From extractive companies, to financial service firms, multinationals, to small social enterprises, Business Fights Poverty’s blogs capture the trend in how business and the social sector are redefining their relationships to tackle tough social problems.
Curiously, multinational pharmaceutical and medical device companies are absent from much of the conversation. Yet, it is difficult to find such inherent creators of shared value, as these companies develop and market life-saving and life-enhancing products and services. There’s lots of history to explain why we don’t look at these companies at the vanguard of fighting poverty but times are changing, finally, and in a big way. In the past, many of these companies have not aimed innovations to create value for the poor. Fortunately, multinational companies are slowly but surely moving away from the past practices of addressing patients in low-and middle-income countries through donations and corporate social responsibility to treating the poor as customers. We’re seeing major innovations in how companies such as Novo Nordisk, GlaxoSmithKline, Novartis, and others are changing their business practices to serve these new customers.
FSG sought to capture this trend and better understand how companies are doing it. We recently released the findings in our report “Competing by Saving Lives: How Pharmaceutical and Medical Device Companies Create Shared Value in Global Health” that is based on over 70 interviews with corporate executives and leaders in global health. You can learn more about the report in the following blog post.
Here, we’d like to highlight the five key implementation principles to provide insight into how companies are moving away from the days of the past to embrace shared value for the future:
1. Focused and determined leadership at the CEO and country levels
Strong leadership was mentioned as a key success factor by almost every company. GlaxoSmithKline’s CEO, Sir Andrew Witty, set a corporate strategy to move beyond “white pills in Western markets” and was closely involved in the creation of their Developing Countries and Market Access Group – a business unit specifically tasked with serving developing countries. In addition, strong leadership within country affiliates and business units are essential since this is where shared value actually gets created.
2. A culture of innovation and learning reflected in structures and incentives
Without a culture that embraces entrepreneurial risk-taking, learning, and innovation, companies may miss opportunities to reach underserved populations. Companies are either creating cross-functional teams that coordinate across the company or separate innovation units that directly manage shared value initiatives. We’re seeing new business units such as GE healthymagination, Novartis’ Social Business Group, and Becton, Dickinson and Company’s Global Health group.
3. New approaches to measurement that track the link between business value and patient lives improved
Companies are beginning to capture the link between improved health outcomes for patients and economic benefits. Novo Nordisk calculates the net present value for their business, and for Chinese society for better disease management in diabetic patients. The company ties together the economic benefit of improved patient treatment with the direct business benefit of increased treatment sales.
4. New skills in identifying and acting on unmet health needs
Companies are changing whom they hire to meet the needs of the underserved in low- and middle-income markets. To implement shared value strategies, there is an emphasis on hybrid backgrounds and skills. Companies are hiring from non-traditional backgrounds and using leadership-development programs to get employees to think creatively about strategic problems associated with low- and middle-income countries.
5. New partnerships for shared value insights and implementation
A host of new partners that bring information and help to deliver products or build missing health care infrastructure are becoming more important for pharmaceutical and medical device companies. An interesting shift is happening where NGOs, once viewed as grantees, are becoming business partners in places where these companies lack consumer understanding, networks, and government relationships.
In March, FSG hosted a launch event where company executives talked about the challenges in making these five implementation principles come to life. See herefor key takeaways from the discussions. The companies recognize that there’s much to learn from each other to reach the underserved.