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Idealog—in the ideas business

Ray Avery’s Medicine Mondiale takes off

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Photograph by Bruce Nicholson

A meeting with Fred Hollows set Ray Avery on a new career. Kiwi entrepreneurs are breaking the Third World poverty trap with money, new business models and smart ideas—and selling the same things to the pampered West. unearths the fortune at the bottom of the heap.

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It takes a Kiwi to think of something this nutty. Take left-over meat from New Zealand abattoirs, mix it with unwanted kiwifruit pulp, dry the result, package it into a sachet, and then sell it as super-food to the world’s poor and starving. Oh, and as a sideline, flog the sachets at a premium to Californian body builders.

It’s just the sort of whacked idea that might turn up in a secondary school science show, but former pharmaceutical scientist Ray Avery’s latest invention, Proteinforte, is just such a super-food. The product works on a premise that children in developing countries die from protein-energy malnutrition. Even if they have access to food, they don’t have the energy to break down the protein molecules. Avery’s product ‘pre-digests’ the protein molecules and includes added immunogenic peptides and small- and long-chain amino acids. Voilà: the nutrients of an entire chicken in a sachet the size of a teabag. Avery has even enlisted Martyn Atack (the man behind the flavours of Paradiso ice cream and EasiYo yoghurt) to come up with a variety of tastes to appeal to different countries, from banana in Ethiopia to pumpkin in Nepal.

The technology is so useful, it’s now patented in every country. Which is handy given the sachets have come to the attention of athletes in developed nations, particularly bodybuilders in California, who pay as much as US$25 for each magic teabag.

“What I like is the sexiness of the idea,” says Avery, who works his wizardry from a lab in his garage in Balmoral, Auckland. “I like that we can take products that we throw away and create something new. In Nepal, we’re building a factory, and on one side of the road is the biggest chicken factory and on the other is a pineapple plantation. Put it together and you’ve got a real deal. This technology is reasonably simple—it’s just that nobody’s thought of applying it to this end use.

“It’s also a nice paradigm to make money out of a good idea that has a use in both worlds. If you don’t have that mix, I don’t think you’d be able to make a sustainable business out of the Third World environment, because there always has to be a distribution channel for marketing these products.”

One man can make a difference. I know, because now there are five million people walking around with one of my lenses in. That would never have happened if we hadn’t found a way to break the cartel of the multinationals

Words like ‘channel’, ‘markets’, ‘products’ are not the usual vocabulary of Third World aid. But Avery is not alone in re-imagining how the wealthy can serve (and benefit from) the four billion people living below the poverty line. Though the individual purchasing power of the poor is, er, poor, the total is sum is enormous—as much as US$5 trillion according to a March report from the World Resources Institution, The Next 4 Billion: Market size and strategy at the base of the pyramid. And the opportunities for innovation, particularly for high-tech solutions in health, education and infrastructure, are spectacular. According to The Next 4 Billion, the trend towards high-tech business solutions is on the upswing. For example, a consortium of 19 mobile phone operators serving 600 million people in 100 countries recently announced a new transfer remittance system to reduce the cost of mobile banking by more that $1 trillion annually by 2012.

Recasting the way we think of the world’s poor—from victims awaiting our aid to customers demanding our services—has most famously been documented by CK Prahalad in the book The Fortune at the Bottom of the Pyramid. In it, he finds examples of entrepreneurs solving problems as intractable as sourcing potable water in Africa and creating insurance banks in India. We wondered if this spirit of invention is alive and well in New Zealand. How silly of us to ask. Here’s a bunch of amazing Kiwi innovators at work.

From his garage lab, Avery affects the lives of more people than most of us will ever meet. Once he made “a very good living” for a large drug company but Avery left the multinational to work with The Fred Hollows Foundation, creating low-cost lenses for cataract surgery in Eritrea and Nepal.

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Illustration by Adrian Clapperton

“I was lucky enough to meet Fred, who stuck a bony finger in my chest and said ‘Stop making money out of sick people’,” he says.

The result was the Intraocular Lens. Although it is marketed through normal distribution channels, the proceeds support national healthcare programmes—sustainable business with an ethical basis.

The lenses, now used in both the West and the developing world, once cost about $300. However, by making the lenses for $3 and selling them for $7, Avery collapsed the international market and made them affordable for those who needed them most.

“One man can make a difference. I know, because now there are five million people walking around with one of my lenses in. That would never have happened if we hadn’t found a way to break the cartel of the multinationals.”

And so began his company Medicine Mondiale. Avery began working on a gadget to control the flow rate of drugs through an IV drip. He’d noticed that technology from the 1800s was still in use in developing countries and, because of the lack of medical staff, mothers were inadvertently killing their children through improper use of equipment. Enter Acuset, a five-dollar piece of medical equipment that is foolproof and reusable. It didn’t take much to get financial backing from Trade Me founder Sam Morgan and support from dozens of others, from patent attorneys to manufacturers, who donate their time. But this device doesn’t just have uses in the backblocks of Africa—vets also use it as a low-cost alternative to a syringe pump, and Californian mansion owners are now using it to deliver chlorine to their spa pools.

“For me, a project has to be based on business DNA, otherwise it doesn’t work,” says Avery. “We need to work on both product streams simultaneously—for the First World and the developing world market. If we can address some of the major issues in healthcare in developing countries and have a product that has an equal fit in the First World, that’s fabulous, because it’s the way I think we evolved as a community—to try to look after each other—and somehow it’s got terribly disordered.

