Business Ethics Governance & Social Responsibility

Case 8: Social Business at Novartis: Arogya Parivar

Section: A
Submitted On: 28-12-2021
Group: 1
21001 – A Nirmala
21002 – Abhilasha M P
21003 – Adhwaid P S
21004 – Nityam Aggarwal
21005 – Akilesh Holla K U
21006 – Akshay Chore
21007 – Akshay Srivastava
21008 – Aloka S (Absent)
21009 – Anirudh M
Question 1: Discuss the various issues related to social business as far as
Novartis is concerned. Use theoretical explanation for your answer.
In our opinion this case about Novartis comes under Ackerman Model,
In the first stage, the project will be identified for social delivery. The top managers get to
know the most common social problem and express willingness to take part in a particular
project.
Here Novartis executive committee, management thinker C.K. Prahalad had challenged the
company to move beyond its conventional approach to corporate responsibility of donating
medicine to the indigent. He encouraged the company to develop a profitable way to serve
what he called “the bottom of the pyramid” – the four billion people who each lived on less
than $5 per day.
In the second stage, experts are hired for suggestions to make the projects operational.
Here Novartis’s India country head Ranjit Shahani, together with Udit Batra, head of
corporate strategy, Paul Choffat, head of the Consumer Health division, and Richard Saynor,
head of Novartis’s emerging market generics business, set up an informal steering committee
to quietly explore the idea.
In the third stage, project is made public and implemented.
The steering committee approved initial pilots of 6-8 months’ duration to test whether short
talks by visiting local social workers would increase awareness of health care, hygiene, and
disease treatment that might lead even illiterate villagers to seek out and visit a nearby doctor,
receive diagnosis.
In the fourth stage, societal issues are considered and addressed in detail.
After launching Arogya Parivar they educated many rural people about the hygiene and
health regarding infectious diseases, malnutrition, and pediatric needs.
Many Stakeholders faced the issue related to social business like
Company and patents: Novartis pharmaceutical business relied on patented products, but
executive granted by patent protection allowed the company to sell drugs at higher prices for
certain years, but drugs invented for $1 billion by R&D had been in the fallen by 50% for
every 9 years for 50 years. Drugs representing industry sales of $117 billion losing patent
protection.
In 2012 the sales shrink by 2% affecting top 8 country markets as government, hospitals,
insurers, management care organisations, pharmacies.
Indian patents act 1970 has restricted patents process and limited composition patents for 5 to
7 years.
Rural areas: the health care providers in India have been practicing non allopathic (i.e.,
Ayurvedic, unani, homeopathic).
People
Novartis' primary interest was for those living in rural areas. People in rural areas were
frequently confronted with issues of access and knowledge. The main issue was access; if
they needed to attend a primary health care Centre, they had to go a long distance away from
their house. In the event of an emergency, they are unable to go to a primary health care
facility and must be treated at home with only a few standard medical devices. The key
religious healing practices reportedly included Kalami, Bhandai, and Spiritual Healing,
whereas the non-religious healing practices included Sorcery, Kabiraji, and Home Medicine.
Both patients and healers practiced self-medication at home with their indigenous
knowledge. Kabiraji was widely practiced based on informal use of local medicinal plants in
rural areas. Healers in both Kalami and Bhandari practices resorted to religious rituals, and
usually used verses of holy books in healing, which required a firm belief of patients for the
treatment to be effective. Traditional healing practices in rural Bangladesh this is an example
how the rural area used to treat the people in case of emergency. The second important
difficulty was raising awareness among rural residents. People were unconcerned about
health habits. The girls in the neighbourhood were experiencing a variety of hygiene-related
issues, including urinary tract infections. The rural people were blaming numerous females if
they saw any of them go to the doctor because of this. Due to urinary infection, there are
many complications in female physiology which even result in the removal of uteruses.
After launching Arogya Parivar
Internal issues in the pilot stage: cost was allocated between two division whose products
Arogya sold.in proportion to their sales. Local sales teams were asserted. To defend the
program some stores were shut in Mumbai to avoid arguments.
Government: government provided free medicine for TB which eliminated the commercial
demand for Novartis. But most of the rural people did not have the idea about the free
medicine. But however, there was an issue with the packaging as it was difficult for the rural
people to afford the whole packet.
Slow processing: novates must register every new product variant and package size with
national authorities and this process took months.
NGO’S: Expanding Arogya field’s presence partnering with both Indian government and
NGO’S neither proved feasible. Though the government was not as feasible and was time
consuming. NGO’S were not used in the best ways.
Many Novartis’s most senior manager saw Arogya and social business as a unique source of
value.
Pasrija told “People in India and elsewhere in emerging markets need basic information on
hygiene, health care, and treatment compliance, and we need to address social taboos and
attitudes towards modern medicine, and all this comes before patient diagnosis and drug
treatment can be helpful. Arogya shows that we can do this on a self-sustaining basis. If
Arogya was making a loss it would die”.

