“It is not the man who has too little, but the man who craves more, that is poor. ”
Fernando Chua, MD passed away today, July 19, 2014: his friends and proteges in the Chinese General Hospital are still in shock as we write this. He expired at 11:30AM, and from the call of his closest friend, Dr. Samuel Ang earlier, at 3:00pm, as much as he would say he expected it: Dr. Ang was obviously not yet grieving, but he was trying to take it all in, trying to understand what all this would mean to him and to the other friends of Dr. Fernando, who were seen by Dr. Fernando to be under his protection from a corrupt and corrupting world. This, we guess, summed up Fernando Chua: his large (and loud) presence and personality, and yes, his complexity, made him difficult to understand, and yet impossible to shake off. He was a loyal friend, a fierce enemy: no matter how your were classified (friend or foe? No in-betweens) in his book, he was quite a presence.
There is no way to write about this legendary anesthesiologist of Chinese General Hospital: legendary in temper, principles, likes, and dislikes. One thing for those of us who really did not know him well but could claim to at least some efforts to comprehend this incredible bundle of energy, it never failed to strike us that in his element, which was when he was in the Operating Room of the hospital he had served for over three decades with some of the best medical doctors in the country, he was usually wearing his University of Connecticut OR cap (which he is wearing in the photo we have put up above). That cap said a lot about the man, as it was the University where one of his children successfully hurdled medical internship. He loved his family, but it also said a lot about his belief that most good things emanated from the United States. It was his badge of honor to have his medical doctor-sons in the United States, making a name for themselves in medicine, having been given opportunities he had helped get, but opportunities he also never had in his life; and there is another son here in Manila who is helping manage a business concern that he was proudly involved in conceptualizing and starting. We would have friendly, even if one-sided arguments. It was one-sided because he thought, since we were younger, we really had yet to see what he had seen. Very much like Samuel Taylor Coleridge’s poem, the Ancient Mariner, he was not out to exchange ideas: he was here, in front of you, to impart wisdom, stories, and warnings about the wrath of a natural law in this world where there was a confused sense of right and wrong.
He was of the old school in many ways. He would proudly share stories of what he had been able to buy for his children. It was a contradiction of the man, to proudly declare to all the material goods he was able to give his loved ones, but to insist that most of what were important could never be quantified or even physically grasped. Maybe it was not a contradiction: just way of objectifying that parental affection. That OR cap also said to and of him, and everyone else, that he had come a long way from his days of trying to make something out of his life; it was his emblem in his world, which was really the Chinese General Hospital: it was a declaration of arrival. But no doubt he also had his share of people in this age of Facebook would be described as “unfriends”: as his ability to throw a tantrum was the stuff of stories that had been passed, retold, blown-up from one generation of Chinese General Hospital health workers and patients to another. Silence could also be his ultimate signal of contempt. His eyes and ears were sensitive to all sorts of nuances that a wrong shift of a tone, or an improper or disrespectful inflection, could provoke an immediate rebuke.
Aside from being an unforgettable character, we are writing this because he imprinted in us one lesson that he kept insisting we should learn. He said it was all we needed to be worthy of being a member of the human race: that for a man to be successful, to be respectable, to be somebody who for him was worth associating with, the basic ingredient was simple: It was to have a great sense of shame. “You have to have a great sense of shame if you want to be somebody worthy of trust and friendship. I tell that to my children. I tell that to my junior doctors. Ask them if I really say that. Ask Dr. Benito. I tell them when they do things, they should consider what their family and friends will say. They should ask: will my family and friends be embarassed by this thing I do, or will they be proud?” He was so insistent about it, as he thought there was a short supply of such a sense of embarrassment, that he had to tell you, he just must tell us people who were significantly his junior, and obviously for him, it was his way of showing his hopes and care for us, junior members of the human race. It was this passing of a man, whose affection, or even love for his family, friends, and colleagues was marked by a shout out for some sense of shame that made him so memorable. Just like the Ancient Mariner, it was figuratively the albatross around his neck, this sense that we live in a world of no shame. He was very old fashioned in this old world kind of way.
We had been asking him for an interview for this website, and that would never happen now. In spite of his age and his battle with cancer, we note the passing of Dr. Fernando Chua with sadness and disbelief. He was 68 years old.
The photo above does not capture at all the scene in the evening of the 40th day after typhoon Haiyan had hit ground zero. It is a photo, taken from a moving van, of a long road in the still no electric power Tacloban, where thousands of candles were lit up on kilometers of the road to remember the thousands who died during the storm. We don’t want you to think we take this event lightly, as the title of this article may suggest. So what does a start-up movement have to do with disaster and relief operations where so many have died? A lot, if we are to base it on what we have seen in Tacloban, Leyte. Let us begin by tackling multilateral organizations. There is no bigger organization or bureaucracy in the world, probably, than these global humanitarian organizations (Medicin Sans Frontiers, Red Cross, International Organization of Migration, World Food Program, the United Nations). We can even say these groups have some the strongest brands in the world that will be the envy of equally large, but for-profit organizations, like Coca Cola. Would you stop in the street to give someone money for whatever charity Coca Cola is working on, or for some product the company is developing? Think of UNICEF or World Vision in contrast.
