Our client is ImproMedcare, a leading pharmaceutical company based in Kenya. ImproMedcare has developed a new drug for an often-fatal infectious disease. An estimated 400,000 people fell ill with this disease last year worldwide. The drug, which is administered orally in multiple doses over two years, improves patient recovery speeds and survival rates, and is substantially cheaper than existing drugs on the market which have very low penetration in Africa (<1% of total cases are being treated with existing drugs already on the market in the region).
The company’s senior executives have approached Dalberg to help them determine which African countries they should introduce the drug in. Separate teams are working on market entry strategies on other continents.
Before you think about how to approach selecting countries, share your clarifying questions.
A good answer will: 1) Repeat back key facts and clarify any questions and/or terminology you may be less sure of; 2) Ask about the client’s objectives, and; 3) Determine if any additional information on the disease burden and the cost of treatment could be shared.
A great answer could also ask about any limitations to the scope of work for our client, any available information on the regional health systems/feasibility of implementation (to ensure the full treatment is administered correctly), potential partnerships, and funding.
- What are the client’s objectives? Do they seek to maximize profit, increase access, or something else?
- Would it be possible to share any information on health outcomes and the current disease burden in the region?
- How much is the cost of treatment?
- Does the client have any strict limitations for the scope of work, e.g.,
- Are there any specific geographic sub-regions or countries in which the client would prefer not to work?
- Is there any aspect of the decision-making process (such as price, local in-country production potential, etc.) that the client will manage on their own?
- Can you share any information on the strength of the sub-region/country-level health systems and the feasibility of implementation (e.g., the level of effort needed to administer the drug correctly over two years)?
- What sorts of partnerships could help overcome barriers to treatment, cost, or other obstacles?
- Where will funds come from – local government spending, global grants, insurance, out-of-pocket payments, or other sources?
ImproMedcare informs you that their objective is to maximize global health impact in a financially sustainable manner (i.e., they do not need to make a profit, but they want to cover their costs). They would like to reach as many people as possible in a cost-effective manner, and also ensure the local health system is able to properly treat patients for the full two-year treatment period. As ImproMedcare has little experience entering new markets, they would like to start in a limited number of countries to minimize risk. However, they also estimate they need to reach at least 20% of the population in Africa with this disease to cover their costs.
Based on your initial desk research, you learn that about a quarter of global cases are in Africa.
How would you structure your research to determine which African countries they should introduce the drug in?
Note: Specific knowledge of drug supply chains is not required here, just a baseline understanding of the types of costs beyond producing the drug.
You could consider applying a cost effectiveness approach including:
- Cost: How much does it cost to treat a patient successfully over the two-year period?
- What is the cost of producing the drug?
- What is the total cost to deliver the treatment over two years (including distribution, storage, treatment, etc.)?
- What other costs are required to ensure adequate health system capacity, e.g., costs of:
- Logistics to support storage and delivery of the drug
- Training costs for health workers to diagnose the disease and administer the drug as intended
- Sufficient numbers of health facilities close to affected populations (in urban and also rural settings, etc.)
- Regulatory approval in each country
- Health outcomes (e.g. Disability-Adjusted-Life Year (DALYs) averted or simply the number of people treated). For example:
- Number of people treated:
- What proportion of patients start treatment, and of those how many successfully complete the two-year treatment?
- What are the key factors that can lower cure rates by country?
- As a proxy for the number of people to be treated, it is useful to look at the total disease burden. You could consider the following:
- Which countries have the greatest number of people infected by the disease?
- What countries have the greatest proportion of their population impacted?
- What is the distribution of cases by district/city (and the urban vs. rural spread)?
- Number of people treated:
You should also think about key risks of entering specific markets. For example, a large risk that needs to be considered is funding, i.e., which countries have structures in place to ensure our client can cover their costs. See ideas on additional risks in the last section of this case study.
Note: Other frameworks may also work for this case. Regardless of the framework used, responses should clearly identify key areas and present a clear structure for the recommended approach.
- Applying the standard profit = revenue – costs framework: While this is a useful for many conventional business cases, it is not sufficient on its own for many Dalberg cases, including this one. By identifying the client’s objectives upfront, the interviewee will realize the goal is not to maximize profit but rather maximize global health impact.
- Considering the competitive landscape in each country: The interviewee may also consider analyzing the competitive landscape. However, with < 1% of patients on the continent treated with other drugs, this is less essential here.
Question 3 Part A
Through desk research, you are able to find some data on the disease burden in three high-burden countries. The number of new cases per year (incidence rates) is:
- 10 per 100,000 people in Nigeria
- 20 per 100,000 people in South Africa
- 30 per 100,000 in Mozambique
Please estimate the total number of people who suffer from this disease in these three countries. What proportion of total cases in the region does this comprise?
