Around 2009, two terms came into parlance among business scholars and entrepreneurs interested in innovation and emerging markets: “reverse innovation” (products initially intended for low-income countries spread to wealthy countries) and “frugal innovation” (reducing the complexity and cost of technologies or delivery models to sell them to overlooked customers). Health-sector professionals looking for ways to advance the public good though market-driven or customer-centric mechanisms have since applied both concepts to their work.
Fast-forward six years. There are now many examples of highly successful frugal innovations in health service delivery and systems. Aravind Eye Care System and Health Leads are two. But the total number of successful reverse innovations for medical devices has been quite small. Dartmouth Professor Vijay Govindarajan has documented 25 full-fledged (poor-to-rich-country) reverse innovations since 2009, yet only two on his list are medical devices, and both (the portable ultrasound and portable electrocardiogram) are products from GE Healthcare, a multinational company with a huge staff and significant capital resources.
The reason for the limited success of reverse innovation for medical devices could be because the phenomenon of reverse innovation is fairly new, or because health products have specific barriers to market entry and scale. For example, medical devices in the United States must receive FDA approval, a process that can be both costly and time-consuming. The regulatory requirements for market entry can be much simpler in lower-income countries.
In our interview with Govindarajan, he explained that since writing the 2009 book, his thinking about reverse innovation has evolved to include inventions that move not only from low-income countries to high-income countries (such as from India to the United States), but also those that move between low-income countries (such as from India to Bangladesh). Thus his definition of reverse innovation has grown to include many more medical devices.
Even so, the thinking about those devices largely remains focused on technology transfer—how a device from one market might best sell or expand market share in a new market—rather than if the device will scale for greater social impact and health equity. To create impact, health organizations must look more closely at the potential to serve low-income patients and how to reach them.
At D-Rev, we design and deliver medical technologies for underserved populations, and we have seen first-hand how reverse innovation for medical products can make good business sense, but not necessarily be a path to closing a health inequity. Patients and cultures are different, and it’s hard—sometimes impossible—to switch markets with the same or a similar product, and meaningfully serve patients. Instead, we’ve taken an approach we call “impact innovation”—the process by which products and services are specifically designed and disseminated to close social equity gaps among the world’s poor. Before adapting a solution from one context to another where there is a market and a need, we determine whether the product will close health inequities. If it won’t, or if the hurdles are too high, we don’t do it. With our ReMotion Knee, an $80 prosthetic that performs as well as $350 versions, and Brilliance, a $500 phototherapy device that performs on par with a $3,000 American model, we decided to focus on markets where we can have the biggest social impact: low-income countries. We could sell these products in the United States, for example, but we would have to sell them at a cost that would be out of reach for poor patients, and the devices wouldn’t necessarily have the meaningful impact we seek.
Strategically thinking about technology transfer relative to health equity in this way is part of a larger global health movement—a human rights movement—to ensure that everyone, regardless of income, ethnicity, geography, or gender has the opportunity to live the healthiest life possible. At the Robert Wood Johnson Foundation, we have introduced a framework for building a Culture of Health—improving health and well-being for everyone in the United States. We recognize that good ideas have no boundaries, and value the opportunity to learn from communities around the world, and apply that insight to solve major health and health care challenges in the United States. That includes understanding how devices that work for people abroad could help meet the needs of people in America.
Neither of these approaches to improving health equity is easy. Impact innovations for multiple markets require careful user research and strategy, and we need more tools to equip entrepreneurs with the technical, design, and business knowledge they need to address market-introduction hurdles while including patients most in need. With greater understanding of what works and where those hurdles exist—with the lens of impact—we hope to see more entrepreneurship in impact innovation.
One tool we’ve developed is the Impact Innovation Framework, which aims to help organizations evaluate whether a health technology can address a gap in a new market and still serve low-income patients. It walks organizations through three steps:
- Understanding the scope of the problem, the problem your product addresses, the users and their needs, and the main players who will influence your product’s success. For example, there is an unserved annual need of approximately three million prosthetic knees, mostly in low-income countries where quality prosthetic leg systems are prohibitively expensive. Target patients in these regions tend to be young and active; in the United States, however, low-income amputees skew older and often have other medical problems. The prosthetist, who makes product recommendations to patients and purchases the devices, is critical to the success of prosthetic knees in all markets.
Evaluating the market size, product differentiation per market, and viability of market entry in terms of competition and sales/marketing requirements. To successfully address the needs of low-income American amputees, for example, the knee would need to prioritize patients’ physical stability over agility. We also found that the need and market are greater—and marketing less costly and resource-intensive—outside the United States.
Assess the minimum structural factors and requirements for product sales (such as the cost of meeting regulatory requirements and the type of liability insurance and intellectual property protections you need) and product distribution in your second market. For example, product liability insurance for low-income markets is often much cheaper than in the United States.
These steps can help organizations determine how best to improve the lives of the poor. Other resources for health entrepreneurs include the Idea to Impact toolkit from USAID’s Center for Accelerating Innovation, and Stanford University’s Global Health Innovation Guidebook. In doing our US market assessments, D-Rev also took advantage of pro bono domestic health expert support, thanks to Harvard Business School Community Partners.
If we are serious about closing gaps in health equity, we need to go beyond reverse and frugal innovation, and start talking about impact and impact innovation. We can design and disseminate medical devices that serve multiple markets, but we need to emphasize the importance of making them high quality and affordable for low-income patients and programs that serve them. The payoff will be a more productive and healthy society for all.