We have read so much about the unintended consequences of aid agencies swarming places like Africa; like capturing local talent that eventually joins the aid agencies’ exit of the area. We never expected to experience some of these unintended consequences, and of all places, in the Philippines; not a rich country, but by no means is it wallowing in famine or war. But as soon as our plane landed, we knew it was a different Leyte we would be seeing. In spite of the barrage of television images, and the usual sentimental and caramel-laced ABS-CBN reporting, nothing prepared us for what we saw. From the air and on the ground, we saw dozens and dozens of white tents, army helicopters, fallen trees, and houses and buildings torn to shreds: it was a scene straight out of the movie MASH (about the Korean war), or some B-movie probably entitled “World War III.” This is serious business: and the word “calamity” doesn’t even begin to describe the gravity of what had happened, especially for us who have many friends in Leyte.
There are two ideas, or tools, we want multilateral aid agencies to explore: “customer discovery,” which “searches for problem/solutions fit,” and “get out of the building,” which should lead to the concepts about stating your value proposition, pivot, and innovation. (See our previous post on Steve Blank and Saving the World). The people of the Start-up Movement, from Steve Blank to Eric Ries and many others, have taught a lot to entrepreneurs who are inventors, software programmers, businessmen, corporate executives. Non-profits, especially gargantuan organizations like the United Nations, have a lot to learn from the movement. Eric Ries defines a start-up as “an institution, not just a product, and so it requires a new kind of management specifically geared to its context of extreme uncertainty.” There is no more uncertain situation that probably surpasses any business environment of a start-up than a few hours or days after a cataclysmic disaster hits a locality.
Who are the customers of the United Nations in Leyte? What do they want? We at Sunfu think multilateral relief organizations are overly concentrated on relief operations and their operational/logistics capabilities, as probably perfected in their business plan, but the creation of their business or execution model is largely flawed from the start. For one, the scale of the operations is so big and the resources of the multilateral agencies so massive, they create problems with their bigness that, having read about these problems over two decades ago, we realized they haven’t learned anything from the criticisms of their host countries that we have read about. For one, almost all the hotels have been commandeered by multilateral agencies, like the United Nations: they just take whole buildings and whole blocks, and in a short-sighted view it looks like they are helping local businesses, but in the end, they are actually hindering it because all of a sudden, the whole island’s operations shift from getting back on their feet mode, its disaster relief mode is prolonged. Now what is wrong with that? A lot.
The real customer of these relief organizations is the country. The whole interlocking relations that make the flow of life possible has just stopped. People from outside the island of Leyte, or even just the city of Tacloban, will have a hard time moving in to help or bring back normalcy into the place, to look for family, or to begin looking and connecting for business opportunities, because all of a sudden, there are no accommodations for months, all the restaurants are filled up, and so life is in a stand still because the multilateral organizations have a whole set of checklists they have to fulfill in order to report to headquarters in New York, or Geneva, or Paris that they have done their jobs: the right photo opportunities have to be taken, the right video clips have to be shot, and as Ban Ki-moon appealed for today, more funds would move in to feed this cycle. The infrastructure of the island that survived are being commandeered by the size, good intentions, and wealth of these giant aid agencies, which feeds more the need for relief, and we fear, they will further institutionalize mendicancy. Most hotels, even lousy hotels, have been booked for until June 2014. Do aid agencies know of these consequences? Do they know their customer?
Part of the panic, which fed into the looting, was caused by the fear that there would be no food available commercially. Money thus becomes worthless. Yet for us, the Sunfu team, it took us hours to find breakfast, because the available restaurants were filled up with aid workers, some with the insensitive posting on the entrance of an establishment saying this or that restaurant is exclusive for this and that group. The result is some of us had to go out for hours looking for breakfast, losing our patience and temper a few times, because the paratroopers of agencies like the U.N. have not been going out the building, or in this case, their hotels, except to distribute relief, do site inspections, and prepare for the arrival of agency bigwigs. But the area, the city, or even the whole province will not rise if the ecosystem of the whole province is under the strangle hold of multilateral agencies that want to make sure their tents are up, the food packs readily available, and they have done their mandate. Who can argue with that? A comment from one of the barangay captains, which I thought worth repeating: “The stores are beginning to open, which is the best sign that things will go back to normal.” But the aid agencies are hindering the flow of goods as trucks and other kinds of vehicles have been rented out at incredibly high prices. In fact, she said if the looting did not happen, whatever the devastation, people would have been able to pick themselves up faster. The point is get the customers up their feet, and the fastest way is to give them the capacity to get up: if you are in a medical mission, after the mission of a few days, just enough time to give the local doctors to recover, they leave them capacity to do their jobs. But that would be very expensive, and less dramatic. Not much photo opportunity, and fewer occasions to have contact with the media and the general populace. The validation of the customer therefore should not be in that the patient is not dead, or is up and about, but the validation is if their lives have gone back to normal as soon as possible, or is it even better and more productive than before. From our angle, what we see is most multilateral agencies are there to help, but their help ends with the “feeding mission,” or the “medical mission.” Tzu Chi, the Buddhist charity organization, seems to have gotten it right. They immediately did a work for money program: help clean up certain streets of debris and you get money. That helped clear some streets. They also had a medical mission component. Yet they also just distributed money, and we are talking about P10,000 to P20,000 (in US dollar terms it’s somewhere at the minimum of USD200 to USD500). The group gave people capacity and capacity immediately to get some of the resources they knew they needed and wanted, and it gave some life to the local economy. Tzu Chi left immediately afterwards, and its members were not in the way by hogging resources of the place (very Buddhist).
