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Lessons from Novartis

By Professor Donald A. Marchand and Program Manager Associate Anna Moncef - April 2011

Every 30 seconds a child dies of malaria. Over 40 percent of the world’s children live in countries in which malaria is endemic. Each year the disease kills around a million people – most of them African children under five. Increasing resistance to anti-malarial drugs, coupled with widespread poverty, weak health infrastructure and, in some countries, civil unrest, mean that this mortality rate is rising.

The tragedy is that the vast majority of these deaths are preventable. The problem is not that we lack the medical knowledge to cure malaria, but that the supply chain is not up to the job. Good drugs exist, but supply is unable to meet demand where it occurs. It is a problem that many businesses would recognize and indeed a case study that many can learn from. The only difference here is that when drugs that treat malaria are out of stock it costs lives, not profits.

Exploring the problem
Novartis, the pharmaceutical business, produces a drug called Coartem, which has a 95 percent malaria cure rate with only three days of treatment. However, it is also aware of the huge supply chain problems in many African countries that make it hard to actually get the pills to patients. When it analyzed the situation with a view to helping solve the problem, it found that the major issues were:

  • High stock-outs at rural health facilities, i.e. the point of care, where patients can get free drugs rather than having to pay for them at pharmacies or private clinics
  • Zero visibility to district management on the medicine stock levels in their facilities
  • Extreme difficulty in forecasting demand for the drug, resulting in emergency orders that require Novartis to ramp up production and transport the drug by air
  • Inconsistent reporting of consumption and sporadic, paper-based ordering
  • Very poor IT and communications infrastructure, particularly in rural areas, although mobile coverage was growing

At the same time, its analysis concluded that it was not possible for Novartis simply to step in and take control of local distribution itself, as this was the responsibility of each country’s ministry of public health.

Rather than giving up, Novartis decided to take on the challenge and search for innovative solutions to the problem. To this end, they established a Novartis led Public Private partnership initiative which enlisted the support of other partners; IBM, Vodafone, the Roll Back Malaria partnership and the Ministry of Health in Tanzania.

Having defined the problem and targeting SMS, mapping, mobile phones and the Internet as key elements to the solution, Novartis used the IBM “Extreme Blue” problem-solving method, which its people had used for years to find solutions to all sorts of obstacles. One of the program’s unique characteristics is that it enlists the help of students, who bring fresh thinking that is not constrained by the “corporate way” of doing things.

For 12 weeks, this group worked on the solution: it mapped the supply chain, investigated possible improvements, researched mobile phone coverage in sub-saharan African countries and refined and proposed 10 possible options. From these Novartis’ management chose one – SMS-based stock management.

SMS for Life
The core of this solution is the use of SMS messaging between the health posts that dispense Coartem, and the district and regional warehouses that distribute the drug. The information from the messages is combined with a data management system that tracks stock movement and improves stock forecasting and planning.

Every Thursday, the system sends a stock request message to the mobile phones of all registered health facility workers. They then count how much stock they have and send the information back to the system via a free text message. If they have not done this by Friday, the system sends them a reminder. On Monday the system would send information about stock levels and non-reports to the district management officer, who can then monitor stock levels and order or redistribute medicine between sites accordingly.

The six-month pilot program, which was conducted in three districts in Tanzania, covering 229 villages and a population of 1.2 million people,had impressive results: stock-outs were reduced from 57 percent to zero in one district; from 87 percent to 30 percent in the second; and from 93 percent to 47 percent in the third. At the beginning of the pilot, 26 percent of the facilities had no dose form of Coartem; by the end this figure had been cut to less than one percent.

Features of success
It took much more than a clever idea and effective use of IT to make this solution work on the ground. At the outset, finding the right partners in the non-profit and commercial sectors was critical for both sourcing funding and skills, while appointing the right people to form and lead the steering committee was equally important.

The team behind SMS for Life then scoped, designed and ran a meticulously-researched pilot project, spending months on the ground in Tanzania making sure every detail of the solution would fit the local environment. This stage involved explaining the pilot to all stakeholders, showing them the draft solution and getting their agreement; the team also met with a couple of NGOs that worked in Tanzania and its new health systems.

Through the entire process they concentrated on developing relationships with their partners rather than relying on contracts or other legal documents. In the end, no formal budget, legal contracts or memorandums of understanding came in to play between any of the partners. The project was held together by the partners’ shared commitment to the end result, not any external measures.

Donald A. Marchand is Professor of Strategy Execution and Information Management at IMD. He teaches on the Orchestrating Winning Performance program. This article is based on a full case study of the SMS for Life project.

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