Hint: This calculation requires knowing the population in each of the three countries. Your interviewer may be able to provide additional data, so do not be afraid to ask (or better yet, make an educated guess and verify it before proceeding).
If asked, your interviewer would be able to tell you that Nigeria comprises about 2.5% of the global population, and South Africa has about 1/3 as many people as Nigeria, and Mozambique about half as many as South Africa.
Global population = 7.8 billion x 2.5% = 195 million (OK to round to 200 million for easier calculations).
Total cases in Africa: 100,000 regional cases (using the data shared in a previous question (400,000 global cases x 25% in Africa = 100,000 regional cases).
- Population: 30 million
- 30M total population / 100,000 sample size =300
- 300 x 30 = 9,000 cases (~9% of regional cases)
- South Africa:
- Population: 60 million
- 60M/100,000 = 600
- 600 x 20 = 12,000 cases (~12% of regional cases)
- Population: 200 million
- 200M / 100,000 = 2,000
- 2,000 x 10 = 20,000 cases (~20% of regional cases)
Together these three countries represent over 40% of total cases in the region
Question 3 Part B
What is the estimated cure rate in Mozambique? In other words, how many people successfully complete their two-year treatment, a process which includes taking three doses of our client’s drug? How much will it cost to produce?
Assume that two-thirds of people with the disease can be reached to start treatment. Around 17% of those who start treatment drop out before the end of the first year and before they can receive the second dose of treatment, and 10% of those who remain will drop out before receiving their third and final dose of treatment.
Each dose costs $33 USD to produce.
- 9,000 cases x two-thirds who start treatment = 6,000 people get first dose
- 6,000 – (6,000 x 17%) = ~5,000 receive second dose
- 5,000 – (5,000 x 10%) = 4,500 patients successfully completing treatment (50%)
- 6,000 doses at the outset + 5,000 in year 1 + 4,500 in year 2 = 15,500 doses
- 15,500 x $100 USD = $ 1.55M USD total cost
Question 3 Part C
Based on interviews and additional market analysis by your project team, you determine that the full cost of treatment for this disease is $500 USD on average per successfully treated person in Mozambique (this includes the production costs above, plus all aspects of treatment from distribution, storage, treatment, etc.).
Your project team’s preliminary analysis comparing treatment costs for similar diseases estimates that it is 2.5 times cheaper to treat someone in South Africa than Mozambique, and about triple the cost to treat someone in Nigeria vs. South Africa.
The estimated cure rate in South Africa is ~83%, and 25% in Nigeria.
Assuming our client wants to only enter one market at a time, which country should they start with to reach the maximum number of patients at the lowest possible cost? Assume all countries have the ability to cover the estimated costs of the drug treatment.
- Mozambique: $500 USD cost per person x 4,500 cases = $2.25M USD to treat 4,500 people
- South Africa:
- 2.5X = $500 USD
- X=$200 USD
- $200 USD cost per person x (12,000 cases x 83% cure rate) = $2M USD to treat 10,000 people
- Cost per person: $200 USD x 3 = $600 USD per person
- $600 USD x (20,000 cases x 25% cure rate) = $3M USD to treat 5,000 people
Based on these calculations and assumptions you should recommend starting in South Africa where the client can successfully treat 10,000 people at a cost of $2M USD total. The cost per patient is $200 USD in South Africa, compared to $500 USD in Mozambique and $600 USD in Nigeria.
A great answer could refer back to information shared earlier and mention that our client noted that they need to treat ~20,000 people to cover their costs, and that based on this number they would in fact need to expand into additional countries as well.
Hint: Feel free to round numbers as you do the calculations.
Now that you have developed a set of initial estimates and recommendations, which assumptions would you want to test further, and how would you go about testing them (while guarding against any potential biases)?
A good answer would list out key assumptions and provide examples of how to unpack each issue. For example, we assume our data is accurate, when in reality the data accuracy may be highly variable and thus potentially not comparable across countries. With this in mind, you could suggest using multiple data sources and research techniques to get better estimates of disease and cost rates.
A great answer would outline examples of methods/sources to help triangulate your analysis. For example, looking at incidence rates, you could propose using the following:
- Regional/global experts, local medical professionals, and government officials could provide information on the general prevalence of the disease, available testing centers, and contact tracing infrastructure, and also may be able to provide guidance on alternative data sources.
- Potential limitations on interviews may include:
- Information may not be consistent across all countries, especially since the team would have to limit the number of government officials and medical professionals they contact.
