{"id":24706,"date":"2017-11-15T19:03:26","date_gmt":"2017-11-16T00:03:26","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/unlocking-access-to-medicine-in-developing-countries-through-digitization\/"},"modified":"2017-11-15T19:03:26","modified_gmt":"2017-11-16T00:03:26","slug":"unlocking-access-to-medicine-in-developing-countries-through-digitization","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/unlocking-access-to-medicine-in-developing-countries-through-digitization\/","title":{"rendered":"Unlocking access to medicine in developing countries through digitization"},"content":{"rendered":"<h4><strong><b>The next frontier in pharma: Chronic diseases in developing countries<\/b><\/strong><\/h4>\n<p>Three major mid-term shifts urge Novartis to fundamentally rethink its distribution systems:<\/p>\n<ul>\n<li><strong><em><b><i>Growth in developing countries:<\/i><\/b><\/em><\/strong> Healthcare expenditure in developing countries have increased 13.2% annually between 2004 and 2014, compared to 3.5% in developed countries [1]. Developing countries will contribute 35% to global healthcare spending by 2025, up from 15% in 2005 [2].<\/li>\n<li><strong><em><b><i>Rise of the \u201cnext pandemic\u201d [3]: chronic diseases:<\/i><\/b><\/em><\/strong> Driven by urbanization and changing lifestyle habits, chronic diseases such as diabetes or heart illnesses now represent up to half the disease burden in developing countries [4].<\/li>\n<li><strong><em><b><i>Uptake in mobile penetration:<\/i><\/b><\/em><\/strong> 4G coverage will reach 70% of the population in developing countries by 2020 [5], while mobile service subscriber penetration will reach 50-75% by 2020 [6].<\/li>\n<\/ul>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Shifts-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-24886\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Shifts-1.jpg\" alt=\"\" width=\"1403\" height=\"925\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Shifts-1.jpg 1403w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Shifts-1-300x198.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Shifts-1-768x506.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Shifts-1-1024x675.jpg 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Shifts-1-600x396.jpg 600w\" sizes=\"auto, (max-width: 1403px) 100vw, 1403px\" \/><\/a><\/p>\n<p>The confluence of these developments opens unique opportunities for Novartis. Even though emerging markets contributed 25% to sales in 2016 [7], Novartis is struggling to gain traction in chronic diseases. Initiatives such as Novartis\u2019 <em><i>Access program<\/i><\/em> are very limited in reach [8]. Unlike disaster relief efforts concerning communicable illnesses (e.g., HIV, Malaria), chronic diseases require scalable long-term distribution systems. Why does Novartis hesitate to build distribution models in geographies that bear 80% of today\u2019s deaths in chronic diseases [9]?<\/p>\n<h4><strong><b>A digital silver bullet to crack market access?<\/b><\/strong><\/h4>\n<p>Developing countries pose substantial access barriers in awareness, affordability and availability [10,11]. Various hurdles undermine efforts to improve availability through distribution systems:<\/p>\n<ul>\n<li><strong><em><b><i>Permanent threat of substandard (counterfeit) drugs<\/i><\/b><\/em><\/strong><strong><b>:<\/b><\/strong> Up to 30% of medicines in Asia, Africa, and Latin America [12] are substandard, reaching 64% for certain medicines [13].<\/li>\n<li><strong><em><b><i>Limited stock visibility:<\/i><\/b><\/em><\/strong> Novartis has little information on the stock levels along the distribution chain, resulting in stock-outs or waste.<\/li>\n<li><strong><em><b><i>Uncontrollable mark-ups:<\/i><\/b><\/em><\/strong> Erratic margins in fragmented distribution chains can quadruple end-customer prices compared to manufacturing selling prices in countries such as Kenya [14].<\/li>\n<li><strong><em><b><i>Inadequate disease information: <\/i><\/b><\/em><\/strong>Drugs are not ordered because patients and health-care professionals are unaware of treatment needs and options.<\/li>\n<\/ul>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Counterfeit-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-24843\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Counterfeit-1.jpg\" alt=\"\" width=\"1853\" height=\"459\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Counterfeit-1.jpg 1853w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Counterfeit-1-300x74.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Counterfeit-1-768x190.