September 22, 2023

From Aid to Enterprise: Navigating and Shaping the Private Sector’s Growing Influence

By Maisha Meds

What happens to health care as low- and middle-income countries become more economically independent and rely less on aid?

With economic growth, countries rely less on donor support — and the private sector plays a bigger role, essentially filling the gap in funding.

But these opportunities also bring new challenges, according to Dan Rosen, Managing Director of New Business at Maisha Meds. In a recent presentation, Rosen outlined a number of key obstacles that accompany this shift in private-sector influence.

One challenge deals with competition and supply chain consolidation. For example, some countries have thousands of private pharmaceutical wholesalers, while others, like Senegal, have only a handful. These wholesalers must also adhere to regulations that cap how much they can mark up products. Thus, businesses in French West Africa tend to respond by selling the most expensive medications and overlooking generics. These failures of both competition and regulation have led to higher prices for consumers.

Rosen also argues that the private sector, which is driven by price, needs to be incentivized to ensure the quality of its medicines and standards of care. Otherwise, countries may find themselves in a situation where more than half of antimalarials are sold in private pharmacies and clinics — but only 5% of tests. And those antimalarials are increasingly coming from manufacturers that are not WHO-prequalified.

The challenge of making healthcare products available and affordable at the last mile is not just impacted by global supply chain issues and fluctuations in demand. Local factors play an important role, including local manufacturing capacity, the amount of working capital pharmacies have to stock their shelves, and how high they set out-of-pocket prices.

“Patients often buy what they can afford as opposed to what they need,” said Rosen, whose expertise in health commodity data and market intelligence across sub-Saharan Africa spans nearly a decade and a half.

Organizations like Maisha Meds are trying to change this dynamic at the last mile using a combination of software, global health funds, and weekly deliveries of vetted products to participating pharmacies. But there’s no one-size-fits-all solution across all markets, said Rosen, adding the importance of using data to design solutions in ways that respond to each market’s unique challenges. 

“Data is not necessarily going to be the answer to these problems,” Rosen said. “But without data, you don’t know what the question is.”