News & Insights
Delivering Essential Medicines to the Rural Poor, Sustainably
by Agnes Cho, program associate, Global Partnerships
Recently, Global Partnerships and Linked Foundation held a rural pharmacies workshop and gathered together various organizations that have been providing essential medicines to rural communities through a market-based model. With the support of the Inter-American Development Bank (IDB), we spent two days in Antigua, Guatemala with seven organizations from four countries:
- Fonkoze, Haiti
- Mercy Corps, Guatemala
- CDRO, Guatemala
- FUNDAP, Guatemala
- ASECSA, Guatemala
- FUDEIMFA, Honduras (a current partner in GP's Health Services Initiative and featured in GP's most recent case study)
- Farmacias Similares, Mexico
In Latin America and the Caribbean, BoP (base of the pyramid, i.e. the poorest of the poor) households spend more than $12.9 billion per year on medication (GIZ). But rural communities find themselves with limited access to affordable, quality medicines due to high prices and the challenges presented by the state of local, national and regional infrastructure. All the organizations that participated in the workshop are directly tackling this issue and implementing sustainable business models that provide essential medicines in areas with the greatest need.
In the workshop, it was clear that the organizations were eager to learn from one another. Each had a collection of experiences and insights about the details and challenges they face in running a sustainable social enterprise. Though there was an agenda to discuss central themes, such as sustainability, scale and monitoring & evaluation, the energy from the participants was the most palpable during time set aside for them to discuss amongst themselves. These conversations ranged from legal regulations to employee incentive structures, from incorporating technology for more efficient data collection to finding more efficient transportation routes. Over the course of the two-day workshop, the participants not only discussed what they were doing to more effectively and efficiently sell medicines, but also how they were doing it.
This workshop was also an opportunity for Global Partnerships and Linked Foundation to learn more about the impact investing landscape of rural pharmacies in Latin America and the Caribbean. By sitting back and learning from the rural pharmacy experts—the organizations themselves—we took away the following insights:
- The rural pharmacy space presents a market opportunity for a variety of organizations.
- There are NGOs, MFIs and pharmaceutical companies all working toward the common goal of improving access to essential medicines in rural areas. Each type of organization has its own strengths and challenges. For example, NGOs may have more robust training programs for their community pharmacists, but commercial pharmaceutical chains may have an earlier grasp of the communities and local distributors most likely to achieve sustainability. However, they tend not to work in the smallest, most rural communities where the population truly has no other access to essential medicines.
- Organizations interested in building rural pharmacy models need to have a solid understanding of the unit economics necessary to achieving true sustainability.
- Rural pharmacy programs can benefit from the basic principles involved in running a successful franchise (ICSF is one resource for this) to strategically scale their business models. One learning from social franchising that applies to rural pharmacy programs is the importance of having a clear understanding of the business' real costs and revenue, generated by each point of sale, in order to build out and scale up a network of sustainable pharmacies.
- Once the right "formula" for sustainability is found—and some have found it—these organizations will be investable for mission-focused impact investors like GP.
- For many rural pharmacy programs, donations are sometimes necessary to support innovation and non-financial services for their distributors. However, all organizations attending the workshop recognized the ultimate goal is to reduce dependence on donations. Rural pharmacy models generally have to reach a certain level of scale before they can generate enough revenue to cover their operational and administrative costs. Once they have achieved that level of scale and proven its sustainability, impact investors, like GP, can provide capital to support their expansion.
Ultimately, we hope to help create a flourishing network of rural pharmacy programs that are sustainably working toward improving access to life-saving medicines in poor rural communities. The first step is to forge connections and facilitate communication between the organizations that are already tackling this challenge. Events like this rural pharmacies workshop, where organizations can come together to share learnings and discuss developing best practices, are invaluable to reaching this goal.
Blog Tags: community pharmacies Guatemala Haiti health services Honduras impact last mile distribution Latin America poverty rural health rural pharmacies social impact sustainability sustainable business models sustainable health women's health