Pyramid Thinking

Perhaps the most significant business book written over the last decade is The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits.  This book, written by the late C.K. Prahalad, discussed the rise of those at the lowest end the financial “pyramid” and how companies, if they “started with a blank sheet of paper,” might be able to use capitalism for the benefit of all.  The corporate dreamers aggressively began to pursue the opportunities discussed in the book with a wide variety of successes seen over the last decade.  Just last week, despite the worldwide economic problems, the UN announced that the number of those living in extreme poverty had been cut in half which  resulted in the achievement of the first Millennium Development Goal.  Yes, there has been significant progress in the world’s economy.

So what type of things did this work entail?  Companies began selling single use shampoos and small soaps.  Agriculture companies began product development work to help with the specific needs of those living in poverty.  Cell phone companies have had considerable success around the world and those selling minutes for cell phones have developed lucrative businesses.  There are so many more intriguing wins and if you read the book these ideas will start your creative juices flowing, and quite frankly, it may be tough to stop thinking about the ingenuity.

Our industry has embraced this opportunity, just like everyone else.  Pick up almost every annual report from last year and notice that everyone is trying to offset the issues in Europe and the US by taking advantage of the business opportunities in the emerging markets.  Companies are buying generic companies, setting up new divisions and hiring sales representatives in the emerging markets where people are escaping from the bottom of the pyramid.  These are exciting times, where there seems to be so many different ways to approach and win in these “young” markets.

Ok, enough about the rest of the world.  What concerns me, is why haven’t we seen a similar effort in the US?  Branded pharmaceutical companies seem to have no answer to the rapidly declining share of business they now have in the US.  The well documented “patent cliff” will result in generics having close to 85% of the prescriptions in the US this year.  I recognize that part of the issue is that the generics today were the blockbusters of yesterday, but something significant needs to be done or “Big Pharma” will soon become “Niche Pharma.”

In so many ways, we may need to as Prahalad said, “start with a blank sheet of paper.” The industry may have to completely re-look at pricing and contracting strategies.  Yes, access is the real issue.  We may need to better strategize work with the Medicaid, Medicare and VA worlds.  The industry has a huge image problem where customers, providers and policy makers all view the industry with a certain degree of mistrust.  There is definitely a PR issue, in that the value the industry brings to healthcare is overshadowed by the view that the industry is all about the money.  In so many ways, the power of the industry has been surrendered to the payers and that really does need to change.  We need to figure out a way to give all of the over 300 million Americans access to the improved therapies our industry turns out.

So much energy and thinking is going into the work in India, China and Brazil.  This is important work and it should result in better global health.  I think it would be easier to recreate the model in US where systems are already in place and the only thing missing is a lot of creativity, strategizing and guts to once again be able to do business with the top, middle and bottom of the economic pyramid in the US.  This is an exciting challenge for each of us.

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