Pharmaceutical companies and ambidexterity in base of the pyramid markets

Abstract

The challenges that face MNPCs in making healthcare more affordable is a topic that is being increasingly researched. These companies face challenges such as pressure from governments around the world to lower their prices, stagnant growth in developed markets and the failing blockbuster business model. Turning to new markets, such as emerging markets, for growth will necessitate innovations in their business models. The aim of this research was to understand what business models will work in low-income patient markets, specifically in the South African base of the pyramid context. The investigation of four MNPCs through a case study methodology, allowed the exploration of their current business models and ambidexterity level. Two of the four MNPCs exhibited a purely exploitative business model and as such had very little penetration into the BOP segment. One of the four MNPCs demonstrated a few characteristics of ambidexterity, but applied mainly an exploitative model and had limited access to the BOP segment. One of the four companies implemented all of the characteristics of business models that are successful in entering BOP markets as well as a high level of correlation to the characteristics of ambidexterity. The result of this MNPC described was a successful entrance in the BOP segment. The review of the literature and the findings of this research show that MNPCs can adopt profitable business models to enter low-income markets that not only serve consumers at the base of the pyramid but also provide sustained business benefits to the MNPCs. The research study successfully achieved the research objectives and provides insights to stakeholders as to which strategies are effective when entering a low-income patient market and what are the elements that are missing from business models that are not successful. The research also highlighted institutional voids and barriers that are unique to the South African state health care system.