Question 2: What lessons can be learnt from this model regarding social
aspects of business? Provide frameworks or theoretical explanations to
support your views.
Analysis of various contributions Novartis made towards the betterment of the society
Awareness:
In India most followed traditional methods of healthcare, which took very time to heal and
was not that effective to the given growing hybrid world. Patients' discernment skills are
lacking, and they are unable to find the correct specialist for their illness. They have no idea
whether the medications prescribed by the doctor and those delivered by the pharmacist are
same. Patients have no idea whether the drugs they're taking are meant to prevent, cure, or
maintain their health. Arogya Parivar reached a break even after 31 months of its launch, the
Pilot team which built a relationship with the chiefs, opinion leaders and healthcare workers
at villages helped in creating an education platform
Affordability:
Rural villages spent 10% of their income on cigarettes and Alcohol and spent less than 6% on
health. The preference of the research was given to families earning $2-$5 per day, which
means Novartis is targeting the low-income groups. Sandoz initiative enable Novartis to
provide products at steep discounts. If the patient is to be brought to a nearby town for
treatment (therapy lasts six to nine months), the cost of TB treatment at government health
centres is expected to be more than INR 10,000, compared to INR 15,000 for private
treatment. Patients at government facilities had to go to private diagnostic centres and buy
their drugs. Private therapy for minor ailments or skin allergies cost between 250 and 1,000
rupees.
Availability:
The biggest challenge has been gaining access to medical services and medications. There are
no qualified doctors in the villages, either private or government-run, and no authorised
pharmacies. As a result, travelling to the block town, where the PHC (public health centre) or
a private doctor is located, incurs a cost. Arogya sales that occurred via Novartis existing
distribution boundaries. It proved its efforts when the population who could afford the
medicines rose from 12% to 60% through its various distribution programs.
Accessibility:
Arogya health camp helped in bring the healthcare facility to the Village people and with the
help of awareness that Novartis was trying to create through its education programs. How can
they best meet the needs of marginalised communities? How can they make their medicines
more accessible to more people, is the question, and how can they do it in a way that will
benefit our company in the long run?
It all starts with a fundamental shift in how they do business - envisioning new ways to close
the gap between those who have access to important healthcare advances and those who
don't.
They are devoted to getting their medicines to as many patients as possible, no matter where
they are. they systematically integrated access strategies into how they study, develop, and
deliver all their innovative medicines around the world. This is a vital indicator of their
leaders' and employees' success.
Acceptance:
Patients have their own viewpoints on their ailments. Only those ailments that prevent them
from working are treated. The therapy of youngsters comes first, followed by the treatment of
adults. Novartis recognised the need for high-quality, low-cost healthcare and medications.
Arogya Parivar uses Novartis' medical expertise and resources to offer crucial healthcare
information, medications, and services to rural populations in ten Indian states. Among the
services provided are health camps, free check-ups, and educational and awareness
campaigns. To date, the organisation has reached out to 50 million rural Indians, with the
goal of reaching 350 million in the next ten years. Novartis has emp It is not necessary to
remind anyone that India is a big country with massive problems. Out of a total population of
1.2 billion, more than 700 million people live in the country's 640,000 villages. Rural India
accounts about half of the country's revenue. At least half of the rural population lives on a
daily income of $2-3 US dollars (INR90-135). For a pittance, many of these people work as
day labourers. As a result, getting sick has a big influence on household income and one's
ability to get out of poverty. Health education and treatment are scarce in rural India. People
have limited access to preventative and curative knowledge, as well as medical treatment
from professionals. Because of this widespread misinformation, India's rural poor would
suffer from disease rather than seek medical help. There is clearly a compelling need for
healthcare to be met a social business strategy to battle the monster that is rural healthcare in
India.
Lessons that can be learnt:
Greater Social Responsibility:
Novartis is actively supporting various initiatives in the areas of health, education, and
environment. Primary focus is on health where Novartis strive to reach underserved patients
followed by education. Novartis has been successful on helping masses suffering from
various kinds of infectious disease through partnerships with other like-minded agencies
including hospitals, civil society, advocacy groups and academia. It has discovered and
developed innovative medicines by collaboration to address the world’s most pressing
challenges. Its Corporate social responsibility arm focuses on doing business responsibly, by
driving environmental responsibility and meeting high ethical standards for example as per
their CR strategy they added private distribution at a small return to company’s anti-malaria
program. Thanks to Batra's funding, the steering group selected Olivier Jarry to head research
and testing in India. Jarry began by looking into the rural marketing efforts of fast-moving
consumer goods (FMCG) companies in India, where they had begun to experiment with new
business models oriented toward low-income individuals. With stakeholders, Social Business
has opened doors and created opportunities, and we are now seen as distinct from other
pharmaceutical firms. We have the advantage of being the first to form a partnership. Rather
than the limited benefit of additional sales, Social Business provides strategic value by
distinguishing Novartis with politicians, significant opinion leaders, and payers in the
countries where we work. Another need for success is consistency. The product offerings of a
corporation must remain consistent, and the company must stick to its initial product claims.
As a result, the company will be able to develop a market-value proposition, allowing it to
remain in business in the long run. Finally, the company must be enthusiastic about the
product, confident in its abilities, and self-motivated. This allows the organisation to
concentrate on the opportunities rather than the threats. The firm's self-assurance and self-
determination enable it to maintain its position regardless of market volatility.
Taking Healthcare to the Villages:
Novartis India Limited launched Arogya Parivar, a social business programme that offers
affordable medicines and health education to rural areas, after recognising a gap between
healthcare accessibility and knowledge.
The effort began in 1996 as a trial programme in Uttar Pradesh, India's northernmost state,
and Maharashtra, India's westernmost state. Arogya Parivar expanded its reach after a
successful pilot phase. This programme aims to create a long-term, successful business that
increases healthcare access for the underserved millions. The company accomplished this
through raising awareness, improving local medicine availability, and developing cost-
effective healthcare solutions.
The 4 "A's" of Arogya Parivar are Awareness, Adaptability, Availability, and Affordability.
These principles work together to guarantee that rural areas have a long-term influence.