There were sardine cans from charity organization being sold in the market by recipients, hardly any takers, as canned sardines coming from charity organizations flooded the island. Recipients of these sardines were simply sick and tired of sardines, after weeks of nothing but sardines. They want variety, they want to move on, they don’t want the same fare day in and out. Inedible relief food packs have found their way in the market: with hardly any takers. This is not corruption, as some in media have claimed: this is the market somehow throwing out (vomiting) the food it is being fed, trying to monetize the situation in order to get going. One of the biggest hits, and the long lines of people waiting for their turn was the best proof, was when Mayor Sandy Javier’s restaurant, Andok’s Manok, opened: people patiently waited for hours to pay good money to get some juicy roasted chicken. Nothing like good food to heal the body and uplift the spirit. Even we fell in line. No doubt his being mayor of a small Leyte town and he is somehow also related by party affiliation to the province’s governor helped, as government electric generators helped light up the establishment’s surrounding area. But good food is good food: whatever the criticisms were muted by great hot crispy juicy chicken.
We know it sounds callous to be so calculating, at the same time critical of multilateral agencies who certainly want to save lives as well. But the multilateral agencies we observed were actually not looking at capacity building: they were looking to yes saving lives, but they were simply also looking at this as a job, a good job, a serious job, a vocation even. But they were not looking at this as an entrepreneurial enterprise that would fold up if it didn’t succeed in hitting its goals of making the customers happy, or getting the customers’ lives back to normal, immediately. And here is the other suggestion we can take from the start-up movement: verbalize what you or your founders are trying to do. If I am to just cite two perceptive and very interesting articles written about the disasters that have happened to the country, the phrase that stands out is “capacity building.” This is what is needed: capacity building. Very important. Equally important is to ask: But capacity for what? This is not about giving the fisherman boats and nets to fish: it is a lot more than this.
The first article is by Gabriela Luz, who works with Oxfam. She writes in the Philippine Daily Inquirer about what has happened to them in earthquake-struck Bohol, after Haiyan devastated Leyte: “In a natural disaster, the immediate assumption is that the most vulnerable are stripped of basic needs: food, water, shelter. There’s a race against time to deliver aid that would meet the big three. We in humanitarian agencies have been working in emergencies for so long that we’ve broken down aid to food packs, hygiene kits, water kits and emergency shelter.
“What happened in earthquake-struck Bohol was that agencies working on the ground were still trying to meet these needs when Yolanda hit, and then markets instantly dried up. Cebu was the nearest large market and logisticians trying to procure supplies were shut out. Supplies coming into Tagbilaran were suddenly diverted to Cebu hubs because the needs were bigger and more immediate in Yolanda-hit cities with zero systems.
“Granting that you can purchase the right number of aid kits needed, there’s still the problem of getting these in. What happened in Yolanda is that places like Leyte had no local suppliers. There were no vehicles, no fuel, no trucking. Everything had to be sourced from the outside. You’re scrambling to get the next available vehicle—but you’re not the only organization trying to do so. Suddenly, suppliers who could bring relief in were in high demand and could control prices. It was costing up to P10,000 just to rent a vehicle. Trucking companies were canceling arrangements in the middle of the night, right before a distribution, because of higher bids worth more money.
“Hand in hand with resources is the human element. In the humanitarian field, only a relatively small number of people are equipped to work in emergencies. Finding someone to do emergency work means finding a person with the technical expertise, knowledge and experience not just to respond but also to figure out how to go beyond response and move toward recovery as quickly as possible. Immediately after Yolanda, experienced humanitarian workers were being pulled out of Bohol to work where the need was greater.
“Recognizing that a competition of emergencies can happen is important because the pressure of it consistently happening should add to how we understand the scale of preparing for disasters. Here are some things we should consider to acknowledge this problem:
“Capacity-building and going local. We know that we are a country overrun by disasters and that it’s going to get worse. And we know we don’t have the personnel to respond to this on our own. We need to spread the knowledge, the capacity, around, so if we ourselves can’t do it, then we know others can.”
It is interesting to read the article because coming from the point of view of someone who works for a giant aid agency, she looks at capacity building as being prepared for disasters. While we advocate for start-up tools, we also advocate capacity building, in allowing the locality to figure out what they need to be strong, not for disasters, but for life, maybe with the help of aid workers getting out of the way after the initial stage of relief: or at the very least, to get out of the relief mode and immediately into capacity building, not for disaster preparedness (as Nassim Taleb would say, there is no way of preparing for Black Swans, but there is a way to be Anti-Fragile), but to be strong and have a mind set of strength by helping provide the mental tools to have the mind set of running their lives, or households, or employment, or companies as start-ups. The whole NGO and multilateral aid agency community must get out of the disaster relief mind-set, and it must get into the entrepreneurial start-up mode.
Here is another article, this time by Art Villasanta and Peter Galace, also published in the Philippine Daily Inquirer just three days after the above article from the Oxfam worker: “Tom van der Heyden, a satellite expert who works in the Philippines, said the country needs to be properly educated to properly appreciate what a satellite can do. He noted that its satellite requirement ‘has always been urgent.’ The Philippines, however, needs to have people in the highest positions who understand what can be done with a satellite.
‘Buying a truck will not help if you have no experience driving a truck. The country needs to build up capabilities, and then a satellite, so that the satellite is not just a drain on the economy but can serve the people and business,’ Heyden said.
“He emphasized that the Philippines also needs a satellite for maritime security and to protect its waters and borders. In this vein, Pimentel said the Philippine military should have quick-deploy VSAT systems and a hub with the necessary IP backhaul connectivity. ‘It is pathetic that today, the VSAT network of the [military] is actually on a Chinese satellite!’
