Contemplation

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19 Οκτ 2013 (πριν από 3 χρόνια και 9 μήνες)

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Financing Social
Entrepreneurship Efforts

David Green

Creating a Different Economic
Paradigm


Examples of sustainable eye care that serve all
economic strata, where free is the lowest price


The interplay of affordable technology combined
with cost
-
effective and affordable eye care
service delivery


Social enterprise business models with the right
control and governance to ensure fidelity to
social mission


Financing to bring about the revolution

Our “Calling Card”


Over 300 eye care programs are self financing
and serving low income


Eye care, more than any other medical
specialty, has proven that primary, secondary
and tertiary care can be self financing and
serving the poor


Lessons learned in eye care need to be applied
to other medical arenas

Aravind Statistics 2011
-
12


Charity Pays: Aravind in Kerala

Initial situation

Activities

Result

Word of mouth generated by doing affordable care is sufficient to
drive paying volumes; cannibalization doesn’t occur


O
nly 2% of
Aravind’s

paying patient
population was
coming from Kerala


Aravind held over 40
outreach camps in 12
months


O
ne year later, over
25% of
Aravind’s

paying patients came
from Kerala

Paying
patients

Aravind Has Helped 285 Eye Hospitals Become
Sustainable

Other
Countries
:

Bangladesh

Bulgaria

Bolivia

Botswana

Cambodia

China

Egypt

Indonesia

Kenya

Malawi

Maldives

Nepal

Zambia

Zimbabwe

Guatemala

El Salvador

Tanzania

Tibet

Nigeria

Sri Lanka

Lions (SF)



-

112

Sight Savers

-

53

CBM

-

21

WHO,
ORBIS,IEF,RTS


Seva
, others

-

45

Total:

231

Participants: 1148

80% of these eye care programs have become
profitable while serving the poor

Grameen

Eye Hospitals

Surgeries:


47,000

70% pay



$
33

20% pay

$
78

10%

free

Profit

$
222,222

Lumbini

Eye Hospital, Nepal

AlNoor

Magrabi

Eye

Hospital

Egypt

Annual Data of Shenyang He Eye
Hospital


Chitrakoot
-

Sadguru

NC


Waiting room private

Waiting room Social


Operating theatre

Visualiza

:
Public and
Private Together

PACIFIC

VISION

FOUNDATION

EYE

INSTITUTE

San Francisco

USA

Humanizing Capitalism


Use profit and production capacity to serve


Profit
is good;
it

s
how you use it that makes a
difference


Profit
is a means to an end and not the end
itself


Maximize
distribution while being
profitable
VS Maximizing return on investment


Use pricing to change the competitive
landscape in favor of the
consumer

Finance from the Customer

Policy Implication for INGO’s


Instead of re
-
inventing cash flow
each year to pay for programmatic
operating expenses:


Make programs self financing from
user fees


Use freed
-
up finance for start up or
expansion of new service delivery

Create and Use Market Forces


Change the competitive landscape by
providing accessible high quality services


Consumers become program planners


Stimulate industry development by converting
need into demand and proving that markets
exist


Interplay of technology, disruptive pricing and compassion

14 million eyes regained sight through affordable
Aurolab products


8% global market
share of intraocular
lenses


1.9M
annual volume


Products sold in 120
countries: 60% to non
-
profits; 40%
commercial


CE Mark for most
products, FDA for
suture








IOL

Suture

Pharma

Volume


1,337,901


1,173,953


1,675,122

Aurolab Price
USD

$4.50

$1.10

$1.50

Competitor
Price


$100+


$10


$60

Aurolab

Aravind’s

Growth and IOL’s

Aurolab 1992

Source: “Restoring vision to Millions


underlying management concepts” a presentation by
Aravind

Executive Director
Thulasiraj
, 2010

Total procedures over time

Humanize Capitalism
-
Product Development

1.
Demystify product development,
manufacturing and regulatory costs

2.
Control technology/IP to be in control of
manufacturing, distribution and pricing to
insure affordability to end users

3.
Engage extreme technical competence

find people who already know what they
are doing

4.
De
-
construct supply/distribution chain to
cut out unnecessary margin

5.
Take the help of IP
lawyers


Aurolab

Humanizing Capitalism
-

Distribution

1.
Create novel channels that remove non
-
value
-
added
margin

2.
Use
pricing and quality
to change competitive
landscape

3.
Create
companies
that transform their
industry and
are in
favor of lower income people

4.
Convert
great unmet need for lower income
populations into demand

5.
Sculpt costs and margins to result in affordability,
while achieving reasonable returns

6.
Create novel, disruptive supply chain ecosystems
that reach middle class, lower middle class and
poor

Technology Development Formula


Find individuals with extreme technical
competence


Build company around them


Low cost product development


Short product development cycles
-

typically 2
years

Sculpting Costs & Margins to fit Reality

Comparing Apples to Apples

Manufacturing costs may be the same but
margins and distribution are vastly different


