Published on January 23, 2009
Changing the Design Paradigm – Affordability and Access through sustainability. Bala Manian, PhD. ReaMetrix Inc. San Carlos, CA © 2005 ReaMetrix, Inc. All rights reserved.
What is the context of my talk? One has to remember that “You can only be as objective as your subjectivity will permit you to be objective”. We are all but a prisoner in our thought process and to our own perceptions of the world. Case and point: every pre-conceived idea with which I started my present activity in India, turned out to be totally wrong. In spite of the fact that I grew up Indian, after 40 years in the US, I had lost my ability to think “Indian”. My understanding of the “local” unmet need and the best approach to address them was highly influenced by my world view from California developed over the last 40 years. Therefore you are listening to the raw experiences & confessions of a budding new entrepreneur from Bangalore, India and not the voices of “silicon valley” veteran. © 2005 ReaMetrix, Inc. All rights reserved. Page 2
Why do we need to look at this subject differently? Simple survey suggests that the past approaches have not succeeded in addressing unmet needs of the resource poor settings. For every isolated local success story, there are many more unmitigated disasters that not only raised false expectations but also wasted valuable resources. Global public health in resource poor settings has to be viewed within the context of local economic activity. Without that, any solution rendered will remain forever at the mercy of charitable organizations and/or changing political fortunes. © 2005 ReaMetrix, Inc. All rights reserved. Page 3
What is the existing paradigm? The most of the solutions conceived today are habitually western model centric. Often the emphasis is on technology as the key driver. All the solution development takes place in resource rich settings. All learning from successes and failures remains there. The “modus operanda” is delivering the completely engineered solution to the resource poor settings, more like giving the “fish to fisherman”. Design decisions are often highly influenced (directly and indirectly) by the macroeconomic environments prevailing in which solutions are developed and not where it is to be deployed. These often lead to unpleasant surprises when solutions are deployed. © 2005 ReaMetrix, Inc. All rights reserved. Page 4
What is wrong in this picture? There is no focus on local economic participation as a key component in design criteria. This is difficult to internalize, in an environment of a “third party reimbursement” culture. Seldom there is an awareness of tailoring of technology development to favor local economic value addition. There is also an absence of an understanding of the influence of local economic constraints on design or in deployment. Incorporating a local economic stake is the only way to build “successful” and economically sustainable solutions. © 2005 ReaMetrix, Inc. All rights reserved. Page 5
How to frame the big picture? Diagnostics is an important component in disease management. Diagnostics is not just about diagnosing “illness” but it has to be also about maintaining “wellness”. It is all about “information” and diagnostics is an information business. Information is generated to help the physician (and in some cases the patients) make better clinical decisions. What matters is the cost per unit of information and the local macro-economic environment to support that cost sustainably. © 2005 ReaMetrix, Inc. All rights reserved. Page 6
Anatomy of the Cost of Goods Sold (COGS) Many components contribute to the costs per unit of information generated. • Cost of patient transport to blood collection center. • Cost of the acquisition of the sample. • Cost of the transportation of the sample. • Cost of processing of the sample – Tech labor + assay reagent costs. • Amortization Cost of the capital equipment investment. • Laboratory infra-structure overhead cost. • Distribution, field service & support, etc, etc. © 2005 ReaMetrix, Inc. All rights reserved. Page 7
How the costs are influenced? In most developed countries, because of the infra-structure advantages, there is a natural and organic aggregation of samples. During development, macroeconomic factors prevailing in those countries such as labor costs, transportation costs etc do influence key design decisions. Macroeconomic impact on product design decisions and process developments can be subtle and indirect. Design criteria optimized for one environment may not be the right solution for another. © 2005 ReaMetrix, Inc. All rights reserved. Page 8
Different priorities in different environments In the developed countries: • Labor costs dominate the COGS. • The emphasis is on reduction of labor both in manufacturing and in process. • Material conservation is not often a priority because it takes high labor cost for realization. In the resource-poor countries: • Material costs dominate the COGS. • The Labor cost is low but how does use that cost arbitrage to impact high material costs? • The priority has to be on material cost reduction – more of the raw material has to end up in finished goods – this is sustainable in the long run. • Reliance on the utilization of labor demands innovation. It is required to minimize human “error” which is by-passed in the developed countries by eliminating or minimizing labor. © 2005 ReaMetrix, Inc. All rights reserved. Page 9
How to change the paradigm? Import the science but the implementation of that science locally has to be started from a clean slate. Define “the affordability index” in the context of local macroeconomic environment. Affordability index does not necessarily mean always lowest cost solutions. Affordability index drives the appropriate technology that can deliver the good and services within the affordability index. The demand at the bottom of the pyramid then drives the cost economics However, local economic participation is what assures long term economic sustainability. © 2005 ReaMetrix, Inc. All rights reserved. Page 10
