Reproductive Health Supplies

Coalition MeetingWashington DC November

2004

Coalition TM working group 3

Objective 1 Develop a common understanding of a total market approach and promote use through Coalition

ActionDraft paper on key concepts and disseminate

Expected outcomePanel discussion around key concepts, terminology and factors

Coalition TM working group 3

Objective 2Explore and develop the second tier market concept.

ActionResearch and develop a concept paper for potential three country program including; convening meeting/s with representation of donors, industry and developing country contingent

Expected outcomeDevelopment of a proposed approach to grow the second tier market

The total market - definitions

Total market relates to all segments that make up country contraceptive markets – currently:

•1st tier – high price commercial sector products•Free distribution tier – government/donor supplied free of charge/cost recovery•SM segment where significant programme exists

The total market

1st tier

Social marketing segment

/Free distribution tier

The total market - definitions

In-depth understanding of the total market is a pre-requisite for any new country intervention.

•Existing segmentation•National policy framework/national commitment to RH supplies availability•Procurement, funding and supply channel structures•Regular socio-economic/demographic factors•Existing or planned interventions

The total market - definitions

Recognized in the key conclusions – DFID approach to social marketing review meeting in April 2004•Referred to as third generation model of SM – assess comparative advantage of market participants in terms of competence, value and role in delivering/facilitating access.•In a total marketing approach, the potential overall market impact of interventions is addressed at the planning stage•Enables closer and more structural linkages with commercial, SM and public sector actors

The total market - Coalition

Adopting a total market approach at the international level includes most of the stakeholders in the Coalition, representing all of the main components that impact on country contraceptive markets.

•Governments – donors and recipients•International/national NGOs•SM organisations•Manufacturers•Advocates

The 2nd tier

•The 2nd tier is a sustainable commercial market segment between the high end commercial and free distribution market segments•Its role within contraceptive security, is the ability to reduce some of the dependence on the free segment thus allowing donor resources to focus directly on low income groups. with a reduced cost burden•A comprehensive understanding of the total market, including detailed segmentation studies is the tool for assessing the feasibility of a 2nd tier contraceptive marketing intervention•The 2nd tier exists potentially exists in many developing country markets around the world

The total market (with 2nd tier)

1st tier

2nd tier

Social marketing segment

/Free distribution tier

The total market reproductive health supplies

concept

Key concepts

•Explore possibilities relating to establishing a 2nd commercial market segment in selected countries•Research historical approaches of the SM manufacturers model•Role of manufacturers•Provide maximum impact at the national level

Approach

•Total market - has been adopted, and the intervention has the ability to impact on more than one market segment.

–New2nd commercial tier –Existing free distribution tier

Approach

•Partnership - ensuring the availability of sexual and reproductive health supplies can only be achieved through individual institutions reaching consensus on the main issues, with each contributing its individual strengths towards a common set of solutions.

–Donors - bilateral multilateral & private–National government–NGOs–Technical agencies–Range of manufacturers

Based upon the broad constituent base in Coalition

Goal

The goal of a total market intervention is to pilot a new approach to product supply, that will result in increased and better-targeted availability of sexual and reproductive health supplies, primarily utilizing existing resources.

Objectives

1. To generate significant savings in the cost of a range of sexual and reproductive health supplies destined for the free-to-client market segment.

2. To develop a new sustainable market segment between the free and social marketing segments, and the commercial segment, known as the 2nd tier (T2).

3. To ensure that products for this intervention are supplied and delivered within commercial best practice and maximum efficiency.

4. To document the intervention as a model for replication in other markets.

Concept

• The total market intervention is designed to operate across a variety of market segments, with each national programme tailored to specific country circumstances.

• The concept is underpinned by making available a range of low-cost essential sexual and reproductive health products to two market segments, in collaboration primarily with new suppliers.

• Concept does not exclude existing suppliers, should they decide to consider new approaches and working practices as part of this programme.

Unique attributes

1. Manufacturing portfolio2. Potential for dual-segment

impact3. Sustainability/cost reduction

opportunities4. International RH collaboration

national and international

Manufacturing portfolio

• Development and use of new non-OECD contraceptive manufacturers

• Contraceptive manufacturing going through a process of unprecedented change

– Expiry of patents– Emergence of new suppliers in

developing countries – so called generics• Generic suppliers not R&D or marketing

focused• Competing with traditional suppliers on

price/volume• Progress dependent upon reducing market

entry barriers– Regulatory– Market penetration– QC issues

Dual segment impact

• Development of a range of hormonal contraceptive products with selected generic suppliers for free distribution in target countries

• Development of branded version of same products for 2nd tier marketing in target countries

– Familiarity and trust building instruments for free distribution products

– Undertake regulatory complexities

Sustainability/cost reductions

• Significant opportunities for cost savings from reduced price points

• Availability of identical products from a range of suppliers in various locations

• Reduction in number of clients using freely distributed methods

• Enhanced and realistic possibility of full sustainability of 2nd tier market component

Example

Using a CPR of 7% for oral contraceptives across Africa, Asia and LAC the potential cost saving could be $74m PA

Equal to 37% of the total donor contribution to supplies in 2002

Sample market

Encouraging 20% of oral contraceptive users from the free distribution segment to the 2nd tier over 5 years. Supplying the free segment with new product range

•Saving of $5m 2005-2010–$3.5m from lower procurement cost–$1.5m from 2nd tier marketing

Investment of $2-3m

Role of the Coalition

• Procurement and supply – UNFPA, USAID & IPPF supplying new product range to target countries, as appropriate

• Engagement of national governments receiving direct funding for supplies from Coalition members

• Support and assistance of national government in piloting the approach and regulatory barriers

• Inclusion of national NGOs• Technical – partners or associated

organizations – policy QC, supply chain, research, advocacy and monitoring

• Contraceptive marketing

Scope

• Three country pilot• National scale• Methods mix – OC 3

types, ECP, condom• Possible DMPA

Next steps

• Final identification of countries

• In-depth research– Feasibility– Dialogue with national

government/Coalition partners– Segmentation studies– Review of manufacturing

capacities– Review statutory/legal/QC

issues– Business and marketing plan

development• Timeframe Jan-Oct 2005