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Novartis: Building a Sustainable Business at the Bottom of the Pyramid

Published 26 Mar 2018
Reference 6388
Region Asia
Summary

Inspired by C.K. Prahalad’s “The Fortune at the Bottom of the Pyramid”, Novartis was exploring ways to build a sustainable business for the BOP in India that would improve access to healthcare for the poor while being financially profitable, unlike Novartis's traditional philanthropic and corporate social responsibility approaches. To succeed, it had to answer a series of strategic questions: Which BOP patients should be targeted to best achieve the social and financial goals of the programme? Which diseases should it cover, and with what types of products (patent-protected, generics, OTC)? Which stages of the patient journey should the programme address? Which stakeholders should be targeted? What communication channels should be used? What should be the programme scale? Where to ‘house’ the social business group in the Novartis organization?

Teaching objectives

This case has been successfully taught in both MBA courses focusing on strategies at the BOP or in emerging markets, and in executive education programmes (senior management) looking at the challenge of developing profitable and scalable businesses for the BOP or emerging markets. It can also be used in the context of a course or module on business model innovation. It easily fills a typical 90 minute MBA session and can be expanded to cover a double session. In an executive education context it can form the basis for a half-day module. The case provides an opportunity to understand the challenges of emerging markets (India specifically) that result from low income, poor education, social stratification and lack of infrastructure. At the same time it highlights the potential opportunity or “Blue Ocean” that exists due to large underserved customer groups. The case enables discussion of all aspects of a business: which segments to target, which specific needs (diseases) to address, which elements of the consumer decision process to focus on, how to execute against these decisions by addressing the entire eco-system, and how to position it within the firm. The case provides sufficient data to undertake a breakeven analysis for the business, which is key to making a successful business case. It includes a spreadsheet so that instructors can walk students through the breakeven analysis, as well as a deck of slides for an extended wrap-up. After discussing the case, students should be able to think through the key elements of setting up a new business in emerging markets or targeting the bottom of the pyramid.

Keywords
  • BOP
  • Strategy
  • Business Model Innovation
  • Emerging market
  • Healthcare
  • Sustainability
  • India
  • Pharmaceutical
  • Corporate social responsibility
  • Market access to medicine
  • Q31718
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