In June, FSG and GBCHealth hosted a webinar, on how pharmaceutical and medical device companies can create shared value in global health, building on our paper, Competing by Saving Lives, which we launched earlier this year. This post is the second in a series where the panelists answer some of the great questions we received from members of the audience, but did not have time to address. Today, we’ll hear from Karl Hoffman, President and CEO of the international nonprofit, Population Services International.
Question: Karl and Kathy both alluded to the challenges with their new models. Can they illustrate how they’ve addressed such issues as compliance e.g., FCPA (Foreign Corrupt Practices Act)?
KH: From PSI’s perspective, the challenges around shared value partnerships are the conventional ones that any two business partners would face: can each party meet its objectives better through partnership than alone? In our space, price plays a major issue. We are social marketers, and our product work often (not always) involves heavy subsidies. When donors are available to underwrite such subsidies, our marketing activities can reach our target audience of low-income families. Where there is no donor, and we are looking to a partnership with the private sector to try and meet health needs, pricing decisions on the part of our prospective partner are crucial to the success and scale of the endeavor. Pricing decisions and especially concessionary pricing are tough calls for companies reporting to shareholders, and we have to recognize that.
From our perspective, FCPA applies just as much to us as to our private sector partners, and we meet those obligations forthrightly, as we assume our partners do.
Question: Are there any lessons learned to improve access to the last mile distribution to people who don’t have access to traditional retail networks?
KH: Last mile distribution challenges are hugely significant. The best distribution system in the world is meaningless unless this final piece is in place. Like successful fast-moving consumer goods companies worldwide, we use lots of different strategies to close that gap, everything from bicycles, to hand-held baskets of community based distribution agents, to donkeys, to hovercraft (yes, we’ve used those in remote Madagascar). The private sector knows how to meet this challenge better than just about any government anywhere, which is why we like partnering with and learning from them.
Question: What are the most valuable lessons learned in your experience working with different (profit vs. non-profit) partners about how to reach agreement on differentiated roles and objectives?
KH: Clarity about intentions and transparency all throughout the process. These are crucial ingredients to successful partnerships. And of course, even the best transparency can’t always overcome fundamental differences — sometimes, it just isn’t possible to close the gap. But clarity about intentions and transparency helps that reality become evident sooner rather than later.