Bringing Affordable and Quality Medicines Closer to Communities
Bam Aquino and Mark Ruiz founded MicroVentures, Inc. (MVI), a social enterprise that aims to support microentrepreneur programs, in 2007. Their first venture was Hapinoy, a network of sari-sari (community) stores owned and run by MVI-trained microfinance borrowers who are mostly nanays(mothers). The Hapinoy program benefits sari-sari store owners with: a) additional loan for store inventory and operations; b) training and capacity-building; c) access to better prices and new businesses; and d) store branding. By 2010, Hapinoy’s presence was already established in 150 South Luzon communities.
The main products sold at sari-sari stores are fast-moving consumer products. MVI considered adding medicine to their range of products and explored an innovative business model for supplying generic medicine to the BoP in selected areas of Luzon through a grant from iBoP Asia. The project adopted the “Base of Pyramid Protocol – Toward Next Generation BoP Strategy” (2nd edition) or BoP Protocol 2.0 framework, which enables corporations to generate new business opportunities at the BoP based on a participatory philosophy and with the notion of co-creation at its core. The Asian Social Enterprise Incubator, Inc., an incubation firm specializing in BoP ventures, helped conceptualize and manage the project.
During the pre-field phase, MVI conducted research on the legal and economic context of providing medicine. Interviews with relevant authorities and suppliers concluded that nonprescription over-the-counter (OTC) medicine could be legally sold in sari-sari stores. It was realized that most of the stores already sold medicine in a covert way. Also, nanays preferred branded medicine because customers are wary of the quality and effectiveness of generic medicines (despite these being up to 4 times cheaper). It became crucial to work with a partner that assured MVI and the nanays that generic medicines are trustworthy.
The project opted to include Unilab as its strategic partner for the project’s branded medicine and Generika Drugstores for generic medicine. In order to come out with a desirable assortment from the perspectives of commercial viability and public health, MVI combined the best-selling items from the manufacturers, the products best sold by the nanays, and those recommended by doctors.
An initial business model called the Hapinoy Botika was developed based on the existing Hapinoy business model, a platform where MVI would source medicine from the partners and distribute these to the Community Stores via its own distribution operation. These Community Stores, acting as wholesalers to smaller Hapinoy stores, are at the core of the operations. MVI supports their daily operations with its field staff and through regular training events.
Risks, Problems and Barriers
One important barrier to bringing affordable medicine to the BoP is the regulatory framework governing the sale and distribution of medicine. It restricts the role that retail outlets can play (and for all the right reasons), which is limited to the supply of over-the-counter drugs and excludes prescription drugs. During the research, however, it became clear that prescription drugs (especially antibiotic medicine) were sold in the market by sari-sari stores. MVI stressed that it strictly adheres to regulation, exemplified by their securing of necessary licenses and their firm stance on not distributing antibiotics. However, it also acknowledged the reality that the stores could buy antibiotics from other sources and thus included a session in the training program on the correct use of antibiotics, and a discussion on regulatory issues to raise awareness among store owners.
The project team also regularly visited the nanays and monitored them in filling-out the sales tally sheets. In MVI’s point of view, the task of recording base data is vital to managing a grocery store. The nanays, however, did not share this view. For them, it was enough to look after the cash box, and open invoices to determine inventory, available cash and liabilities. Although big efforts were put into applying the simple tally sheet approach, the project was not able to fully overcome this aversion to data recording.
Pricing is always a difficult aspect of retailing at the BoP. On one hand, the project’s aim is to bring affordable medicine to the BoP and reduce the BoP penalty; on the other, the stores have to earn enough profit to make the project sustainable. To resolve this concern, a pricing scheme that fixed the selling price from MVI to the Community Stores and from the Community Stores to the Hapinoy Stores was implemented.
Benefits, Outcome, and Reach
During the pilot phase, the average quantity of order increased from the initial orders of medicine by blisters (10pcs) to packs (100pcs), indicating a growing demand from the stores. 81% of those sold were branded medicine, while 19% were generic drugs. This split was in line with expectations as it reflected the preference for branded medicine at the BoP, despite its higher price point. As the pilot phase ended, the nanays expressed optimism about the Hapinoy Botika Corner. They confirmed that the education component was the basis for its success as it enabled them to sell the medicine with conviction. The merchandising materials brought the products to the forefront of the stores’ offering and informed the customers about the possibility of acquiring a comprehensive range of over-the-counter medicines in the store.
Mark Ruiz views that the inclusion of all stakeholders from the very beginning, guided by the co-creation principle, was one of the key success factors of the project. The strategic partners and the nanays co-developed all aspects of the project, including the design and size of the merchandising materials, the assortment, pricing, educational events, and final launch of the project.
Contrary to the initial idea of only supplying generic medicines on the basis that they are more affordable, the co-creation workshop revealed that branded medicines are still vital to the project’s success. It brings the best selling items of the market at a less expensive distribution pricing to the stores, which previously had bought those items at suggested retail prices from local pharmacies.
In the workshops, it was also highlighted that the nanays required training and education as they felt insecure about selling medicines. Together with Dr. Miel Penalosa, an experienced community health practitioner, an education presentation was developed in the Botika Corner launch, which discussed branded and generic over-the-counter remedies. The presentation aimed to empower nanays to become credible suppliers of medicine at the BoP.
Due to the success of the pilot phase, MVI decided to scale up the Hapinoy Botika Corner project in 2011 and make affordable medicine available to 150 communities through 5,000 Hapinoystores. The strategic partners were satisfied with the results and discussions are ongoing on how to structure their involvement in the scale-up phase.
About the Author
comments powered by Disqus