What are some case studies? ReaMetrix as a company, has been able to translate these concepts to diagnostic solution development in India. Five fold cost reduction in COGS by focusing on improving material yield of Antibody used in assay KIT formulation. Elimination of cold chain for transportation & storage – allowing the development new business models in distribution. Development of multi-purpose hardware platforms designed for easy deployment and local service & support. Technology focus on is more on local economic sustainability rather than on peer reviewed publications in scientific journals. It is all about creating the ethos and the ecosystem to drive entrepreneurial solutions that are economically sustainable. © 2005 ReaMetrix, Inc. All rights reserved. Page 11
Dry Reagents In places like India, cold chain transportation costs can be higher than the cost of reagents. A unique process for drying down the assay reagents enables ReaMetrix to ship the reagent without any cold chain requirements. While dry reagents were developed to drive transportation and storage costs down, it opened opportunities to explore new business models for local economic value add. © 2005 ReaMetrix, Inc. All rights reserved. Page 12
Sample collection & centralized processing There is a huge problem in timely and temperate transportation of blood samples from remote areas to centralized testing centers. Because of poor infra-structures and long distances, this results in “aged” blood samples (> 48 hrs) that are unusable. To solve this problem, enormous effort & resources have been spent of ways to stabilize the blood sample. However, with dry reagents, it became possible that blood can be collected, stained and fixed at the point of collection before being shipped to a central testing facility to add value at the local level. Through serendipity, it was discovered that after processing and fixing the blood sample, it can be stored for up to 8 days without any significant difference in CD4/CD8 counts. © 2005 ReaMetrix, Inc. All rights reserved. Page 13
Post fixation stability of blood sample Stability of CD4 counts 70 60 50 CD4 Counts 40 30 20 10 0 1 2 3 4 5 6 7 8 ay ay ay ay ay ay ay ay D D D D D D D D © 2005 ReaMetrix, Inc. All rights reserved. Page 14
Unintended benefits derived from dry reagents Unitized test – reduces human error. Distributed value addition in sample processing – creating local economic activity. With the sample coming into the central lab ready to be run, the throughput per machine increases dramatically. Capital investment tied up on the expensive flow system amortizes much faster – lower cost to patient. Longer shelf life of the reagent (>12 months at room temperature). Thinking differently does offer its rewards © 2005 ReaMetrix, Inc. All rights reserved. Page 15
Thinking differently on Healthcare Delivery © 2005 ReaMetrix, Inc. All rights reserved. Page 16
Saantwanam – A health screening project Kerala (India) Fighting life style diseases – A novel project by HAP, Kumbashree & State Bank of India. Objectives - Screening for Diabetes mellitus, obesity, hypertension and growth retardation. Referral to physician & health education. Strategy – rely on locally recruited and trained young women with high school education but from poor families and deploy them in an entrepreneurial business model to accomplish the objective. © 2005 ReaMetrix, Inc. All rights reserved. Page 17
A Training Session © 2005 ReaMetrix, Inc. All rights reserved. Page 18
The first batch © 2005 ReaMetrix, Inc. All rights reserved. Page 19
Glucose-Measurement © 2005 ReaMetrix, Inc. All rights reserved. Page 20
The Investment Item Cost [Rs] Measuring equipment 15000 Motor Cycle 29000 Mobile phone 2500 Preliminary expenses 3500 Total 50000 Rs 7500/- is given as subsidy by the government © 2005 ReaMetrix, Inc. All rights reserved. Page 21
Expense Income EMI against loan 1800 10 glucose estimations 250 Fuel charges 750 15 blood pressure 150 Telephone charges 500 10 BMI 50 Consumables 3000 Average income per day 450 Total 6050 Total per month 1250 Net income anticipated - over Rs 5000 per month Over 150 care givers servicing 200K screens/ year 20% earning over Rs. 10,000 per month. © 2005 ReaMetrix, Inc. All rights reserved. Page 22
What questions that arise from this observation? What more can be done using this model of healthcare delivery? How to empower these young women to move up the value chain? How to bring other parts of healthy living as an economic part of this healthcare delivery? If one believe that compelling self interest is the biggest factor in compliance enforcement, how to bring about financial incentives to shift the focus from illness to maintenance of wellness? © 2005 ReaMetrix, Inc. All rights reserved. Page 23
In summary… One has to look at “diagnostic information generation” holistically, not just as a set of assay reagents and hardware platforms. Addressing “the economics” problem innovatively, will lead to sustainable solutions. “Import the science” but not the implementation of the science – great to think globally but sustainable innovation is all local. Rather than just focusing on cost arbitrage, use cost arbitrage to generate sustainable value arbitrage. Using this model, one can not only address the unmet needs in resource-poor settings but change the way diagnostic information is delivered globally. © 2005 ReaMetrix, Inc. All rights reserved. Page 24
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