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Q.1] What is the concept of shared value?

Creating Shared Value

For most of the companies, the concept of value creation for customers is very narrow. They just
focus on achieving the short term financial objectives by not understanding the most important
customer needs. It’s time for the intersection of both society and the companies, and applying the
concept of shared value

Shared Value- Concept

Shared value is when, the business fulfils its economic goals and enhances its competitiveness, with
the simultaneous benefit to the society, not only in terms of providing goods and services, but also
improving the social conditions of the communities, in which it operates.

Most of the times, the companies feel that the benefit to the society will come at the expense of
company’s profits, but on the other hand, many companies are now even extending this approach
and examining ways in which they can better leverage their own assets and expertise to create
shared value

Shared Value can be created in the following ways-

 Redefining and reconceiving, the products in a way, that it benefits the society, and a lot of
new opportunities can arise by catering to the underprivileged/disadvantaged communities
of the society
 Redefining the productivity in the value chain, which can help in better use of energy and
other resources. The process of procurement and distribution can also be looked after
 Bringing together the companies in the same industry by making supportive clusters. These
clusters can focus on academic programs, employee supporting activities, etc

While creating shared value, one must keep in mind the compliances and regulations of the country
in which the company is operating.

Thus, simultaneously creating shared value with the economic value of the business will be one of
the powerful driving forces in the coming years.
Q.2] Is this concept applicable to Novartis, and if so where?

Yes, the concept is applicable to Novartis in context of rural India. The case clearly states the
company found a need in the Rural Indian populace for proper, affordable medical help in case of
Tuberculosis, Infections and Women Nutrition, their research found a lack of awareness about these
problems.

The company decided that they must focus on creating awareness about these diseases via a Health
Educators model. In this model representatives of the company would visit the villages (or would be
from the villages) and educate people about various aspects of treatments of TB while also assisting
in the treatment of the people already having the disease. This helped in increasing the recognition
of the brand in the Rural India. The HEs would visit the village and identify people in need of
treatment and convince them to get a treatment for it, also they would educate the people about
the disease and basic prevention methods. This was all aimed to ultimately help the company to
grow while also benefiting the people.

The program eventually helped Novartis build a healthy network of Doctors and Pharmacies who
feel that this is a good initiative. The doctors started prescribing medicine and the pharmacies are
keeping these medicines now as they are being prescribed. Eventually the program has helped both
the company as well as the rural BOP population of India.
Q.3 What are the ingredients of success for Novartis?

Through the medium of the case study, it is evident that Novartis has to take the following route:-

(1) Promote and enable health-seeking behaviour in rural India

(2) Ride on the momentum from the above and establish a sustainable business model based on the
concept of shared value

1. We understand from the case that 80% of the audience attending the sensitization sessions were
women. Having a workforce of women HEs drawn from SHGs (Self-Help Groups) and the Anganwadis
would go a long way in understanding female-centric ailments. This would also help achieve
Novartis’ twin aim of promoting health-seeking behaviour and creating a sustainable business model
driven by an increase in health-seeking behaviour.

2. The Arogya Parivar team needed to engage the influencers at the Primary Health Centre (PHC),
the Secondary Health Centre (CHC), doctors, chemists, sarpanch et al. for making a strong
foundation for future success. These influencers enjoyed immense leverage to convince and
onboard people to Novartis plan of action for mutual benefit.

3. Extreme caution must be observed by Novartis to make sure no government norms are flouted
while going about their business. The Medical Representatives (MRs) won’t be able to directly
prescribe drugs from Novartis while sensitizing the people about the various ailments, symptoms,
diagnosis and the treatment methods available.

4. The Health Educators (HEs) mustn’t be utilised for transactional purposes for the medicines as
that will again put SOPs (Standard Operating Procedures) in jeopardy. A basic infrastructure and an
enabling environment is required for the medicines to be relayed to maintain their sanctity and
functionality.

5. Capital intensive exercises like new product development for the rural markets or co-partnering
with the FMCG majors & Big Pharma must be carefully analysed in terms of the cost-benefit they
might or might not bring to the table.

