Ideas to Action:

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Changing Global Health Marketplace

Compared to a mere five years ago, the market for global health products--and both the difficulty and importance of forecasting demand for them--has changed dramatically.

  • More and increasingly diverse products are being developed and delivered, some with long production lead times and short shelf lives. Many of these are still under patent, have few suppliers and high prices per dose. Costs are further driven up by the technological complexity of the new drugs and vaccines; opportunities for recouping investments through sales in wealthy markets are limited for those, such as anti-malarials, that can expect virtually no consumption in the US and Europe. . These products have the potential to save millions of lives, but without a continuous supply, treatment can be interrupted, leading to patient death and the emergence of drug resistance.
  • More money and greater dependence on donors have resulted from governments' and foundations' increased attention and resources for global health. Billions of dollars in donor funding is now focused on infectious diseases, and much of it flows through new financing mechanisms such as the GAVI Fund, the International Finance Facility for Immunization, Advance Market Commitments, the President's Emergency Plan for AIDS Relief, the Global Fund for AIDS, Tuberculosis and Malaria, UNITAID/International Drug Purchasing Facility. In addition, the higher costs of new products and treatments mean that donors shoulder a larger portion of the financial burden.
  • More and different suppliers and emerging business models are new features in the market. For example, some multinational companies have agreed to set prices to recover costs or to license production in developing countries to respond to urgent public health needs.
  • New buyers and intermediaries have entered the market at the country- and global-level, some with very limited experience in forecasting, procurement and delivery.

These changes in the global health marketplace intensify the volatility of donor aid, introduce new sources of risk that affect the willingness of manufacturers to engage in developing country markets, and constrain the availability of essential medical technologies in poor countries, thereby increasing the health costs of supply chain failure. While there are many manifestations of these risks, the one that affects critical decisions, from whether to invest in R&D for future products to how to guard against stock-outs of antiretrovirals in health facilities, is shortcomings in demand forecasting. With a collective and cooperative effort by funding agencies and manufacturers, however, demand forecasting can be improved.