Rutgers University Curbing COVID 19 Social and Economic Life Effects Paper You have recorded Covid infections for the month. Discuss your findings. Talk ab

Rutgers University Curbing COVID 19 Social and Economic Life Effects Paper You have recorded Covid infections for the month. Discuss your findings. Talk about the similarities and differences and try to explain WHY this might be happening2. Your job is to find geographic solutions to Covid. By that I mean, spatial (how do you get it to stop spreading throughout the world and in the US (or Germany) and locally; economic; political ( a big deal in the US); socially. And so on.This is a difficult question and I expect you to do a bit of research. Your job is NOT to figure out what I believe; rather, you are to use good arguments, as you have done in the discussions, and back them up with research.MLA Format, 750 words, no plagiarism, cite websites you use I will be attaching my recorded Covid infections of the month. Integrative Case 3.1
Farmacias Similares: Innovating in the Mexican Healthcare Industry’
Miguel A. Montoya (Tecnológico de Monterrey)
Mauricio Cervantes (Tecnológico de Monterrey)
In the Mexican healthcare industry, Best Laboratories cre- professionals, low profits, and refusal of the private
ated Farmacias Similares (FS) in 1997 with a new Pharmacy network to use generic drugs-combined with the fact
Doctor business model, which started by focusing on the base that there was only a single client and that there was
of the pyramid (BOP). The successful model recently pene a large amount of the population without access to
trated higher-income markets in Mexico as well. Looking for medical services-pushed Best Laboratories to create
ward, the Board needs to decide which direction to focus on. Farmacias Similares (FS) in 1997 with a new Pharmacy
Doctor business model.
The Board of Farmacias Similares wants to maintain FS began with one pilot model in 1997, which
the firm growth rate of the past few years. Next month increased to two in 1998. There was then a large
it will have its annual meeting and need to make a very increase to 144 in 1999. The initial objective was to sup-
strategic decision: should the firm migrate to focus on ply generic medicines to the Bol population without
the low-income class in other Latin American countries access to public health insurance (59% in 1997), mainly
or should it migrate to focus on the high-income class covering those working in the informal economy who
in Mexico.
lacked public health insurance and who could not
afford private healthcare. At that time the Mexican
Introduction
population was growing at 2% annually, with the urban
For over four decades, Best Laboratories, a Mexican Bop population also continuing to expand, signifying
owned company founded in 1953, concentrated exclu an expanding market for the new service. The FS model
sively on the production and supply of generic drugs for is comprised of a small medical clinic attached to the
Mexican public health institutions. This model had a sig pharmacy where clients visit the doctor for a nominal
nificant weakness: a single client the government, a lot of fee (no more than US$2) and receive a quick prescrip
competition, and low profit margins (see Appendix 1). tion. The consumer then purchases the generic drugs
Faced with these challenges, in 1997 Best Laboratories quickly and cheaply at the FS pharmacy, with most drugs
saw a huge opportunity with a change in the law allow being 50% cheaper than their brand-name equivalents,
ing the sale of generic medicine directly to the public.? The FS medical service is available for over 12 hours
At first Best Laboratories tried to sell the generic daily. Right from the start, users interviewed reported
drugs through private pharmacy chains. However, due that the convenient location of the pharmacies, the
to a campaign to discredit generic medicine, exist low-cost medical service, and the lack of the require
ing private pharmacy chains in Mexico refused to sell ment for an appointment together with the availabil-
the generic drugs. As a result the current distribution ity of generic medicine at affordable prices-made FS
channels were of no use to Best Laboratories. This situ- one of the best options for the treatment of illnesses
ation motivated Best Laboratories to create its own dis- not requiring hospitalization.
tribution channels in order to fulfil the needs of the
base of the pyramid (BOP), by offering cheap generic Increasing Market Share in the Low-Cost Segment
drugs in direct contrast to the expensive brand-name Competitors of FS (mostly multinational drug makers)
drugs sold by the current private pharmacy chains. criticized the quality of the generic drugs sold by FS.
However, the majority of private doctors continued to But a series of tests carried out by the authorities, as well
prescribe brand-name drugs. The excess of medical as universities and multinational laboratories, showed
that FS drugs were reliable. The innovative low-cost
11 Miguel A. Montoya and Mauricio Cervantes. Reprinted with permission Pharmacy-Doctor model enjoyed rapid growth within
21 Generic medications are those sold under the name of the active ingredient,
the BOP in Mexico: in 1998 the company had two in-
in contrast to brand name drugs that are manufactured worldwide by different
pharmaceutical companies for brand name owners.