“The Philippines has orbited only two satellites: the derelict Agila-1 and Agila-2, which is now operated by Asia Broadcast Satellite, and serves Africa. ‘Forewarned is forearmed’ is a lesson we should have learned long ago from the unending procession of natural disasters that pummel us without fail every year. We must immediately heed this lesson. Nature is not merciful, and never will be.
“We need a Philippine satellite now to save Filipino lives in the future.”
The excerpt above talks about “build(ing) up capabilities” in the high tech sense of having the technology, in this case a satellite, to withstand another typhoon Haiyan. We think in this blog we are writing, our point about capacity building is clear: we are different from these two articles in that we interpret capacity building eventually as a mind-set first, with approaches to the problem (the start-up movement tools) second, and third, but no less important, an eco-system within the local and national boarders (how unfortunate that we still have to talk about national boarders in the 21st century) that makes it possible for channels of commerce, goods, health care to freely flow and be strong no matter what situation, even after a major disruption by an earthquake (Bohol), invasion of gangsters (Zamboanga), or a typhoon (Leyte). After the initial first week: the relief mentality must immediately shift to local capacity building. In fact, it is a golden moment to get a community to be better than it was before the disaster.
With organizations like the United Nations, the magnitude of their operations and the professionalism involved: you know even if pursued with passion, the organizational momentum is towards feeding and temporarily housing people: these tasks will take up most of the organizational energy. This is partly, but also hardly, capacity building. Steve Blank is now talking about metrics and software programs that measure indicators of success of a start-up, and that has got us worried. We think that many victories and successes of a start-up, aside from the bottom line, will never be measurable, because a surviving start-up is a confluence of events and initiatives as it looks for a scalable model. The danger, always, for the start-up is that it will not be able to withstand the shocks the competitors, the market, and other Black Swans are throwing at it. The other danger is that it will start looking and believing that what matters are what are measurable, which is a trap of these giant NGOs and aid agencies-mind set. But the reason we are enamored by start-up thinking tools is because we think Steve Blank and the other articulators of this movement are able to find the equipment (or point-of-view) for people, entrepreneurs, to understand and take the shocks, by being lean and agile, by having the correct mental outlook and desire to fail, fail fast, and pivot.
And here is where getting out of the building is important: the concept in the start-up movement is for the founders or entrepreneurs to get out of the building to meet the customer, to develop customers and knowledge of the customers, to see their problems, to find out what they want and what are the solutions. Aid workers will tell you that in fact they are out, seeing the problems, and solving them. But we would argue, the generals of this army, like Ban Ki-moon, and the rest of the team should stay out of hotels and, in the evening, sleep in their tents (literally) during the duration of their stay. They want to spend money, then instead of spending them on hotels, rent out parcels of vacant land for their UN tents for their staff and generals to stay in. Perhaps they will find out why, in spite of so many tents available, people prefer to go back to their destroyed houses. Many tents are actually unoccupied. Other charitable organizations, when out there, will find out that, locals and local government officials do not know what to do with old clothes being sent their way, and if it will not offend, we have no doubt many of them would gladly pour some fuel and throw a lighted match on the clothes. They don’t need them. Those that do, they want new clothes. Local governments are in fix as to what to do with donated used clothes, without appearing ungrateful.
Indeed, a provincial administrator of the local government very provocatively asked: why have most parachute doctors and hospitals from donor agencies and countries not visited the local public hospitals and given or helped the local hospitals in having the capacity to do their work, as the local doctors there know the culture and the language of the area? The patients are flocking to these places, only to find devastation. The local doctors are just there, waiting. Some of the most sophisticated medical ships, mobile clinics, military hospitals came over from different countries, mostly from countries that have experienced or are currently experiencing military expansion, thus the development of very mobile medical teams and equipment. But they never gave the local provincial hospitals and doctors capacity: hardly anyone asked how they were doing. Sure a tent or two, with some medical tools were left behind by a group, but it was not even a dot in the ocean of need. The local doctors who know the problems, local language, the patients and their medical history: they were just left to clean up and wait for the national and local government to get their act together and go through the tedious task of meeting stringent purchasing rules to get the necessary equipment to get going. This is not a criticism of the local and national governments, but an acknowledgement again that the bureaucracy has its own rules and momentum, its own checklists of requirements, that dictates its actions and ability. It cannot move unless certain boxes have been checked. It needs a start-up culture, or at least it needs to have start-up clusters and teams. Yet local governments have the edge of having the local knowledge of each area’s idiosyncratic culture, specifics of who is in need, and the location of infrastructure to get whatever needs to be brought to the end-user. It will be difficult, if not impossible, to ignore them. Of course just like the experience of the Red Cross in Bohol in getting into a conflict with a town mayor who wanted to have a say in relief distribution, there is fear of being sucked into the local politics of each locality, thus the desire to avoid local officials. Fine: then get out of the hotel and literally stay in your tents as home and office: live literally on the ground. This way, not only is the feed back loop easier, faster, and more realistic: they do not hamper the normal flow of commerce by hogging all the resources of the locality. If bringing and cooking your own food is a problem, or is simply not the solution, leave half the space of the restaurant for other locals, do-gooders, entrepreneurs, scientists, and aid workers to buy their meal. Of course hospitals getting donated medical equipment will not be good for local businesses like Sunfu, so maybe donating countries can purchase equipment from businesses like us, and if they prefer, they only buy equipment that are manufactured or invented by their countrymen that businesses like us sell, as a sort of compromise (as this seems to be an issue for some); or better, support equipment invented and manufactured by us (although honestly medical equipment manufacturing is still a pipe dream in this country, as there is no capacity: although Sunfu Solutions is trying, and may partner with Dr. Harvey Uy in the future for some initiatives in ophthalmologic solutions).
