5## long-acting, reversible contraceptives inserted 1,274,413 pre-packaged antibiotics, saving lives by (including implants and intrauterine devices). treating pneumonia. +2#MC?N#O#*"+/O*$4/7O!9845"#/1%9+/1%46# 282,018 voluntary adult medical male circumcisions performed. SERVICES PROVIDED

1,578,027 voluntary testing and counseling sessions for HIV and other STIs conducted.

10.6 liters of water treated with water treatment products.

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