store medical clinics, a number that expanded to 1,215
Part Three Integrative Cases
437
in 2003, 3,630 in 2008, and 4,053 in 2011. More than further stated that visiting the doctor with no appoint-
5 million visits a month were recorded in 2011, with the ment involved an average wait of more than fue hours,
cost of the medical consultation being approximately despite the average consultation not exceeding ten
US$2. FS only sold generic drugs, and over 220 million minutes. Finally, the interviewee claimed that in most
generic units were sold in 2013, achieving a market pen- cases, four out of five, the drug is not free”.
etration of 60% of units sold. The Pharmacy-Doctor As the Pharmacy-Doctor model started to become
business model immediately began to spread within more established, positive discussions on the quality
the industry. GI Pharmacies began operations in 1999, of generic medicines and brand-name rights between
simultaneously piloting the low-cost Pharmacy-Doctor FS and international drug makers began to take place,
model for the Bop population and purchasing generic resulting in collaboration between the various actors.
drugs from several laboratories, GI is only a distributor: An example of this would be Sandoz de Mexico, the
it has no dedicated laboratories and no plans to inte generic division of the Novartis Group, which began to
grate the entire process in the same manner as FS. work towards becoming the supplier for FS. Regardless
The successful Pharmacy-Doctor business model of the efficiency of implementation and the increasing
for those lacking health insurance pioneered by FS healthcare coverage resulting from Seguro Popular,
gradually became threatened by new legislation. At the FS Pharmacy-Doctor model continued to grow. The
the beginning of 2003, the government launched the emergence of the model and its nationwide diffusion in
Seguro Popular (universal public health insurance), the Bol by FS was a huge success.
offering medical coverage to all Mexicans with no for-
mal employment and therefore without access to IMSS
Imitators in the High-Income Level Segment
or ISSSTE. Seguro Popular coverage grew rapidly, and Up until 2011, FS and GI focused on servicing the BOP
by 2011 more than 49 million Mexicans were affiliated and had no plans to enter the healthcare field for the
(43% of the population). As a result, when adding middle or upper class in Mexico. In 2009, external
52 million Social Security system users and users of events once again affected the dynamics of the model.
other public health systems, the country’s public health Mexico was affected by a pandemic (the HINI in?lu-
coverage reached over 89% of the population. The mar-enza virus), leading to increased regulations of drug
ket segment of the BoP for FS was therefore reduced sales and making a prescription mandatory for the sale
from 59% in 1997 to 11% in 2011. As the innovation grew of antibiotics. This became a strong contributing factor
in acceptance, an unforeseen factor came into play the to the diffusion of the business model. The treatment
ability of the system to save service-users time. Although of HINI was complicated because the Mexican popu-
IMSS, ISSSTE, and Seguro Popular are totally free, lation was accustomed to self-medication without the
they have a long waiting list for their services, including necessity of a prescription. The lack of national regu-
emergencies. The Bop population is mostly employed lations preventing the sale of antibiotics without a pre-
in the informal sector, meaning if people lose time wait- scription and the prevalence of self-medication led to
ing for medical services they lose their daily wage. It is the deaths of several people affected by HIN1. In order
also difficult for employees to obtain permission to visit to address this problem, in May 2010 the government
the doctor’s office. BoP clients prefer to spend an aver tightened the regulations governing the sale of drugs,
age between US$7 and US$10 on a doctor’s prescription particularly the sale of antibiotics. These legislative
and medicine than to lose their daily wage waiting in changes, combined with an ever-increasing time-poor
line for free public services.
middle and upper classes, helped the Pharmacy-Doctor
Despite the increase in public health coverage, the model to diffuse to large segments of the population.
new Pharmacy-Doctor model continued to grow. The In 2011, the majority of the national pharmacy chains
perception of poor quality of public health services had adopted the Pharmacy-Doctor model in most of
(such as significant waiting time before being seen by a their branches, not just in areas populated by the BOP,
doctor and a lack of medicine in public health institu- but also in mainly middle and upper-class neighbor-
tions) provided an opportunity for the consolidation hoods. Initially pharmacies sold brand-name drugs. But
of the new model. An interview with a lower middle- by 2011, many adopted the new model, making space
class user of state-run medical services revealed that: within the pharmacy for a doctor’s office. Today many
“even with an advance appointment, the waiting time pharmacies offer an almost identical model: a physician
for a consultation is about three hours.” The interviewee who can be seen quickly (10 to 15 minutes waiting time)
Part Three Integrative Cases
439
Exhibit 2 Growth of the Pharmacy-Doctor Model in the Base of the Pyramid in Mexico, 1997-2011
6000
5000
4000
3000
2000
1000
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Number of Pharmacies of FS and Gl combined.