Yesterday Ban Ki-moon appealed for more funds for food, shelter, water, and health. We could only imagine if this almost $1 billion US dollars of fresh funds could be used to fund an honest-to-goodness start-up movement within the UN for Leyte, and on the ground where their foot soldiers are all out trying to make a difference in the lives of Filipinos. There is a big movement in the Philippines called Go Negosyo, which encourages Filipinos to become entrepreneurs in a culture where dreams are for our loved ones to join the biggest corporations, which can withstand the shocks thrown by life at an individual. Work for a great big company and they have health care, insurance, yearly bonuses, and so on to protect the employee. We have always approached the Go Negosyo program with skepticism because, for one, the underlying current of the initiatives is government cannot help you, and for its failures, you are on your own: so look at these millionaires and billionaires (some of them modern day pirates) and see if you can be like them. The end goal, end philosophy, is to be self-sufficient. In the context of the Philippines, the start-up movement is worth pursuing, as it provides the outlook and tools in working towards self-sufficiency, but it needs to be added, in the context of the Third World, with the consciousness of the need for local capacity building, technology transfer, management innovation, and human capital development. The task and challenges are enormous: the start-up movement just provides conceptual tools to get started, to withstand and understand the shocks, the Black Swans, and if successful, to have the necessary mindset to see the world with eyes of a hungry and innovative entrepreneur.
In the context of the Third World, we know many of these apps and technologies out there, being produced by start-ups in places like Silicon Valley, are just toys; made for the First World, or worse, made for venture capitalists. (See article in “Can Silicon Valley Save the World?” by Charles Kenny and Justin Sandefur in Foreign Policy, July/August 2013, about innovation in the devices and gadgets supposed to help the Third World defeat poverty that are impractical if not laughable: example, a solar powered soccer ball that generates power when rolled, but cost maybe 10 times more than more practical and less sexy gadgets. Cute, but no thanks). We need local capacity-building start-ups, not band-aid solutions, we need start-ups that have a culture that will save lives beyond mendicancy, and on the other extreme, start-ups must also look beyond just the bottom line and the great global technology fetish. We do not need start-ups like a new gasoline station company in the Philippines which declared that it is decorating and lighting their gasoline stations like First World gasoline stations. Shell and Petron have done that years ago in the Philippines. Their other stated goal is to franchise out as many gasoline stations as the wildly successful Jollibee Hamburger. That’s innovation?
One of the most precious commodities for days, after typhoon Haiyan hit Leyte, more precious than gold, were to have liters of gasoline to run vehicles. People fell in line for over a full day to get their share, and only the opening up of alternatives like in the photo below alleviated the pressure on the community, which served to dissipate the panic. The black market helped calm down the communities, because money, the traditional medium of exchange and value, is back in circulation. How can gasoline stations service small entrepreneurs in the photo below, without being a danger the environment (using water and soda bottles as gasoline containers!), and skyrocketing prices? The need for goods to be readily available, not be hogged by a select few (no matter how good their intentions), they need to have a mind set to state the hypothesis or goal, to know the customer and have the hypothesis validated, and to literally get out of the building (and for multilateral aid agencies to live outside the hotel buildings) are necessary: we need a start-up culture obviously, yes, and we also need a start-up set of tools, sure; but equally necessary, we should not be too target driven when we enter a business or a relief operation, because we should be looking, with a clear and hard eye, at what the customer wants and needs. We cannot enter a situation with our preconceived notions. One of the great ideas articulated by Steve Blank is that no business plan ever survives first contact with the customer. Think about that. Why is that so true United Nations?
We were part of the Sunfu Solutions team who went to the Visayas to help alleviate the suffering of the people of Leyte and Samar ravaged by super typhoon Haiyan. United Nations personnel are swarming Tacloban, and they look great: with their powerful satelitte phones, many also with iphones in specially made holsters clipped to their belts (almost like a substitute for revolvers used during the days of the wild West), wonderful stainless steel water containers hanging from their backpacks, designer hiking shoes, many of them looking cool and slim, ready to save the world. If any child looked at these guys, they will be inspired to look for a job in some international agency like the UN, and likely they will also realize that smoking is cool and a great idea. Come on guys: enough of this macho crap. For around 30 minutes a day, for two days, while waiting for our ride, we took a few photos of UN personnel as they came out of a hotel in a disaster area. We have doctor-friends who have to go into hiding to take a puff, thinking it irresponsible to be seen smoking, even if they are in casual clothes and blend in with the populace: how about if you are in a UNICEF shirt, out to distribute relief, would it be the same responsibility? Do not worry, since we are a health company, we make sure our colleagues who still smoke are occasionally held accountable for feeding poison into themselves and setting a bad example to kids; a form of friendly “harassment” of smokers is part of the company culture. Here is a sampling of some photos (we avoided publishing photos that have full face exposures):
Time for Another Revolution in Medicines Access The ‘Test Case’ of Herceptin
(From the website Newsclick: http://newsclick.in/international/time-another-revolution-medicines-access-%E2%80%98test-case%E2%80%99-herceptin )
The last fifty years is witness to a virtual explosion in the creation of new knowledge. Capitalism has used this characteristic of modern science and technology to constantly create products and tools to constantly revolutionize the productive forces.
