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Thursday, December 13, 2012

Coke is Everywhere: Why Aren't Medicines?

By Prashant Yadav

A Coca-Cola distributor. (Image courtesy of Cola Life)

Over the last six to seven years, in almost every meeting related to access to medicines that I have participated in, someone has asked the following question:

Why does Coca-Cola get to the remotest parts of the world, but essential medicines remain out of reach for many?

It draws very varied and interesting responses from people. Those who work only on access to medicines feel that making the comparison itself is absurd. Those who work with consumer product companies feel it is this “closed” attitude of the medicine supply chain experts that does not allow cross-sectoral learning.

So a few years ago, together with two colleagues at INSEAD, I set on the task of deciphering this question, hoping to find answers that could help make this debate more constructive. We met several people, interviewed both medicine and Coca-Cola supply chain experts, and talked to some social entrepreneurs.

Coke's "Secret Formula"

We found that Coca-Cola’s system of production and distribution is built very strongly around information and incentives. The medicine supply chain system, on the other hand, is built around normative guidance and regulation.

Yes, medicines need regulatory oversight much more than Coca-Cola. And the retail points where medicines are stocked and sold perhaps cannot be as widespread as those of Coke. But the more important learning is that the Coca-Cola system thrives on small, empowered, entrepreneurial units working together on a centrally developed “drum-beat” to make the complex process of delivery work smoothly. The medicine supply chains, on the other hand, work with a top-down institutional mindset which in some cases hinders innovation. The primary reason for this is the greater need for control and oversight in medicine distribution, due to the higher safety risks involved.

Health care service provision in the developing world has seen remarkable benefits from social innovation in the last decade. LifeSpring hospitals can deliver babies at a fraction of the cost, with higher quality. Aravind, the pioneer in low-cost high-volume business models, accomplishes the same with eye and cataract surgery. MedicallHome, the Saúde 10 clinics in Brazil, HMRI, MeraDoctor: the examples of social businesses that have made affordable health care possible for the bottom 4 billion are numerous.

However, there are very few examples of social enterprises focused on improving access to medicines. And the few that exist often depend on support from large global donors.

Looking forward

For essential medicine supply chains to be effective and efficient we need social innovation at a scale similar to that in health care service provision.  

This requires two things:

First, those who are at the helm of affairs for medicine supply chains, both nationally and globally, need to embrace or rekindle the culture of social innovation. This requires them to have greater confidence that the culture of innovation, experimentation, and social enterprise does not necessarily conflict with ensuring oversight and regulatory control.

There are reasons for optimism that this is beginning to happen. Last week in Maputo, Mozambique I met with a team from the Clinton Health Access Initiative that is working with Coca-Cola and the government of Mozambique to bring Coke's expertise in distribution planning into the country's public medicine distribution system. Later in the week, in Dar e Salaam, Tanzania, I met with a team from Accenture Development Partnership that is working with the Tanzanian medicine distribution system. They are collaborating with Coca-Cola to incorporate Coke-like performance management, monitoring and evaluation, and planning methods into the government's medicine supply chain. 

Second, social entrepreneurs have to spend time thinking carefully about the unique needs of delivering medicines, and not assume they are the same as Coca-Cola. They have to incorporate the role of regulatory oversight and greater control in their business models.

The race is on to see which social entrepreneur will become the Aravind of medicine delivery.

To read more on the similarities and differences between Coca-Cola and essential medicine supply chains, please read my article in the Stanford Social Innovation Review

 

Prashant Yadav is a senior research fellow at the William Davidson Institute (WDI) and director of the Health Care Research Initiative at WDI.

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