- The regional/global experts’ level of knowledge likely varies significantly by country and could be biased based on their own experiences or opinions.
- Local data sets
- If there is data for certain districts/provinces/towns in a specific country, you may be able to extrapolate to the country level.
- A potential limitation is that local data may not be representative of the country overall. One would have to be reasonably certain that the region’s disease burden is not substantially higher or lower nationally.
- Data on related diseases
- Data on related diseases (e.g., associated co-morbidities) and medical supply purchases that are linked to the disease could serve as proxy data.
- A potential limitation is the integrity of the proxy data and ensuring there is a good understanding of the relationship between the proxy and the disease in question.
- Dalberg internal knowledge
- Prior Dalberg engagements and publications may have included calculations on the disease. Researching Dalberg’s prior work in this area may provide useful guidance on a potential approach in addition to potentially providing helpful data
- A potential limitation is that data from previous engagements may not be relevant to this case (e.g., different region of focus, different disease, etc.).
- Two common pitfalls when suggesting ways to triangulate data:
- Suggestions related to examining medical case files:
Not only is this an invasion of patients’ privacy, it would be too onerous an exercise to carry out for one country, let alone many.
- Proposing continent-wide surveys: This would be a time- and labor-intensive exercise that, in addition to potentially being prohibitively expensive for ImproMedcare, may provide data which takes too long to analyze and/or is unnecessarily precise for the decision the company needs to make.
- Suggestions related to examining medical case files:
You have just bumped into your Project Director in the elevator. They have asked for an update on the project and our emerging recommendations. What do you tell them?
A good answer will start by summarizing the original ask / objectives, synthesize what was done and the insights generated, and provide a recommendation on what comes next. An insufficient answer will just respond to the question without synthesizing what was done and the associated insights. Over-explaining every step instead of focusing on the key takeaways should also be avoided.
An example of a good answer may look like the following:
- Our client asked us to evaluate which African countries they should expand into. (You can start by summarizing who the client is and the specific ask, but this is not essential)
- We conducted a cost effectiveness analysis focusing on three countries that represent over 40% of the total regional disease burden: Nigeria, South Africa, and Mozambique.
- Although the proportion of people with the disease is highest in Mozambique and the absolute number of cases is greatest in Nigeria, our analysis suggests launching the product in South Africa due to higher treatment success rates and lower costs, potentially related to greater access to health clinics/trained medical professionals to administer treatment in areas with higher disease burdens and strong pharmaceutical logistics (hypotheses to be confirmed through interviews and further research).
- However, as our client needs to reach ~20,000 people with the disease to cover costs, and we estimate only being able to reach about half that number in South Africa, the client will need to expand into additional countries as well
- Nigeria and Mozambique are strong contenders, though we will need to analyze ways to enhance the cure rate and cut treatment costs here, and also fully vet other countries in the region with high disease burdens.
Note: Many recommendations are possible and acceptable as long as they are supported by the analysis.
Possible Additional Questions (Depending on the Specific Role)
Having completed your analysis and presenting your recommendations to ImproMedcare leadership, our client decides to introduce the drug in four African countries, including the three above and one more that you uncover through further research. An important step in this process is to obtain approval from each of the country’s health authorities. One of the countries rejects ImproMedcare’s request.
Which reasons might the country have for declining the request even though there is a clear need for the drug in the country, the drug has been approved by the respective regulatory body, and funding has been secured?
It is important to realize that national health and economic priorities may not align with ImproMedcare’s priorities in a specific country. Such reasons may include:
- Costs around the drug treatment. Although the country may nominally have the infrastructure to successfully implement the drug treatment program, the country may believe that these costs take too many resources away from the treatment of other priority diseases. Such costs include monitoring patients over extended treatment periods, the logistics of properly storing and moving the drug, and the treatments and equipment necessary to manage possible side effects.
- Ongoing disease outbreaks. The country may be going through one or more health emergencies and its health leaders may therefore see the use of health sector resources better deployed to emergency response efforts.
- Desire to protect national industry. If the country is trying to strengthen its domestic pharmaceutical industry as part of its national industrialization plan, it may seek to protect it from foreign competitors. Even though local companies may not be able to produce this specific drug, the country may, on principle, have decided to disallow the entry of foreign pharmaceutical companies.
What other risks should our client consider when selecting countries to focus on?
ImproMedcare’s brand and reputation, intellectual property, and other assets could be affected by the country’s:
- political instability
- human rights record
- potential to counterfeit the drug
Hint: Many answers are possible here! What is most important is to take a step back and think through any other possible influential factors.