3 Reasons Why Inclusive Business in Health is Not 'Soft'
Let us correct this myth and discuss what is needed to support inclusive business models for health care in Asia and the Pacific.
In a meeting just before we hosted the panel discussion focused on health at last month’s 2nd Inclusive Business Forum for Asia in Manila, a friend of ours asked us, “why are you doing all this soft stuff?” Because health is our passion, and inclusive business is one thing we believe the world needs more of.
Inclusive business is everything but ‘soft’ as the concept is fundamentally commercial and can have high impact, but our friend’s question shows what many people—including commercial banks and maybe also you—think about inclusive business, especially in social sectors like health; it’s a hybrid between philanthropy, charity, and social work, and it’s not ‘real’ business.
Allow us, though, to correct this myth and share with you some facts and key points of our panel, which brought together cutting-edge businesses leading health care innovations, represented by corporate executives and entrepreneurs who work to turn a profit, to discuss what is needed to support inclusive business models for health care.
1. There is a market
Health is one of the fastest growing business sectors in Asia, driven by an increasing demand for quality health care and a growing population. When we asked the panelists why they went into health, they all said that’s where they identified business opportunities that could be scaled up. For Giovanni Alingog, President and CEO of Glovax Biotech, distributing affordable vaccines is not only socially responsible but also a great business model in countries like the Philippines, where more than 60 million people are not fully vaccinated because they can’t access or afford the shots. Likewise, the ‘the real’ business in Colombia for Sanitas Internacional was in targeting the low-income segment, after the government has established a social health insurance system based on capitation fee. Naresh Malhorta, CEO of The Family Doctor, the largest clinic chain for affordable quality primary family care in India, said there is definitely an opportunity for primary health care targeting low-income groups to fill a market gap in his country and other parts of Asia and the Pacific. And Dr Eric Schulze, founder of Lifetrack, explained how his company is developing an inclusive business from his experience in teleradiology to bring affordable radiology diagnostics and training to remote hospitals in Asia.
2. Success factors are the same for all businesses
To succeed, any type of business needs to know their market, build on scale, develop a brand, think long-term, and have patient capital. This is also the case for inclusive businesses that aim to be sustainable and commercially viable in the long run. The only key difference is that inclusive businesses go the extra mile to reach emerging target markets, and differentiate their products to improve ‘social’ infrastructure that will ultimately serve the poor. Given today’s global economic uncertainty, shouldn’t smart business models be looking into these key differentials anyway? Shifting consumer trends and emerging economic populations mean that successful businesses must be able to reach diverse customers, and quickly.
3. Inclusive business is here to stay
The rise of small and medium-sized enterprises in Asia has coincided with the expansion of inclusive business in the region. In this case of health, opportunities continue to grow at such a steady rate that we can conclude that inclusive business in health is here to stay, driven by organic factors such as an aging population, growing middle class, overburdened public health systems and greater locally driven innovations to social problems. But to support inclusive business models for health, we need a shift in mindset, and do more to support inclusive businesses by sharing their success stories with financiers and technical experts; building confidence on the commercial value proposition for inclusive business, and integrating these businesses into mainstream commercial finance structures.
At ADB, we can help boost inclusive business by creating networks with key partners such as impact investors like Eric Berkowitz from Bamboo Finance. We can also provide advice on business plans and financing, investor pitching, identifying risks, prepare mitigation strategies, and creating solid business expansion strategies. Because commercial financiers still need to understand how to evaluate not only profit but also social impact, ADB can contribute to bridging the gap for inclusive businesses. By doing so, we will be supporting business models built for the long term, that can be scaled, and offer private sector solutions for people at the base of the income pyramid.