Though I'm no longer on WRI and NextBillion's staff, I'm glad to announce the release of WRI's latest What Works business case study, CareShop Ghana: Improving access to essential drugs through conversion franchising. This study is authored by Joel Segre (Harvard Business School, '08) and myself, and was made possible through the generous support of the Horace W. Goldsmith Foundation.

NextBillion has discussed pharmacy microfranchises in the health sector on numerous occasions, but CareShop is unique among them as a conversion franchise that recruits existing drug store owners, rather than a "green field" franchise model that establishes new outlets. A conversion franchising strategy has great potential especially in Ghana, where an extensive network of 8,000 individually run retail drug stores, known in Ghana as "licensed chemical sellers," already reaches every corner of the country.

CareShop's founders interpreted the prevalence of easily treatable infectious diseases in Ghana as significant unmet demand for better access to more affordable drugs, and endeavored to meet this demand by working with chemical sellers in a franchising arrangement. CareShop, as the frachisor, runs on a for-profit basis and generates revenue from product sales to chemical sellers as its franchisees. CareShop provides franchisees with valuable business and healthcare training, branded materials, and the convenience of having products delivered directly to their doorstep. CareShop is a program run by Ghana Social Marketing Foundation Enterprises Limited, which itself is a for-profit subsidiary of Ghana Social Marketing Foundation (GSMF), a non-profit organization.

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I'm sad to say it's time for me to sign off as a member of the NextBillion staff. I remember joining World Resources Institute and the NextBillion staff in June 2005. NextBillion had just been up and running for two months. Take a look at this old screenshot and you'll notice the site had three navigation bars, 19 navigation links, and six color blocks. We agonized over the dearth of comment submissions and had regular staff meetings about how to improve site design, increase traffic, and encourage community participation.

Over the last two and a half years, NextBillion has undergone many site make-overs, but more importantly, the quality of its information and readership have improved exponentially. We now have over 250,000 unique visitors coming to NextBillion on a monthly basis, many of whom enrich the discussion through commenting on blogs and giving suggestions for site posts and improvements. Some gratifying third-party confirmations of the site's effectiveness include its nomination for a Webby Award in 2006, and "Best of the Web" mentions in BusinessWeek and New York Times.

It is exciting to think of NextBillion's steadily growing visitor count and media recognition as a reflection of growing interest in private sector solutions to poverty, and to think that NextBillion has had some role in nurturing this trend. It's been a honor to work with Rob Katz and the site's numerous blog contributors over these years. I'm eager to follow the site's continuing evolution as the "Base of the Pyramid" field matures and the ideas discussed on NextBillion become reality.

Boston Consulting Group has been conducting extensive primary research into the spending habits and lifestyle of a segment of the population it identifies as the "next billion." The "next billion" are economically better off than the poorest of the poor, but earn just less than the current customer base of the formal economy.

BCG discusses business strategies to tap the next billion market segment and provides some data on the segment's population size, income, spending, and lifestyle in two papers released last week, New Rules for the Next Billion, and The Next Billion Consumers: A Road Map for Accelerating Telecommunications Growth in Brazil. The former is a shorter and broader summary piece that contains much of the information presented in the latter report, a more in-depth treatment of the next billion telecom market in Brazil. Both focus on the next billion's untapped potential as a market for telecom companies but also present some tantalizing data that hint at BCG's depth of market research.  These reports come 4 months after two other short "next billion" pieces BCG released earlier this summer, The Next Billion and The Next Billion Banking Consumers.

In Brazil, BCG surveyed over 1,300 next billion consumers and visited dozens of households. This primary research seems to have been combined with a BCG analysis of one of Brazil's 2005 national surveys to paint the following picture of Brazil's next billion:

• Earns a monthly income between $100 and $700
• Monthly savings between $30 and $300
• 45% do not live close to a slum
• 65% are married
• 60% do not work in formal jobs
• 82% receive their salary in cash
• 67% of households pool individual incomes

Household spending by the next billion breaks down as follows:

• 39% of spending goes toward food
• 23% of spending goes toward housing
• 72% of spending is on essential items, leaving
• 28% for discretionary spending

Both reports present the following strategies as key to reaching the next billion:

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In high-income countries, asthma is usually a nuisance, but among the rural BOP, asthma can be a costly and deadly disease for victims who are unable to access treatment locally.

Eric Green, a medical student at Stanford University, traveled to Mexico last year as part of a group from his “Entrepreneurial Design for Extreme Affordability” class. In Mexico, he found inspiration for the invention of a very low-cost asthma inhaler spacer, an apparatus that attaches to the medicine canister and enables young children to take the medicine. He named the apparatus “Respira!,” Spanish for “Breathe!” He explains the motivation behind Respira!:

 

“This project began with a trip to the Higueras Health Center in Nuevo Leon, Mexico. There I met Jose Antonio, a young physician working and living in this center. He told me the story of Jesus, a child arriving with his mother in the middle of the night and gasping for breath [from an asthma attack]. Jose Antonio knew the right treatment immediately but had no way to deliver it. Although he had a refurbished nebulizer sitting in the corner of the room, it had not worked for years.