Figures for 2007

IOL's

Aurolab

Major competitor

Price

$2
-
30 (
$4)

$50
-
400 ($130)

Volume

1M

7M

Revenue

$5M

$920M

Cost of goods

$2.50

$32

Manufacturing

$1

$1



Quick test

User adjustable

Attach to Ear

SoundWorld
: Hearing
in 30 Minutes

$
2000 vs. $100
-
$200

Quantum Catch Fundus Camera


Fully automated operation


Field of view about 55
degrees in diameter
(mosaic) high resolution


Separate images under
near
-
infrared, red, and
green retinal illumination


All images are stereo pairs


Price
not yet set but far
lower than existing cameras


Glaucoma Detection


Hopkins Study
Conclusions: A prototype
pupillography

device appears able to discriminate
glaucoma from normal with relatively high
specificity and sensitivity.


RAPDx

is a
pupillograph

utilizing a high
-
definition,
machine
-
vision.

Non
-
Invasive Blood Glucose
Monitor


Aqueous Humor


We measure optical properties of the

aqueous humor related to glucose

concentration


Concept: shine light into eye, measure

output; correlate to blood glucose level,

all in a hand
-
held device for home use



Light

Change Competitive Landscape with Pricing


India market growth in cataract surgery
after Aurolab 1992
-
2002:


2 companies grow to over 10


Commercial companies compete with
Aurolab

on price and quality


Market grows from 800,000 to 5 million
cataract surgeries per year


Big Co
vs

Aurolab /Indian Govt.


Aurolab forces competitor to reduce pricing
for suture from $240/ box to $23 using
competitive pricing
as the
weapon

Changing the Competitive
L
andscape
with Finance


Financing as tool of influence to tilt an
industry in favor of the
poor


Criteria by which funds are invested
changes competitive landscape


Engineered financial instruments are
needed to grow social enterprise as an
asset class

Deutsche Bank


IAPB
-

Ashoka

$0.5 million

Subordinated Debt

$1.5 million Equity

$2.3 million

Senior Debt

$14.48 million

Eye Fund 1

Investor Protections:




84% first
-
loss protection to commercial


socially motivated investors provided by

Deutsche Bank, foundations, and

development agencies



1% loan loss reserves



6
-
month interest reserve

$10.18 million

Subordinated Loans

Investors


Storebrand

Livsforsikring

, Norway


SPP
Livförsäkring

AB , Sweden


Agence

Francaise

de
Developpement
, France

USA Investors


Overseas
Private Investment
Corporation


The Bernard A. Newcomb
Foundation


Deutsche
Bank Americas
Foundation


COFRA
Foundation,
Switzerland


Janet A.
McKinley

Investments:


China


Nigeria


Paraguay

IAPB Capacity Building: $1.5M to 8
Institutions to
P
rovide Training to 37


Eye Fund Two


$50M affordable debt


Presently accessing demand


Regionalize


Combine with grants and possibly equity fund

Enhancing Organizational Effectiveness

Raise
$10
-
20M
to support creating sustainable eye
care:


Strengthen
organizations providing sustainability
planning, consultation and training
services with
clients in their region


Create
IT infrastructure to support all activities,
including monitoring and reporting to donors;
demonstrating results


Take
lessons learned in creating sustainable eye
care and
apply
to other medical specialty arenas.


Apply
lessons learned in developing countries for
creating more equitable and cost
-
efficient eye
care service delivery in developed countries.


For
-
Profit Social Enterprises


Development of a new asset class to
facilitate financing for
social
enterprises


For profit social enterprise that can leverage off
of increasing valuation of assets
vs. non profits,
which can’t


Go beyond Corporate Social Responsibility to use
assets and core competencies to be socially
transforming


“Middle
-
Way” of
Capitalism


Philanthropy is not sustainable and often does
not reach the beneficiary


Strictly return on investment commercial sector
does not address problem in it’s full public health
magnitude


Need for “Middle
-
Way” of capitalism that
maximizes distribution while being profitable


Socially transforming vs. CSR


Service to others ‘baked’ into the organizational
DNA

Fight
All
Forms of Blindness


Physical Blindness


Blind to the needs of
others


Empathy with the blind
and visually challenged
and
our desire
to do
something about this.


IAPB


we are small but
powerful in our collective
quest to serve others and
ameliorate human
suffering


Dr. V and Systems Change

Guiding Philosophy



“… Spirituality
allows the divine
force to work
through each of us
for a greater good