Social business

In the world of aid, you can give till it hurts, and still it will seem like you’re barely scratching the surface. The ranks of the needy keep growing worldwide, but not the ranks of billionaire philanthropists like Bill and Melinda Gates.

And even the pockets of the Gates couple aren’t bottomless. The Microsoft owners, whose principal cause is public health care, are partnering with other organizations for sustainable health assistance programs.

In the Philippines, a multinational health care company is exploring a possible tie-up with the Gates foundation and NGOs for a sustainable health aid initiative. Top Novartis executives are in Manila this week to discuss, apart from the usual corporate matters, pilot health care programs being developed with farmers in Pandi, Bulacan and a doctors’ cooperative in Palawan.

Research and community immersion for the so-called micro health care initiative started in September last year. The Asian Development Bank has agreed to come on board.

What’s unique about this program? It’s not an outright dole-out but health care at subsidized prices. Beneficiaries will pay a minimal amount – enough for Novartis to turn a profit and make the program self-sustaining or self-funded.

“This is a for-profit model. This is a business,” Dorje Mundle said. “It’s a social business, if you like.”

Mundle heads corporate citizenship management at Novartis International AG’s Corporate Integrity and Compliance division. He told me that beneficiaries of the planned program would be asked to pay a minimal amount for sleeping nets, for example, that are treated for long-term repulsion of mosquitoes and other insects.

Studies have shown, Mundle said, that people who receive something for free do not value it as much as when they have to pay even a token amount for the item. Mosquito nets given away for free in some areas, for example, have been used for fishing.

Novartis does have non-profit, full charity programs for the poorest communities. Company chairman Daniel Vasella was among the first to respond to the United Nations’ call, made by then UN secretary-general Kofi Annan at the 1999 World Economic Forum in Davos, Switzerland, for corporate citizenship under the Global Compact, which seeks to make private business part of the solution to many global challenges.

The company’s anti-malaria initiative, the largest private access-to-medicine program for developing countries, has delivered 300 million treatments so far, 172,260 of them in the Philippines in partnership with the World Health Organization. Through the WHO, the company has also donated nearly all of the global supply of multi-drug therapy for leprosy, helping cure an estimated five million patients.

Mundle said the company works in partnership with other private institutions to promote access to health care. It recently committed to distribute a cheap incubator developed by Stanford University in California under the school’s Design for Extreme Affordability program.

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But private companies are in business to make money. And a company like Novartis needs to make a lot of money to finance its operations and invest in cutting-edge research and development.

Rainer Boehm, Novartis head for life cycle innovation and strategy, said it can take 12 years and about $2.3 billion to develop, test and release into the market a single drug. It can cost even more to rush a drug into production. Novartis was the first to come out with a vaccine for the AH1N1 flu.

In the next five years, the company intends to submit over 60 types of drugs for approval.

The company has its non-profit aid initiatives, but it wants to try out a self-funding program. This is difficult to accomplish in the poorest countries.

I asked Boehm why the company picked the Philippines for its pilot program. He acknowledged that while the country is “not the Democratic Republic of the Congo… the need is there,” and access to health care is a problem particularly in an archipelago.

The infrastructure must also be in place to support the program, which will be implemented directly not by Novartis but by health professionals and NGOs. Novartis doesn’t want dole-outs but sustainable access to affordable health care, Boehm told me.

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The company is one of the most profitable in the industry, thanks to its focus on what pharmaceuticals head David Epstein describes as “riskier and more innovative designs” such as those for painful joint disease. It has “sniper” drugs that specifically target cancer cells instead of zapping everything including healthy cells through treatments such as chemotherapy. Apple CEO Steve Jobs uses Novartis’ Afinitor to treat his rare renal cell carcinoma.

Cancer treatment is beyond the reach of the poor. But since 2003 Novartis has provided the breakthrough treatment imatinib to about 2,000 poor Filipino cancer patients.

In line with its access-to-medicine program, the company has its generics arm, Sandoz, which guarantees quality generic drugs. In this industry, quality means “prescribing the right treatment for the right patient at the right time for the right reason and with a predictable outcome,” according to Novartis’ executive in charge of quality, Djordje Filipovic.

Novartis believes guaranteed quality will encourage people to pay a minimal amount for a self-sustaining micro health care program.

Under its initiative in the Philippines, NGOs and private health professionals will be tapped to identify health care problems prevailing in the pilot areas.

Part of the program is an information campaign to help residents identify symptoms of common diseases such as dengue.

If successful, this “social business model” will be replicated in other countries.

Novartis is currently focusing on producing drugs to fight diseases in developing countries such as dengue, tuberculosis and infectious infant diarrhea. Treatments for these illnesses are distributed to patients in low-income countries on a non-profit basis.

These acts of corporate citizenship, Mundle acknowledged, are “just a drop in the ocean.”

But in addressing the global health challenge, every drop counts.