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Counterfeit-1-1024x254.jpg 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Counterfeit-1-600x149.jpg 600w\" sizes=\"auto, (max-width: 1853px) 100vw, 1853px\" \/><\/a><\/p>\n<p>Overcoming these hurdles requires better data flow along the supply chain in developing countries. Hence, how is Novartis leveraging the mentioned surge in mobile communication technology [15]?<\/p>\n<h4><strong><b>Cutting-edge in developed markets, but barely scratched the surface in developing markets<\/b><\/strong><\/h4>\n<p>Novartis\u2019 outgoing CEO Joseph Jimenez recently appointed a Chief Digital Officer [16] and embraced digitization as a top priority [17] through various initiatives:<\/p>\n<ul>\n<li><strong><em><b><i>Analytics:<\/i><\/b><\/em><\/strong> Cooperation with <em><i>IBM Watson Health<\/i><\/em> blending disease knowledge, data analytics, and machine learning to individualize treatment for breast cancer patients [18]<\/li>\n<li><strong><em><b><i>Connected solutions:<\/i><\/b><\/em><\/strong> Cooperation with <em><i>Qualcomm<\/i><\/em> to develop a wireless enabled inhaler device (\u201cBreezhaler\u201d) supporting disease management in respiratory conditions [19,20]<\/li>\n<li><strong><em><b><i>Smart devices:<\/i><\/b><\/em><\/strong> Audacious long-term bet with <em><i>Google Health<\/i><\/em> to commercialize smart contact lenses with auto-focus capability and blood glucose measurement [21,22]<\/li>\n<li><strong><em><b><i>Data transparency:<\/i><\/b><\/em><\/strong> Public-private partnership program \u201cSMS for Life\u201d providing Sub-Saharan healthcare facilities with smart phone applications to monitor and manage stock levels [23,24]<\/li>\n<li><strong><em><b><i>Data sharing:<\/i><\/b><\/em><\/strong> Multisector collaboration with <em><i>Intel<\/i><\/em> (\u201cBetter Hearts Better Cities\u201d) for cardiovascular disease prevention\/management in low-income urban communities [25]<\/li>\n<\/ul>\n<p>Only the last two initiatives could potentially alleviate distribution challenges. A technology leader in developed markets, Novartis has shown little appetite to drive digitization in developing markets.<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/SMS-for-life-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-24853\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/SMS-for-life-1.jpg\" alt=\"\" width=\"1876\" height=\"594\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/SMS-for-life-1.jpg 1876w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/SMS-for-life-1-300x95.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/SMS-for-life-1-768x243.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/SMS-for-life-1-1024x324.jpg 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/SMS-for-life-1-600x190.jpg 600w\" sizes=\"auto, (max-width: 1876px) 100vw, 1876px\" \/><\/a><\/p>\n<h4><strong><b>Digitization \u2013 more than a silver lining<\/b><\/strong><\/h4>\n<p>In light of the far-reaching implications of digital technologies on fragmented distribution systems, Novartis should fundamentally rethink the downstream supply chain in developing markets:<\/p>\n<ul>\n<li><strong><em><b><i>Verifying authenticity of medicines to fight substandard drugs:<\/i><\/b><\/em><\/strong> Radio-frequency identification (RFID), Quick Response (QR) codes and blockchain technology reduce the risk of counterfeit drugs [26,27,28]. Drug integrity is confirmed through the manufacturer, or through a trusted blockchain network along the supply chain that allows patients to verify medicines with an app [29,30].<\/li>\n<li><strong><em><b><i>Creating inventory transparency to increase stock visibility:<\/i><\/b><\/em><\/strong> Implementing a digital end-to-end supply management and inventory tracking system empowers members throughout the drug stock chain to report stock levels and react to system-generated reminders. A stock visibility solution developed by Vodacom South Africa has reduced stock-outs by up to 66% [31].<\/li>\n<li><strong><em><b><i>Lowering price levels to address uncontrollable mark-ups:<\/i><\/b><\/em><\/strong> Verification technologies at the point-of-sales drive affordability. Subsidies or reimbursements can be directly linked to the end-customer price, which reduces incentives for drug retailers to overcharge patients.<\/li>\n<li><strong><em><b><i>Facilitating information flow to create a downstream pull:<\/i><\/b><\/em><\/strong> Mobile health (mHealth) apps support health-care professionals and patients in better understanding treatment needs and \u201cpulling\u201d the most effective medicines from the upstream supply chain partners.