This dual nature of capitalism in the arena of knowledge creation – knowledge creation and its control are both embedded in the nature of capitalism. Without new knowledge and the creation of new products, capitalism is unable to survive. At the same time, it cannot allow the free use of such knowledge, as this jeopardizes the very basis of capitalist accumulation based on hegemony over the process of production. This inherent contradiction is starting to express itself in a new dilemma – control over knowledge production is now a fetter on creation of new knowledge.
TRIPS – a cruel agreement
This dilemma s being played out in the field of innovations that leads to discovery of new medical products. It is being played out in two very important ways. The 1980s and 1990s were a period of intense struggle, waged by developed capitalist countries, to put in place a global system that would legalise its hegemonistic control over knowledge. The result was the signing of the TRIPS (Trade Related Intellectual Property Rights) agreement in 2004. The TRIPS agreement legitimized the control over knowledge through a strengthened patent regime that was to be applicable to all countries in the world (with some limited waivers in the form of transition periods for developing and least developed countries).
The TRIPS agreement is a cruel agreement – what it basically says is that access to knowledge that can save lives would be limited to those who can pay (as individuals or through their governments). The decade of the 1990s saw the unfolding of one of the worst man-made tragedies ever, in the form of the HIV AIDS epidemic. Nominally, the disease is caused by a virus, but the conditions for the devastation it caused (and is still causing) was a human creation. In less than a decade after HIV infection was first detected in humans, the first drugs to effectively treat it were being rolled out. Yet it raged across the poorest countries of the world, especially in sub-Saharan Africa, decimating huge swathes of the population. Almost a whole generation succumbed to the disease in the region. Not because remedies were not available. Not because we did not understand how the spread of the disease could be stopped. But because these remedies were not allowed to reach those who needed them the most. They were not allowed to be used because a handful of CEOs of giant pharmaceutical companies priced these drugs way out of the reach of people who needed these drugs in poor countries. Sub-Saharan Africa was already reeling under massive debt burdens foisted on them by policies promoted by the IMF and World Bank. They were now asked to shell out money to buy drugs that would save their people – money that amounted to, in some cases, over 50% of the entire GDP of the country.
In 2001, and Indian company – Cipla – entered the fray. It announced that it would supply drugs to treat HIV AIDS at 1/40th (that is just 2.5%) of the price charged by multinational corporations. Drug prices of anti-retrovirals (those that treated HIV AIDS) fell from the earlier $12,000 per patient/per year to $300. Since then the prices of these early anti-retrovirals have fallen to less than $100 for a year’s treatment.
Biologics – the new frontier of disease control
The above story, known to many, merits repeating because it is now being played out in another area of medicinal products. The next new-frontier of disease control lies in finding remedies that can effectively cure and control cancers and several degenerative diseases. Cancers of different kinds are a cause for over 8 million deaths every year (i.e. almost 15% of all deaths) and 70% of these deaths occur in low and middle income countries. Even 3 decades back most cancers were considered a death sentence. No more so. Over the past decades new treatments and products are starting to win significant victories over a number of types of cancers. New products are being developed and many are already in use – many of which are a significant advance over existing treatments. As such opportunities open up, they are also opening up opportunities for pharmaceutical companies to reap super-profits at the expense of human misery. While the basic research for virtually all cancer treatments are done in public funded institutions, the ultimate products are controlled by a handful of companies.
Simultaneously we are seeing another development taking shape. Fewer and fewer new drugs that are significant advances over current treatments are being researched. Partly this is a consequence also of what we have noted earlier – the patents system, by controlling access to knowledge, finally also acts as a fetter to the creation of new knowledge. Most patents registered today do not protect an invention, they actually are designed to prevent others from doing research. Known as ‘patent thickets’ these patents prevent transmission of knowledge, and its further development. In India less than a handful of new medicines are introduced every year, yet several thousand patents are granted. This is a global phenomenon not restricted just to India. While the number of patents is growing, the number of new drugs that are being researched continue to fall alarmingly.
There is, however, and exception to this trend. The field of biotechnology is starting to live up to its earlier promise and is delivering entirely new forms of treatment. Thus while we have fewer drugs of promise that are being developed through the earlier route of chemical synthesis, exciting new treatment avenues are being opened up by research using the biotechnology route for drug development.
Drugs developed using biotechnology are different because they are produced in living cells. The molecules which make up these drugs are larger in size and more complex than the ‘small molecule’ drugs manufactured using the chemical synthesis method. The manufacturing systems used to produce these drugs need to be monitored differently. These drugs – termed as biologics – have several potential advantages. They can, theoretically, be tailored to hit specific ‘targets’ in the human body. This is of particular interest in diseases which are caused by altered or aberrant functioning of specific genes – such as in the case of several types of cancers. Traditional cancer drugs are called ‘cytotoxic’ drugs, i.e. they are poisonous to cells in the body. The basic principle on which they work is that they selectively kill cells that proliferate very fast (as happens in the case of cancer cells). However they are never entirely selective and that is why cytotoxic drugs have a range of side effects caused by the destruction or alteration of normal cells in the body as well. Biologics are being developed that only target specific gene sequences in cells and thus would have less side effects.
The Herceptin Story
One such drug that is a breakthrough drug is called trastuzumab. The drug is used to treat a certain kind of breast cancer that is particularly aggressive and difficult to treat or manage.
