Innovative funding across the healthcare value chain in the Middle East

Core operations: Facilitating market entry or strengthening new business models to expand access to healthcare is a recurring challenge. The absence of any solution in these cases can impact the final price for consumers. Besides, with hardly any market research data available on the existing market actors, the issue becomes even more complex. While companies can establish local production facilities, there’s a need for more funds to ensure these facilities are at par with international standards.

Also, when setting up new business models, risks like weak infrastructure, low-quality healthcare facilities, and similar issues must be addressed.

Here’s what businesses can do:

• Companies can turn to a de-risking mechanism like a volume guarantee to get large orders from medical suppliers, ensuring they can benefit from economies of scale. A binding contract with investors is a good way to commit to a certain production capacity at low prices. Previously, companies like Bayer and Merck & Co have been a part of volume guarantee schemes to provide contraceptive implants.
   

• Getting investments from corporations, either through corporate venture funds or similar mechanisms, often works well. Companies could tap into philanthropic grants and loans or commercial and sub-commercial returnable capital to access better market insights and improve existing conditions. In the past, Bayer Healthcare sponsored the EyeFocus Accelerator, which supports companies that make products for preventing, curing, and living with eye diseases.
   

• Lastly, program-related investments can help social entrepreneurs address the financial gap and create funds where the same money can be consistently invested over the years.

Health systems: The need of the hour is to strengthen health systems for all people. However, as healthcare spending increases, the quality of service will likely decrease if infrastructural challenges plaguing the sector aren’t addressed. This can be done through funding from social impact bonds, corporate and third-party investments, credit guarantees or other mechanisms to ensure everything from point of care to distribution and patient education is taken care of.

These solutions may help ease the challenge:

• Companies can be investors or advisors in small and medium-sized enterprise financing to upgrade their operations. They can also take advantage of credit guarantees to take care of any potential losses.
   

• Social or development impact bonds can also drive innovation and affordability in healthcare service delivery. These could be used in cases where service delivery and outcomes are associated with reimbursement.

Patients and customers: Greater access to quality healthcare must also be driven by the willingness of patients to seek care. The reasons could differ, from a lack of awareness of health risks to a high cost of treatment. Even where health insurance schemes exist in countries, many people pay out of pocket for things not covered by these initiatives.

Here are a few solutions to address this challenge:

• Promotion of health education and awareness to seek healthcare is the first step to dealing with this issue. The idea is to reach people in communities like schools, markets and religious centers. In this way, innovative finance can help drive demand for healthcare across different strata of society.
   

• Companies can also collaborate with financial businesses to develop health savings accounts, insurance, voucher schemes, loans, and mobile money to ensure that patients are not reluctant to obtain healthcare services due to their lack of affordability.

There are a growing number of opportunities for healthcare companies to partner with the microfinance and insurance sectors. For instance, the BASMAH program is a first-of-its-kind initiative—a partnership between the Dubai Health Authority (DHA), Roche Pharmaceuticals, and AXA-Gulf Insurance— to provide full coverage for breast, colon and cervical screening and treatment for all Dubai residents.