<\/li>\n<\/ul>\n<h4><strong><b>Unleashing the full power of integrated distribution networks<\/b><\/strong><\/h4>\n<p>Digitized distribution systems are necessary, but not sufficient to increase patient access. Novartis needs to build a digital ecosystem that integrates innovative payment schemes (e.g., micro-payment\/insurance) and remote diagnostics, monitoring and compliance solutions. In addition, successful implementation requires well-balanced multisector collaboration networks [32]. Despite these complexities, it is high time for Novartis to expand its digital leadership into developing markets.<\/p>\n<p>(798 words)<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>_______________________<\/p>\n<h3><strong><b>References<\/b><\/strong><\/h3>\n<p>[1] GSMA Intelligence, \u201cScaling digital health in developing markets. Opportunities and recommendations for mobile operators and other stakeholders,\u201d June 2017, p. 9.<\/p>\n<p>[2] PwC, \u201cDigital health in emerging markets. The Digital Healthcare Leap,\u201d February 2017, p. 3.<\/p>\n<p>[3] The Economist Intelligence Unit, \u201cThe Next Pandemic? Non-communicable diseases in developing countries,\u201d January 2017, p. 0.<\/p>\n<p>[4] Ibid., p. 3.<\/p>\n<p>[5] GSMA Intelligence, <em><i>The Mobile Economy<\/i><\/em> (London: GSMA Intelligence, 2017), p. 15.<\/p>\n<p>[6] Ibid., p. 12.<\/p>\n<p>[7] Novartis, Q4 and FY 2016 Condensed Financial Report \u2013 Supplementary Data (January 2017), p. 72.<\/p>\n<p>[8] Novartis, <em><i>Novartis Access 2016 one-year report. Capturing first insights<\/i><\/em> (Basel: Novartis Social Business, 2017).<\/p>\n<p>[9] World Health Organization, \u201cNoncommunicable diseases Fact sheet,\u201d June 2017, <a href=\"http:\/\/www.who.int\/mediacentre\/factsheets\/fs355\/en\/\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[10] Gill Samuels, \u201cAvailability, Accessibility and Affordability, The challenge of diseases of poverty,\u201d 2005, <a href=\"http:\/\/www.who.int\/intellectualproperty\/events\/OpenForumGillSamuels.pdf?ua=1\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[11] Anthony Morton-Small, Derek Dieu, <em><i>Understanding the paradox of Asia\u2019s pharma market to ensure success, Awareness, Access &amp; Affordability Framework<\/i><\/em>, 2012, p. 3.<\/p>\n<p>[12] International Medical Products Anti-Counterfeiting Taskforce (IMPACT), \u201cCounterfeit Medicines: an update on estimates\u201d, November 2006, p. 1, <a href=\"http:\/\/www.who.int\/medicines\/services\/counterfeit\/impact\/TheNewEstimatesCounterfeit.pdf\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[13]<em><i> \u201c<\/i><\/em>Fake pharmaceuticals: bad medicine,\u201d <em><i>The Economist, <\/i><\/em>October 13, 2012, <a href=\"http:\/\/www.economist.com\/node\/21564546\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[14] IMS Institute for Healthcare Informatics, <em><i>Understanding the pharmaceutical value chain <\/i><\/em>(Parsippany, NJ: November 2014), p. 8.<\/p>\n<p>[15] Pew Research Center, \u201cSmartphone Ownership and Internet Usage Continues to Climb in Emerging Economies,\u201d February 2016, <a href=\"http:\/\/www.pewglobal.org\/2016\/02\/22\/smartphone-ownership-and-internet-usage-continues-to-climb-in-emerging-economies\/\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[16] \u201cNovartis appoints Bertrand Bodson as Chief Digital Officer,\u201d press release, August 24, 2017, on Novartis website, <a href=\"https:\/\/www.novartis.com\/news\/media-releases\/novartis-appoints-bertrand-bodson-chief-digital-officer\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[17] Joseph Jimenez, interview by McKinsey &amp; Company, \u201cNovartis on digitizing medicine in an aging world,\u201d June 2015, <a href=\"https:\/\/www.mckinsey.com\/global-themes\/leadership\/novartis-on-digitizing-medicine-in-an-aging-world\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[18] \u201cNovartis announces ground-breaking collaboration with IBM Watson Health on outcomes-based care in advanced breast cancer,\u201d press release, June 5, 2017, on Novartis website, <a href=\"https:\/\/www.novartis.com\/news\/media-releases\/novartis-announces-ground-breaking-collaboration-ibm-watson-health-outcomes\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[19] \u201cNovartis Pharmaceuticals collaborates with Qualcomm in digital innovation with the Breezhaler(TM) inhaler device to treat COPD,\u201d press release, January 5, 2016, on Novartis website, <a href=\"https:\/\/www.novartis.com\/news\/media-releases\/novartis-pharmaceuticals-collaborates-qualcomm-digital-innovation-breezhalertm\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[20] Sarah Neville, \u201cDigital disrupters take big pharma \u2018beyond the pill\u2019,\u201d <em><i>Financial Times, <\/i><\/em>April 24, 2017, <a href=\"https:\/\/www.ft.com\/content\/d7a60642-0361-11e7-ace0-1ce02ef0def9\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[21] \u201cNovartis backs off