Trastuzumab works in a way that is very similar to the way antibodies work in the body. Antibodies are produced by the body’s immune system, which is the body’s defense system against foreign invaders – like viruses, bacteria, and other biological agents. They are able to recognise these foreign agents and bind to them. The body’s immune system then gets into action to destroy these foreign cells. Trastuzumab binds to a gene called the HER2 gene, that is more active in some breast cancer patients. The HER2 gene stimulates the growth of cancer cells. By binding to the HER2 gene, Trastuzumab suppresses its activity. It also stimulates the body’s own immune cells to destroy the tumour cells.
Trastuzumab belongs to a class of biologics that are called monoclonal antibodies. Monoclonal antibodies are produced from a single cell-line (hence the term ‘mono’), which is cloned to produce a very large number of cells. The cells are genetically engineered (i.e. a piece of foreign gene is introduced into the cell) to secrete the antibody we desire. Trastuzumab, for example, is made by substituting a portion of a human gene into a mouse using recombinant DNA technology. The mouse cells are thus ‘fooled’ into producing the antibody.
To continue the Trastuzumab story – the drug was marketed in 1998 by Genetech (later acquired by the Swiss multinational, Roche). It is sold under the brand name Herceptin. It is interesting to note that though the product has now been around for almost 15 years, Roche still enjoys global monopoly over the drug. The story would have been very different if Herceptin had been a drug that could be produced by the chemical synthesis route. Given the drug’s important public health benefit, many generic manufacturers (especially in India, the major centre of generic drug manufacture in the developing world) would be interested in producing their own versions of Trastuzumab. Herceptin was introduced in the global market at a time when the Indian Patent law allowed generic versions of patented drugs to be produced without any restrictions. The inability of Indian companies to come up with a generic version is related to special features that characterize biologics like Trastuzumab.
Unlike in the case of conventional ‘small molecule drugs’ it is never possible to produce an exact replica of the original drug. Biologics are extremely sensitive to the manufacturing process and the starting material. As the starting material is a living cell, it is impossible to have an exactly similar starting cell. Moreover very small changes in the manufacturing process can bring about changes in the final product. Thus, even in the case of the original product, there are variations in the product – between batches and even within the same batch. Thus the equivalents of generic versions of generics are called ‘biosimilars’.
Biosimilar manufacture is a relatively new area as the processes involved are entirely different from those used to produce drugs through the chemical synthesis route. Further, there are regulatory hurdles because the process of getting regulatory approval for biosimilars is more cumbersome than for ‘small molecule’ drugs. This is again because of the nature of biologics – because it is impossible to replicate the original drug, more data is demanded by regulatory agencies to prove that the quality, safety and efficacy profile of the biosimilar is identical to that of the reference drug (i.e. the original biologic). Consequently, in the case of biologics, patent barriers are not the only barrier to the production of biologics.
The time to act is ‘now’
Herceptin has recently been in the news because of two reasons. First, because of the interest being generated about use of Compulsory licenses (i.e. licenses issued to generic companies to manufacture patented drugs) after India issued its first compulsory license last year for another anti-cancer drug – sorafenib. The second reason is that it is only now that Indian companies have started acquiring the capacity and technical competence to produce biosimilars.
Because it now appears possible that biosimilars of Herceptin can be introduced, it is important to examine the economics and the public health importance of the drug. Treatment with Herceptin typically consists of 12 intravenous doses of the drug, administered every three to four weeks over the course of a year. Roche sells the drug for more than Rs.70,000 per dose. Clearly the cost is prohibitive for almost any Indian patient. The cost has to be seen in the context that breast cancer is the most prevalent form of cancer among urban women, and the second most prevalent for rural women According to the national cancer registry, over 1,00,000 women in India develop breast cancer every year (about 1 in 22 women in India stand at risk of getting breast cancer in their lifetime). Out of the total number of breast cancer patients, about 25% benefit from Herceptin (there are tests that can show which patients will benefit). Thus approximately 25-30,000 women would benefit from the use of Herceptin. Importantly, Herceptin is useful in the most aggressive form of the cancer, which typically afflicts younger patients. Yet because of the misuse of the monopoly situation that Roche enjoys, barely 5% of eligible patients are able to access the drug, and many of those who do are put on a lower dosage than recommended.
The situation cries for an immediate remedy. There are several issues that need to be addressed in order to expedite the entry of biosimilars of Herceptin in the Indian market. First, patent barriers need to be removed by expeditious issue of a compulsory license. The patent status of Herceptin is not clear in India as it is the subject of several litigations, however a compulsory license is the fastest way to make sure that patents are not a barrier to introduction of biosimilars. Simultaneously regulatory procedures need to be streamlined to ensure that entry of biosimilars are fast-tracked, while of course ensuring that quality is not compromised. Finally, public investment is necessary to build larger capacity in India to produce biosimilars.
Herceptin is a test case. If the attempt to get Inidan biosimilars of Herceptin in the market is successful, it has the potential to open the doors for a range of other biosimilars of other new biologic drugs that are already in the market or are being developed. Cipla’s pioneering action in 2001 revolutionized HIV AIDS treatment. Biosimilars produced by Indian companies can change the face of treatments for many diseases, now considered virtually untreatable, not just in India but across the world. There is no reason why the experience of a 97.5% drop in prices, seen in the case of HIV AIDS drugs when generics were introduced, cannot be replicated in the case of biosimilars. A bold and responsive government and regulatory agencies need to act in tandem to make this a reality. The time to act is now.
