| Many western companies design their business | | | | because the patient in Boston is being helped by the |
| models based on high profit margins. It pays very well | | | | insurance firm while the one in southern Africa must |
| to be differentiated and pursue vertical markets. | | | | pay cash. That is the major difference in marketing |
| Horizontal markets are commoditized and a strategy | | | | drugs between U.S and Africa. |
| to dominate within it is not always seen as a smart | | | | Another example is in the telecommunication industry. |
| move by analysts. Increasingly firms try to innovate | | | | Cellular handsets are very expensive in Africa when |
| and differentiate in order to carve a niche where they | | | | compared to the U.S. Understandably, a simple reason |
| can make hefty margins. | | | | is lack of competition since not many firms have |
| That is very good if your business is domiciled in the | | | | gotten into the markets. Another is the obvious fact |
| saturated Western Europe and U.S markets. There is | | | | that none of those gadgets are made in Africa. So, |
| growth inertia in these two markets with their | | | | there are associated transportation and handling costs |
| ultra-competitions and intense regulations. Especially in | | | | in selling them in Africa. |
| the Pharmaceutical industry, there seems to be no | | | | Nonetheless, the truth is that by not using price based |
| way to expect growth in these matured economies. | | | | model, many MNCs are undermining their potentials in |
| So what do you do? You have to expand out of | | | | developing, emerging or transitional economies like |
| Europe and U.S to Africa, Latin America and Asia. | | | | Africa and Asia. You have to offer what the |
| They are the future. They have the population with | | | | customers can afford and do away with the cost |
| enormous growth potentials. Despite the downturn in | | | | based strategy. In the U.S, you can ask for any price; in |
| the global economy, they remain promising, especially | | | | Africa, you need sales volume and lower price makes |
| Asia and Latin America (in this case, Brazil). | | | | it happen. |
| Having worked in Lagos (Nigeria) as a banker and | | | | For Pharma industry, they have to rethink their |
| traveled to many Africa nations, the high margin | | | | strategies. It is time they cut down the prices of their |
| structure will not always work in Africa, especially in | | | | drugs. Drug prices are patient problems, unlike in U.S |
| pharmaceutical industry. Many are still very poor; yet, | | | | where it is the insurance firms' (for those that have, |
| they have the same needs as those in the developed | | | | anyway). Many more people can give you sales |
| world. From entertainment to drugs, they want to | | | | volume and you will make more profits than sticking to |
| enjoy the western products. They want the new cars | | | | your present pricing model and serving only less than |
| for their bad roads; they want the best drugs to | | | | 5% of the African market. |
| manage diabetes; the new video games to relax; and | | | | If you focus on pushing volume at good prices, more |
| so on. Any sense of high cost, people will abandon the | | | | customers will come in. That alone will help you stay |
| product. It is very common to see people die slowly | | | | profitable. And they will be better off themselves by |
| because they cannot afford drugs for treatable | | | | using your great products. Drugs, video games, etc |
| diseases. | | | | must not be overly expensive in Asia and Africa |
| Arguably, these drugs and cars are available in many | | | | compared to U.S and Western Europe. |
| parts of Africa. But the problem is that only few can | | | | Change your model and you will be happier doing |
| afford them. With no insurance scheme to finance | | | | business in Africa. Cut the prices and use sales volume |
| healthcare delivery, patients must pay themselves. | | | | to help people and improve your bottom line. It could be |
| What worked in Boston will not work in Botswana | | | | that simple. |