Revealing the Submerged Value
of Medicine Donations
How Valutus quantified the financial value of a global pharmaceutical company’s medicine donation program.
The Challenge: Benefits That Seemed Unquantifiable
A pharmaceutical VP overseeing medicine donation programs in Africa expressed a frustration that remains all too common: he couldn’t quantify the real value of the program.
To the VP, it felt impossible to measure the full impact of the company’s initiatives on the business and the world. Traditional impact metrics were a place to start, but they failed to account for the majority of the program’s financial value and far too much of its impact on patients and communities. This was especially true when it came to catalytic effects and second-order (“domino”) impacts.
However, it turned out that quantifying the medicine donation program’s impact wasn’t impossible. In fact, it took less than three months.
Our Approach: Surfacing Submerged Value
The key to properly valuing the program was to surface the hidden (“submerged”) value created by the program and then quantify it.
This involved incorporating the scientific, social, and economic literature about the target disease and determining what it meant to:
- The individuals receiving it
- Their families
- Their livelihoods
- The local community
- The local economy
- Governmental agencies
For example: the medicine improved individuals’ health. But it also improved their income, since better health meant they could work more. This also benefitted their families, and more healthy families meant the community saw benefits as well.
The medicine also meant illness didn’t force people to leave more productive lands, which created further livelihood benefits. It also improved the local economy, while reducing the need for government services.
Three Key Questions
Part of the analysis was asking three key questions:
2. What catalytic and systemic impacts were there?
3. What was the financial value created for the company and the world?
Business Impact
The analysis identified over $10 million in uncaptured business value, plus well over $100 million in unquantified impact on individuals, the community, and the economy.
It also yielded strategies for capturing tens of millions more in business impact.
Customer Behavior
On the business side, some key customers (such as national health services) give extra consideration to companies that demonstrate their commitment to making people healthier, even those who can’t pay. Some also speed up the decision-making process, which is worth millions even without any changes to purchasing volume or price.
Increasing Value
After the initial analysis was complete, additional work identified even more value.
Catalytic Impact
Analysis revealed that a significant share of the program’s value was catalytic. One counter-intuitive example was that medicine donation can make a difference in Gender Equity.
From Expense to Investment
Surfacing submerged value addresses a critical shortcoming in traditional measurements, one identified by the VP: While program costs are clear, far too often the benefits are not.
- First, the full impact of the program is greatly underestimated.
- Second, the business benefits are not seen or not quantified. This leads to their being excluded from decision making, in effect valuing them at zero – even when their true value is in the tens of millions.
Why It Matters
A critical part of fiduciary duty is an accurate accounting both of costs and benefits. Doing so brings the rigor and discipline the business requires to programs like this one, benefitting both the company and the world.
The Bottom Line
Quantifying true impact is far from impossible. By calculating the social value, the client quantified the program’s contribution to both the company and the world—transforming an expense into a strategic asset for market leadership.