6. The primary issues of the villagers like reluctance to seek medical intervention for their ailments,
lack of information and knowledge of the medical practices and solutions available, expenses
incurred and loss of daily wage upon travelling for treatment is the bone of contention for the
success formula.
Q.4] Discuss the challenges for Novartis:

The following were the major challenges Novartis had to face in regard to the healthcare for rural
people in India:

1. Awareness:

 The awareness for symptoms of TB was less amongst people of rural India.
 Along with this there was lack of awareness about the diagnostic tests required, the treatment
needed, the specific drugs in its portfolio to be used, the expected outcome and the physicians
capable of offering proper treatment and follow up.
 Illiteracy was rampant and a sense of mistrust prevailed amongst people. Hence it was
imperative to make efforts to come through some interpersonal mechanism with individuals
embedded within the community who can be trusted.
 All this had to be done keeping in mind the cost considerations that limited the maximum
amount that could be spent on the programme

2. Availability and accessibility:

 Access to health services and medicines was a major problem.


 Identifying the doctors within reasonable distance who were capable of diagnosing, treating
and following up was a challenge.
 Along with this there was lack of diagnostic centres, laboratories where tests could be run,
as well as pharmacists who were conveniently located and who could carry adequate stocks
of the required medications.
 Existing distribution network of Novartis in India focussed exclusively on urban areas so they
had yet to configure the "last mile" reach to rural patients. These pharmacists had to
reassure that the medicines they were selling are the ones prescribed by the doctors.

3. Affordability:

 Novartis had to be affordable to the patients.


 Although the DOTS programme was free, the patients were charged if the diagnostic
equipment failed to function or the medicines were unavailable, in addition to the loss of
income and travel.t
 Treatment at private clinics costed from Rs. 10000 to Rs. 15000, which was beyond reach of
most R2 and R3 consumers.
 Patients were not aware about the total treatment cost and perceived it to be much higher
than the actual cost and hence avoided seeking treatment.
 Novartis needed to create awareness about the affordability of treatment.

4. Acceptance

 "Health seeking behaviour" was lacking and Novartis needed to prompt BOP patients to look
for medical help.
 Malnutrition, iron deficiency and diabetes were common, but since health education was
absent, their symptoms weren't recognized and diagnosed (due to cost and time involved)
until they became severe
Q.5] How did Novartis resolve these challenges? Identify the options and discuss the Pros and
Cons of Each

Sl Challenge Resolution Pros Cons


No
1 Lack of Novartis created the awareness among Status-Quo way Too Costly (As the
Awareness people by of spreading a case said it would
 Creating the Audio/Visual Vans message in a cost around $80 -
and running them throughout village jargon $100 to operate the
the village vans)

 Employing Health Educators More personal Lack of women HE’s,


(HE’s) who would spread touch with the which made the
awareness through community villagers and women
meetings villagers uncomfortable
understood the
symptoms well
2 Lack of  Novartis Developed a network Provided a Creating a new
Availability of doctors, chemists and better access distribution channel
& pharmacists to stock relevant and reach to was an expensive
Accessibility products using Sales the villagers, option and also the
Supervisors because the MedicalPractitioners
 Novartis contemplated creating SHC’s and PHC’s who were the
/using a new distribution chain, were a time- primary source of
among the options were: lasting affair contact for the
villagers, were also
to be included in the
current channel.
Creating a New
Distribution chain
would be very costly.
a. Creating its own network Ever sustaining High capital costs
and profitable occurred will be
drained, if the
business model fails
b. Using Existing network of Light on Fixed Lesser profit margins
competitors assets and relying on the
competitors might
not give the
competitive edge
c. Using network of NGO’s Can get the No profits until they
benefit of setup their own
recalling the Distribution Chain
Business Model
without
incurring huge
losses, in case
of a failure
3 Lack of  Novartis had one of the options Avoids the price Gross Margins will
Affordability to create a new brand that sells conflict and be lesser
at a lower price. cannibalization
between the
urban and rural
areas
 Can decrease the SKU size [ More People might not
Selling strips of 4 rather than affordable and complete the
10] can buy on pro-dosage, I.e. they will
rata basis stop buying
medicines as soon as
they feel a bit better
4 Lack of To improve the acceptance among the Can create The trade-off of
Acceptance people, Novartis created awareness better creating awareness
through HE’s, improved accessibility awareness and a successful
through its chain of doctors/pharmacies business model. The
company will have
to absorb the costs
involved in creating
the Awareness if the
model did not take
off

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