In the beginning, the legislative change making doctors. It is a successful innovation that has prolife-
drug prescriptions mandatory negatively affected sales rated throughout the Mexican healthcare industry
of medicines in drugstores that did not offer low-cost (Exhibit 2). Looking forward, the Board of Farmacias
physician consultations. This in turn led to pharmacy Similares, which pioneered this model, needs to make
chains for all social strata (BOP, middle class, and a strategic decision: should the firm go international
upper class) seeking to implement the Pharmacy- and export the model to focus on the low-income class
Doctor business model. As a result, the model diffused in other Latin American countries or should it stay
upwards socially bringing the Pharmacy-Doctor pair- domestic and further penetrate the higher-income
ing to middle and upper-class clients. Consumers are (middle and upper-class) markets in Mexico.
willing to pay out-of-pocket for Pharmacy-Doctor cli-
nics to receive care more quickly. Many are willing to
Appendix 1. The Healthcare Industry in Mexico
use a Pharmacy-Doctor clinic for a minor condition if In 1997 the healthcare industry was mainly made up
it means being seen immediately. Pharmacy chains that of the following: the Mexican Public Health Service
offer their products to wealthy social classes have thus (IMSS) founded in 1943 and covering 35% of the
adopted a model originally designed for the Bop,rea population; the Government Workers Social Secu-
lizing that there is an opportunity to increase sales due rity Scheme (ISSSTE) founded in 1960 and covering
to the fact that even the middle or upper classes do not 5% of the population, and other social security sys-
go to their private doctor for a prescription for minor tems founded between 1940 and 1950 and covering
ailments. As one FS patient commented: “The wait was 1% of the population. In 1997, Mexico had approxi-
10 minutes and the consultation was 15 minutes. The mately 59% of the population without medical cov-
doctor’s professional qualification was from a highly crage, the majority of whom belonging to the Bop.
regarded private school in the area. The attention was In addition, there is a private network of insurance
good and I paid US$1.5 for the consultation and US$2 companies, hospitals, pharmacies, and doctors that
for the medicine. My eye infection disappeared in two charge expensive fees for their medical services and
days.” Doctors consulting inside the pharmacies also medicines. This private network is used by the middle
viewed this avenue as a useful way of obtaining expe- and upper classes as they can afford to take out pri-
rience after graduation and helping them to decide on vate health insurance, and this private network covers
a future specialization.
19% of the population. This 19% is already covered
Overall, the new Pharmacy-Doctor model is a win- by the IMSS or ISSSTE, since these individuals are
win-win for consumers (patients), drug makers, and most likely employees and all employers must provide
440
Part Three Strategizing Around the Globe
public service benefits. However, this segment takes picture of the conditions prevailing in the medical
out private insurance in order to avail itself of the pri- industry in Mexico in 1997.
vate network, which is believed to be more efficient
than the IMSS or ISSSTE: only in extreme cases does Case Discussion Questions
this segment use the public service. The individuals
1. Among several definitions of entrepreneurship,
who comprise of the Bop, who are excluded from pub-
a leading definition suggests that entrepreneur
lic medical services and unable to afford the private
ship is defined as the identification and exploi.
services, generally have to use alternative medicines,
tation of previously unexplored opportunities.
such as homeopathy, herbal medicine, and traditional
How does this case support this definition?
healers that are the only options economically avai-
lable to them.
2. From an institution-based view, what factors
The network of private pharmacies sells only brand-
pushed Best Laboratories to create Farmacias
name drugs manufactured by international drug mak-
Similares (FS) with a new Pharmacy-Doctor
ers, while public sector pharmacies use mainly generic
business model in 1997? More recently, what
drugs manufactured by national and international
additional institution-based factors promoted
drug makers. Since the IMSS has the widest population
its diffusion from the BoP to middle and upper-
class markets?
coverage, competition among companies to be off-
cial suppliers has resulted in allegations of widespread
3. From a resource-based view, how easy or difficult
corruption. Another noteworthy characteristic of the
it is for competitors to offer a similar Pharmacy
medical industry is the excellent social status that doc-
Doctor business model? Given your answer, how
tors have, along with the excellent wages they can earn
sustainable is FS’s competitive advantage?
in private hospitals or consultancies. Annually more 4. If you were a member of the FS Board, of the two
doctors graduate from Mexican universities than are directions being entertained, which one would
required in large urban areas. There is a scarcity of you recommend?
doctors in rural areas, but the majority pre?er urban
to rural environments as low-income people are often
Sources: Extracted from (1) company web pages: 2) Euromonitor Interna
unable to pay for medical services. As a result, many tional 2012. Consumer Health-Mexico. Retrieved February 12, 2012, www
medical graduates swell the ranks of the urban under 2011 Survey of Health Care Consumers in Mexico: Kay Findings, Strategic
euromonitor.com/mexico (3) P. Keckley, S. Coughlin, L. Korenda, & G. Moreno
employed, filling temporary positions. This is a general Implications Deloime Center for Health Solutions

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