He then took me to a side room with a humidifier and explained how he desperately tried to get medication to Jesus’ lungs by pouring it into the humidifier, closing the door and hoping. It was the combination of his own feeling of frustration, the powerlessness and anxiety of the child’s mother, and the suffering and fear of the child that compelled me to address this need [for more affordable asthma treatment]” (excerpt from Respira’s Changemakers Competition entry, written by Eric Green).

Respira! is one of ten finalists in the Changemakers Disruptive Innovations in Health Competition and is in the running for a $5000 prize. Below are notes from my recent conversation with Eric.

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Note: We were notified that the version of the case study, What Works: Scojo India Foundation, released on 6/20/07 was found to have citation errors. The case study has since undergone revision and is now again available for downloading. The version available here is the authoritative final release of the case.

We're very excited to announce the release of a new, full-length case study, What Works: Scojo India Foundation.

We've often discussed on NextBillion the innovative work of Scojo Foundation, a non-profit operating networks of "Vision Entrepreneurs" who are selling reading glasses directly to rural, low-income communities worldwide.

The case study, authored by Sachin Kadakia ('07) and Nico Clemmink ('08) of Columbia Business School, provides in-depth analysis of Scojo India Foundation's business environment, operations, and best practices.

Scojo India Foundation began operations in 2003 and has recruited over 400 entrepreneurs, who have sold more than 50,000 pairs of glasses. The case study details the partner networks and business strategies that have enabled Scojo's success, as well as the challenges and growth opportunities that remain.

This case study was made possible through the support of the Horace W. Goldsmith Foundation and Social Enterprise Program at Columbia Business School.

Read the full case study.

I'm happy to introduce our newest staff writer, Ana Escalante, to the NextBillion community.

Ana has joined our team as a summer intern.  She has a long-held interest in international development, having observed first hand the effects of poverty and inequality in her community in Mexico.  During her time as an undergraduate, she spent six months at the Commission of Natural Protected Areas in the Yucatan, Mexico, where she helped to manage and implement a small-scale microfinance development project in the Celestun National Reserve.  The project trained local women in the sustainable harvest of blue crabs and provided them with the skills and training to handle the export of this product.

Immediately prior to joining WRI, Ana completed a four month internship at the Amy Biehl Foundation in Cape Town, South Africa.

She is a recent graduate of University of the Americas in Puebla, Mexico, and holds a BA in International Relations.

Ashoka's Changemakers competition, "Disruptive Innovations in Health and Health Care" closed today, and it looks to be a treasure trove of business model innovations that are bringing health solutions to the BOP. There are entries from microinsurance, franchising, direct selling, telemedicine, and biotechnology projects, among many other project types. Projects focused on improving healthcare in the US are interspersed with those that focus on healthcare for the BOP, raising interesting possibilities of North-South knowledge sharing.

A number of the business models have been mentioned on NextBillion in the past--e.g., Living Goods, Abhay Clinics, Medicine Shoppe India--and their competition entries provide tantalizing details on their operations and financials. Three entrants, Mi Farmacita, Scojo Foundation, and CFWshops Kenya, have been the subjects of our full-length What Works case studies. There are also several projects that have not been explored on NextBillion, such as Freedom From Hunger's MicroBusiness for Health, and MicroClinic in Ghana, among many promising others.

And the fun doesn't stop there. We can participate by giving feedback to entrants and voting on who gets the competition money. Judges will choose 12 finalists from the 300-odd entries. From there, public voting will determine the three winners who will each receive $5000 in prize money. Voting is open from August 15-August 28.

I'm very happy to announce the release of the WRI business case study, What Works: Mi Farmacita Nacional, authored by Enrique Coronado ('08), Christina Krettecos ('07), and Yvonne Lu ('07) of Columbia Business School.

Mi Farmacita Nacional, a fully for-profit pharmacy franchise, is among the first retailers of generic medications to serve low-income communities in Mexico. Mi Farmacita was launched in 2003 and has since more than doubled its number of outlets every year to reach 57 outlets as of March 2007. Outlets in operation for a minimum of 22 months are now processing an average of 2,400 transactions/month in sales of affordable medications, doctor consultations, filtered water, telephone access, and other essential products and services.

What Works: Mi Farmacita Nacional analyzes the business strategies that have enabled Mi Farmacita's rapid growth and success in serving low-income communities.

This case study was made possible through the generous support of the Horace W. Goldsmith Foundation and Social Enterprise Program at Columbia Business School.

Abhay Clinics in India reaches BOP markets through a business model not yet discussed on NextBillion--product franchising. Whereas business franchisors provide franchisees with a complete business format--from administrative processes to branding and products--manufacturers that run product franchises license existing retailers to sell products under a franchise brand.