from 2016 date for testing Google autofocus lens,\u201d Reuters #Business News, November 18, 2016, <a href=\"http:\/\/www.reuters.com\/article\/us-novartis-google-lens\/novartis-backs-off-from-2016-date-for-testing-google-autofocus-lens-idUSKBN13D246\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[22] Nick Paul Taylor, \u201cNovartis chairman: Google smart lens is a high-risk project,\u201d FierceBiotech<em><i>,<\/i><\/em> March 2, 2017, <a href=\"http:\/\/www.fiercebiotech.com\/r-d\/novartis-chairman-google-smart-lens-a-high-risk-project\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[23] \u201cNovartis launches SMS for Life 2.0 in Nigeria to help improve access to essential medicines,\u201d press release, December 12, 2016, on Novartis website, <a href=\"https:\/\/www.novartis.com\/news\/media-releases\/novartis-launches-sms-life-20-nigeria-help-improve-access-essential-medicines\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[24] \u201cSMS for Life uses mobile and digital technology to increase quality of care in developing countries\u201d, Novartis Social Business SMS for Life Fact Sheet (April 2017), <a href=\"https:\/\/www.novartis.com\/sites\/www.novartis.com\/files\/factsheet-sms-for-life.pdf\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[25] \u201cNovartis Foundation and partners launch initiative to tackle hypertension and its root causes in low-income urban communities,\u201d press release, May 17, 2017, on Novartis website, <a href=\"https:\/\/www.novartis.com\/news\/media-releases\/novartis-foundation-and-partners-launch-initiative-tackle-hypertension-and-its\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[26] Don Gunasekera, \u201cCounterfeit drugs: Fight fake reagents with digital tools\u201d, <em><i>Nature 546 <\/i><\/em>(2017): 474.<\/p>\n<p>[27] Guillaume Chapron, \u201cThe environment needs cryptogovernance\u201d, <em><i>Nature 545 <\/i><\/em>(2017): 403-405.<\/p>\n<p>[28] Jennifer Kite-Powell, \u201cPharmaSecure Uses Mobile Device And ID Codes To Take On Counterfeit Drug Problem\u201d, <em><i>Forbes, <\/i><\/em>February 16, 2012, <a href=\"https:\/\/www.forbes.com\/sites\/jenniferhicks\/2012\/02\/16\/pharmasecure-uses-mobile-device-and-id-codes-to-take-on-counterfeit-drug-problem\/#19ac0dac47e3\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[29] Chris Lo, \u201cBlockchain in pharma: opportunities in the supply chain\u201d, Pharmaceutical Technology (October 31, 2017), <a href=\"http:\/\/www.pharmaceutical-technology.com\/features\/blockchain-pharma-opportunities-supply-chain\/\">[URL]<\/a>, accessed November 2017.<\/p>\n<p>[30] Manuela M. Sch\u00f6ner, Dimitris Kourouklis, Philipp Sandner, Erick Gonzalez, Jonas F\u00f6rster, \u201cBlockchain Technology in the Pharmaceutical Industry\u201d, <em><i>Frankfurt School Blockchain Center Working Paper <\/i><\/em>(Frankfurt am Main: July 2017).<\/p>\n<p>[31] GSMA Intelligence, \u201cScaling digital health in developing markets. Opportunities and recommendations for mobile operators and other stakeholders,\u201d June 2017, p. 32 &amp; 63-66.<\/p>\n<p>[32] Ibid., p. 22.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Novartis is a digital pioneer in developed countries, but has struggled to increase patient access in developing countries. How can Novartis use digital technologies as a catalyst to redesign fragmented distribution systems?<\/p>\n","protected":false},"author":10075,"featured_media":24807,"comment_status":"open","ping_status":"closed","template":"","categories":[2608,3895,3439,3627,704,2358,2029,3853,3658,874,3896,2248,2118],"class_list":["post-24706","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-blockchain","category-chronic-diseases","category-counterfeit-drugs","category-developing-countries","category-developing-economies","category-digital-distribution","category-digitization","category-digitization-of-supply-chain","category-distribution-network","category-emerging-markets","category-non-communicable-diseases","category-novartis","category-rfid","hck-taxonomy-organization-novartis","hck-taxonomy-industry-pharmaceutical","hck-taxonomy-country-switzerland"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Unlocking access to medicine in developing countries through digitization - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/unlocking-access-to-medicine-in-developing-countries-through-digitization\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Unlocking access to medicine in developing countries through digitization - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Novartis is a digital pioneer in developed countries, but has struggled to increase patient access in developing countries. 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