Reproductive Health Supplies Market Development Approaches

Reproductive Health SuppliesMarket Development Approaches Presentation to the Coalition

What MDAs should achieve • Efficiency – MDA interventions will serve to move people up the value chain from heavily subsidized products to wholly commercial and non-subsidized products • Effectiveness – MDA interventions will result in overall market growth • Equity – The success of MDA interventions relies on a better targeting of subsidies MDA interventions are worthwhile only if the money saved is reinvested to the benefit of the poorest

Increasingly, there are variations/ hybrids of the above models, • E.g. NGO programs with increased/ full cost recovery, or Manufacturers model with strong commitment to reach the poorest • Sample countries: Bolivia, Ghana, Thailand • Donor/ agency forms partnership with commercial players to co-fund marketing or other activities in exchange for commitment to furthering social goals (e.g. through lowering price, extending distribution) • Key agencies: Futures Group, CMS • Sample countries: Brazil, Cameroon, Morocco, Mexico • Donors fund an NGO (typically an international network like PSI) to provide subsidised services and products • Develop and market their own brands with aim to maximize usage (share) in target group • May have some cost recovery • May establish own distribution infrastructure • Key agencies: PSI, MSI, IPPF • Sample countries: Angola, Eritrea, Uganda, Vietnam • Inherent potential for sustainability • Can be much more cost-effective than NGO model • Depends on program, but generally aim to build on the strengths and minimize the weaknesses of the classical models • Offers NGO/ donor full flexibility/ control over all aspects of marketing mix – extending reach to the poorest/ neediest • Proven ability to create demand • Can be mobilized relatively quickly, by experienced NGOs • Depends on program, but generally include a high level of complexity and a poor fit with the core capabilities of the implementing agency (a an NGO increasingly trying to act like a 100% commercial player) • Sustainability is not automatic – incentives for commercial partners have to be right • Will only work in countries with a minimum level of commercial potential – may not be viable in the poorest countries • May not reach poorest/ neediest • Inherently unsustainable – relies on continued donor funding • May crowd out commercial sector • May not build local capabilities • May not be very cost effective -> unnecessarily high cost per CYP Market Development Approaches – Ends and means Means/ Approaches Non-Commercial Commercial Peripheral MDA e.g. public sector introducing charging for some segments, or outsourcing part of supply chain to private sector Core MDA e.g. introducing new commercial player to attract users from public sector Ends/ Outcomes • Lowering cost/ increasing sustainability of achieving a given RH outcome Improved RH effici-ency Not MDA e.g. public sector expanding scope of free distribution program Peripheral MDA e.g. introducing new commercial player to add to method mix Improved RH effec-tiveness • Achieving a better RH outcome • Initiatives to grow supply or demand in the non-commercial market (I.e. little or no cost-recovery, non-commercial distribution) • Initiatives to grow supply or demand in the commercial market (I.e. some/ full cost recovery, commercial channels) NGO/ Branded/ Distribution model + Commercial methodologies • Including marketing, distribution, procurement etc. NGO/ Branded/ Distribution model +RH Efficiency • Reduced donor spend • Improved sustainability + Cost recovery • Charging those who can pay + Reallo-cation to the Poor Manufacturers model + RH Effective-ness • Improved RH access • Improved RH + Commercial incentives • Providing market-based incentives Source: Adopted from Francoise Armand, Futures Group

Example of MDAs • Shift costs from public sector purse to private pockets so that poor and vulnerable can be better served: • Targeting subsidies • Transitioning consumers to higher priced products • Alternative financing mechanisms • Reduce commodity costs for procurers and consumers

Example of MDAs • Reduce the costs of and increase the effectiveness of distribution • Public to private distribution • Private provider training • Partnership for commercial distribution (with FMCG companies) • Effective distribution • Social franchising

Example of MDAs • Create a policy/enabling environment tat encourages competition and choice • Registration facilitation • Taxation and duty reduction • Increased number of products / offer (crowding in) • Authorize new distribution channels / type of outlets for hormonals

Example of MDAs • Marketing and demand creation • Category demand creation (vs branded) • Greater freedom with advertising / distribution • Better communications (effectiveness of BCC)

Priorities and Gaps • Define success – what programme aims to achieve: health impact, sustainability, cost to donor/government, targeting of subsidy, availability/choice for consumer, enabling environment • Take a Total Market Approach – requires recognition of market dynamics and collaboration across projects • Understand Markets – including consumer segmentation, before programmes are designed

Recommendations • Develop more tools (and pay for them to be used!) • Market assessment • Targeting mechanisms • Market segmentation • Willingness to pay surveys • 4 Ps: Product, Price, Place, Promotion • Post-project evaluation • Try out more and various approaches, evaluate them & share results quickly

Creating a Country Typology for Market Development Approaches RHSC MDA Subgroup

Proposed Criteria Market Potential • CPR levels x Population of Women of Reproductive Age • Competitive environment – esp. efficiency, affordability and targeting of public sector vs private sector Financial Potential • Ability to Pay • Willingness to Pay • Business environment (regulations, taxes, distribution, promotion)

Characterizing country environment Market Potential High CPR and/or favorable competitive environment Little ATP and/or WTP and/or unfavorable business environment Ex: Kenya High CPR and/or favorable competitive environment High ability to pay and/or WTP and/or favorable business environment Ex: Morocco, Venezuela High Low CPR and/or competitive environment unfavorable Little ATP and/or WTP and/or unfavorable business environment Ex: Benin, Congo Low CPR and/or competitive environment unfavorable High ability to pay and/or WTP and/or favorable business environment Ex: Ukraine Low Financial Potential High Low

Matching MDAs and country environment Market Potential High • Demand creation / BCC • Target subsidies • Improve policy environment for private sector • Offer low cost products in private sector Low Financial Potential High Low

Matching MDAs and country environment Market Potential • Value creation (new products, advertising, marketing) • Segmentation strategies • More targeted public sector • Extend offer / outreach of private sector High Low Financial Potential High Low

Next Steps • Finalize a country typology tool with clear source of data identified and a methodology for classifying countries • Make tool available (RHSC website)

Reproductive Health Supplies Market Development Approaches