Since product franchising is a way for manufacturers to distribute their products through existing channels, it's of course most appropriate in markets with existing retailers able to incorporate a given product into their offerings. Product franchising is compelling as a less intensive undertaking than business franchising, but may not work as a strategy for reaching rural communities that don't have sufficient commercial infrastructure. That said, there is plenty of demand among existing retailers for new products to offer their customers.

The following is a brief profile of Abhay Clinics, unique among the franchises we've discussed on NextBillion as having been able to reach profitability in only 3 years of operation.

 

Read more.

I had the good fortune to attend the conference "Mobilizing the Private Sector for Global Health Development," organized by the McLaughlin-Rotman Centre, Program on Life Sciences and Global Health at the University of Toronto, from May 2-4.

The food was really good. The conference was a seamless execution of mass organization. And, even though the majority of attendees were from biotech and pharma R&D companies, many speakers addressed questions that are central to health discussions on NextBillion.

Multiple components of healthy living; Return on Effort (ROE)

Professor CK Prahalad opened the event as keynote speaker and presented a schema of the several resources that must be available for people to enjoy good health:

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Cheikh Mbengue, an expert from Abt Associates on community-based health insurance (CBHI) schemes in Africa, said something that perked my ears last Wednesday at a USAID After Hours Seminar on microinsurance. He said that he thinks CBHIs can't function effectively without subsidies. No one has really talked about subsidies in the BOP space. The message is always, "get prices down low enough, quality up high enough, distribution wide enough, and you've got a market at the BOP."

In some instances, especially in fields with higher R&D, manufacturing, management, and labor costs like healthcare, extending the necessary suite of services to lower-income BOP may require government involvement, possibly with donor backing, in addition to entrepreneurialism, innovation, and investment.

Mbengue began the discussion by giving a brief history of CBHIs in Africa. In the 1990s, governments built up their health infrastructure, but facilities stood empty because people were too poor to pay for services. So individual communities resorted to creating their own insurance schemes, taking care of collection, management and disbursement on the community level. In 11 West and Central Africa countries, there were 76 schemes in 1999. By 2003, the total jumped to 366 schemes. Rwanda has been most successful in scaling insurance to the national level, and had 228 CHBIs by 2004 covering approximately 20% of the population.

Full story.

We've all heard of the dire situations: "Every x seconds, y children/women/people die of z disease around the world."  For many years, health crises--HIV/AIDs, malaria, diarrheal diseases, etc.--have been a prominent focal point for the efforts of the development community.  Only recently, however, have people begun to consider private sector strategies for helping to stymie the overwhelming need for more adequate healthcare delivery to the BOP, often considered the province of governments and aid.  But there IS some willingness and ability to pay among the BOP for healthcare.

This idea isn't so monstrous when one considers that the BOP already must spend for healthcare and that often, available options are of poor quality and costly to access, especially for rural dwellers.  The size of the BOP health market worldwide is estimated to be at least $158.4 billion.  How could the private sector provide high-quality, accessible, affordable treatment and medication to this market?

On NextBillion, we have already discussed the ability of microfranchise models, such as CFWshops Kenya (affiliated with Healthstore), Mi Farmacita, and Janani, to overcome many of the challenges of operating in BOP markets.

The data in The Next 4 Billion suggest that there is a ready market for such private sector interventions.  Pharmaceutical spending comprises the bulk of BOP health spending.  In the report's 34 measured health markets, pharmaceutical purchases tally up to $56.7 billion, well over half of all measured health spending.

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A poised, articulate individual, Liza Kimbo, Director of CFWshops Kenya, seemed just like the kind of person who could lead a successful BOP enterprise. Before the holidays, Liza delivered a presentation about her organization at a brownbag hosted by the Grassroots Business Initiative at the International Finance Corporation, a sponsor of CFWshops. Tough questions, from CFWshops' relationship with the Kenyan government, to whether CFWshops really serves the BOP, were asked by audience members and given full answers by Liza (the following is not a verbatim account):

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Ah, the Tech Museum Awards. It was a night when large tech companies and foundations joined together to support the work of smaller humanitarian tech innovators.

Last Wednesday, Intel, Accenture, Microsoft, Agilent, and the Swanson Foundation recognized the work of 25 organizations through the annual Tech Museum Awards, organized by the Tech Museum of Innovation in San Jose, CA. Each of the Award Laureates have invented new technologies and applications to deal with issues from clean water to special education, to the ergonomics of traditional backstrap weaving. Bill Gates was also on hand to receive the Global Humanitarian Award for the work he has done through the Gates Foundation.

The 2007 Social Capitalist Award winners were announced this morning by Fast Company business magazine and the Monitor Group. The Award recognizes non-profits that are generating both financial profit and social benefit. Winners that have a particularly strong emphasis on serving low-income markets include:

ACCION International--Trains banks on how to offer microfinance services, including insurance and savings (four-time winner: 2004, 2005, 2006, 2007)

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