“Industries are only valuable to the degree they meet human needs. There’s not some – at least in my psyche – this notion of, oh, we need new industries. We need children not to die, we need people to have an opportunity to get a good education.” Bill Gates from the Financial Times interview with Richard Waters
The Philippine ‘labor surplus’ story
CROSSROADS (Toward Philippine Economic and Social Progress) By Gerardo P. Sicat (The Philippine Star) | Updated August 7, 2013
As discussed in last week’s column, the impressive economic growth of East Asian countries like Japan, China, South Korea, Taiwan, Hong Kong and the three ASEAN countries of Thailand, Singapore, and Indonesia could be explained by the labor surplus model of growth. The phrase “labor surplus” is merely descriptive and has no disapproving or judgmental significance.
The Philippine story of growth can also be approached using the “labor surplus” model. Official statistics report that around seven to eight percent of the labor force is unemployed. There is however a high degree of underemployment. Around 25 percent of the total labor force suffers from unemployment and underemployment.
What is worse is that unemployment and underemployment affect the younger members of the labor force by a bigger margin. The “informal sector” of the economy has enlarged to absorb all forms of underemployment.
“The Philippine growth story.” Unlike the typical East Asian narrative, the Philippine experience is unique: the labor surplus has remained a permanent feature of the economic landscape since independence.
Yet, the Philippine growth story is not one of failure. It is not a success like that of our neighbors either. It is a long-standing story of sustained “labor surplus.”
The permanent presence of high unemployment and underemployment and the modest growth of per capita GDP has been a feature of the record because of economic policies that reduced the labor absorption of new growth. It also features a high incidence of income inequality in the economy. All these outcomes form a vicious circle that has to be broken.
The turning point of broadly shared rising incomes when surplus labor is exhausted – a feature associated with inclusive growth – is never reached since the labor surplus is large.
“Unique factors that prolonged the labor surplus.” The confluence of several unique factors has made labor surplus a running feature of the Philippine story.
(a) High population growth. Population growth has remained high in the country. The inter-censal rate of growth of population is 2.18 per cent per year between 1970 to 1990. The level of population is the basis of the labor force.
Other countries in the region have reduced their population growth through their own state programs. Their high growth rates also accelerated the “demographic transition,” a natural consequence of development when parents reduce their family size as they become richer, more educated and diverse in their wants.
The passage of the RH law last year promises to give the government a handle on dealing with population issues. The effect of such a law however will not be felt until after one decade from now.
(b) Misguided economic nationalism. The nationalism of the 1930s was given expression in the restrictive economic provisions of the Constitution of 1935. These made the country adopt laws that followed the spirit of those provisions and which even extended them over other economic domains.
Hence, we got even more misguided policies that restricted the country’s economic achievements. This encouraged a dependence on state action for many types of economic protection against foreign competition. When the Constitution was rewritten after the EDSA revolution in 1987, the provisions became more expanded in coverage rather than being more limited.
(c) A long process of import substitution and economic protection. An outcome of the Constitutional restrictions has been to inculcate a mindset of protection in the philosophy of developing the economy. The industrialization process was left hostage to this mindset. Philippine industrial enterprises became highly domestic market-oriented. Big basic industries were anchored on high protection and large state support rather than geared toward supporting the growth of an economy that was exposed to competitive pressures.
Long after our neighbors had shifted their policies that enabled them to face competition in foreign markets, Philippine industries were still looking mainly inward, trying to develop a limited domestic market. This policy fostered hostility to the entry of foreign direct investments in critical industries. On the other hand, the local industries created were heavily dependent on protection and government credit support.
The import substitution industrialization which essentially got financed from the earnings of a vibrant export agricultural sector eventually led to the eclipse of agriculture industries at the expense of import substituting industries.
This prolonged protectionist outlook made the country lag far behind neighbors that learned how to adapt their economies to the consumption needs of foreign markets, the industrial economies of the US and Europe and other countries.
(d) On the wage front, the premature adoption of high standards of labor policies. The Bell economic mission in 1952 that recommended the adoption of a high minimum wage rate out of line with local market realities set the trend toward the adoption of labor standards that were out of line with promoting employment in many industries.
In no small measure did this labor market policy move the country and domestic industry away from labor-intensive economic ventures. The promotion of industries that take advantage of the nation’s economic opportunities based on its abundant labor would have caused a rapid development of the garments and textiles sector as an export industry.
But here, the confluence of high protection of the textile industry and other highly labor-using industries and the high wage policy arising from the high labor standards killed all the possibilities to exploit this line of work.
These were the initial industries that propelled the export oriented economies of all the East Asian economies in their early stages of growth. In our country, however, all these opportunities were snuffed out because of the confluence of the protection mentality and the interventionist approach in labor policy.
(e) Other factors. There are those who would assign a heavy weight to other factors. Some would ascribe them to leadership factors, to episodes of military coups and adventurism, to corruption, to cronyism, to the high cost of electricity, to inadequate infrastructure and to many other issues that could be the subject of long debate.
Certainly, some of these factors give a special twist to the Philippine story. In my view, however, their factors that I have cited can further explain these other factors that others allude to.
Misguided economic nationalism gave rise to rent-seeking, corruption, cronyism, and uncompetitive behavior dependent on state patronage. The long period of import substitution and protection has promoted further rent-seeking behavior and had corrupted the process of industrialization precisely because it was based on patronage.
All these outcomes are inherently linked to the restrictive provisions of the Constitution. The high minimum wage policy has elevated the unemployment problem by simply killing off from the Philippine economy many highly productive employment creating ventures.