Arogya Parivar Case Study 08-18

Arogya Parivar Case Study

In 2004, the late CK Prahalad, an influential management professor and author, published The Fortune at the Bottom of the Pyramid, a book that urged companies to use a new lens to view the poor. Prahalad advocated for envisioning those at the bottom of the economic pyramid as producers and consumers of products, rather than merely as philanthropic beneficiaries.

Ten years later, several large companies have adopted Prahalad’s ideas and, in the process, have demonstrated that serving the “base of the pyramid” consumer can make good business sense. I analyzed several of these “base of the pyramid” business models — what we call “Building a Marketplace” — in Model Behavior: 20 Business Model Innovations for Sustainability, a report that I co-wrote and released earlier this year.

In the report, I showed that when companies deploy this model, they build new markets for their products in innovative and socially responsible ways. Among other things, this can include delivering social programs, adapting to local markets and bundling with other services like microfinance and technical assistance.

Improving healthcare in India

The pharmaceutical company Novartis implemented the building a marketplace model through its Arogya Parivar initiative, a for-profit effort to improve health in poor, rural communities in India without access to affordable healthcare.

Using a “1 plus 1 education” strategy, Arogya Parivar employs health educators to instruct villagers on a variety of health topics, thereby creating greater confidence in medicine. An accompanying supervisor, the “plus one”, educates doctors, service providers and pharmacies, and assesses an area’s needs.

Rather than solely focusing on selling products to a market, Novartis has taken on the challenge of empowering entire communities by educating potential customers – along with those who assess health and provide medicine – about their community health needs. To ensure the program’s success, Novartis has altered its product pricing structure, making medications available in small packs at affordable prices. In most cases, the cost doesn’t exceed $1.25 a week.

Arogya Parivar started in 2007 as a pilot program in South India. Since then, it has spread to ten Indian states and now reaches more than 40 million people. Novartis reports that the program broke even within 30 months. Recently, the company expanded it to Kenya and Vietnam, and plan to open in Indonesia.

The road to scale has not been easy, and Novartis has had to invest in an entirely new business ecosystem. However, by doing so, the company aims to earn trust, brand allegiance and revenue from a new group of consumers who might have increased spending power in the future.

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