Recently a drug company exec said to me at a conference: ‘There’s no money in sick, dying people in Africa, and no point in investing there.’ I take a different view

“Developing countries have lots of diseases, but unless you can work out who’s going to pay for it … recently a drug company exec said to me at a conference: ‘There’s no money in sick, dying people in Africa, and no point in investing there.’ I take a different view. We need to chip away using our technology.”

Avery isn’t the only Kiwi looking to solve health problems in the developing world. A group of Unitec students has come up with a universal crutch for people with lower-leg injuries. Christopher Metcalfe, Greg Holdsworth and Darrin Eades-Smith were the co-winners in the student category at the 2007 BeST Design Awards for their plastic handle, dubbed The World Crutch. The injection-moulded handles fit onto a bamboo stick, providing an affordable walking aid for $3. The design is currently on a one-year option with the Maddi Group.

It’s still in the development phase, but the group hopes the crutch will be a viable alternative to expensive aluminum crutches.

Back in the 1970s, a small loan—less than US$100—could make a world of difference to a farmer in the developing world. From the mid-1980s in New Zealand, the beginnings of a microfinance scheme were stoked by Christian aid organisation World Vision. The charity convinced New Zealanders to donate to VisionFund, a recyclable loan scheme that enables Third World families to access business coaching and microfinance to start modest businesses.

Large banks worldwide are increasingly viewing microfinance as a serious business. Deutsche Bank, Citigroup and Goldman Sachs are just a handful of the megabanks in the race to tap into the potential profits in this emerging market.

Smaller venture capitalists currently taking on the market here in Enzed include American expat Greg Casagrande, whose not-for-profit South Pacific Business Development Fund is the first to take microfinance to the Pacific, providing unsecured, zero-collateral loans with manageable interest rates to Samoan startups. The SPBD has provided over 14 million tala (about $7 million) since the organisation began in 2000. It’s a slick, financially sustainable operation, with just 0.8 percent of its loans 30 days or more in arrears.

“That 99.2 percent rate of repayment is better than ANZ or Westpac get from their far wealthier customers here or anywhere in the world,” says Casagrande. It’s also attracting investors such as Morgan, who recently visited Samoa with Casagrande to meet the customers and is talking with him about expanding the SPBD further into the Pacific, potentially under a separate for-profit umbrella.

The for-profit plan isn’t about making profits, though. “I’m not convinced that a for-profit business in this sector means more money to be made,” says Morgan. “But it is about building a huge network, and the possibility through that network to get into for-profit. When you create a for-profit structure, it gives motivation to profit services.”

Casagrande agrees—he’s not in it for the cash, he says. He’s in it for the potential. “There are loads of needs and demands out there that are still unmet. It’s a matter of business: looking at the opportunities and needs of your potential customers, instead of just saying they are too poor to afford anything or can’t pay back your loan—that’s a myth.”

It’s a matter of evaluating the needs, building a business and then scaling gradually upwards to reach people who are underserved with quality products, in a way that is financially sustainable both for the business providing these services and for its investors.

“If it’s not financially sustainable it’s charity and if the government changes administration, or the charity falls over, then it’s gone.”

If it makes sense that New Zealand is a world leader in agricultural innovation, then it makes sense that we’d have an idea or two to ease Third World agricultural problems. Enter Neil Macintyre, founder of func.nutrition. Macintyre pioneered the functional food category with the highly successful Sun Latte brand. But it’s the developing world that now has him fizzing. He recently returned to Cambodia with VisionFund and is now looking to start a Phnom Penh dairy company to create nutritious, cost-effective products using Kiwi technology.

Macintyre says Cambodia’s 13–14 percent growth rate makes it attractive to investors. “While there may be downward corrections, there’s a good solid foundation of growth.” The three main areas of growth—tourism, garment production and agriculture—are providing jobs in both urban and rural areas. “It’s really exciting in terms of all the right components for good long-term development,” says Macintyre.

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Dual use: the pre-digested protein formula in Proteinforte (top) is saving children and helping athletes. Acuset (below) is a $5 lifesaver in developing countries, as well a handy piece of equipment for the pool boy

A new milk drink will incorporate some of the ultra-filtration techniques used in producing Sun Latte to create a low-lactose drink that is high in calcium and protein and can be sold for about 20 cents a unit. He also plans to employ locals in all sectors of the business, including bringing Cambodian employees to New Zealand to learn milk-processing techniques in what he hopes will provide a “cornerstone to dairy consumption in Cambodia, utilising Kiwi technology”.

Macintyre is also exploring ventures in Mongolia, after a recent trip with VisionFund and agribusiness expert Chris Bryan. In addition to marketing milk products across the country, there’s the possibility of introducing new farming techniques. For example, New Zealand gene transfer technology can be used in Mongolian goat farming to provide high-quality cashmere for the nearby fashion markets of Tokyo and Hong Kong—and Macintyre hopes the higher quality material and designs will provide a higher rate of return for the herders.

“Can New Zealanders have a role? Absolutely. We have the skills to grow small enterprises into medium ones.”

In fact, Macintyre is heading back to Mongolia in October and he’s looking to take others who are interested in understanding the opportunities to do business there. But he isn’t just in it for the business. After seeing children scavenging through rubbish tips in South East Asia, he realised he wanted to make a lasting difference.

“You can’t just swoop in Angelina Jolie-style and whisk these kids out of the dump,” he says. “We have to do something real. Working in these countries, you’re not guaranteed to make a big profit. There’s no expectation that you establish capital in the first year—it takes time. But you will get your money back in the medium term. If you’re in it for the long term, and you take a long-term position in this market, you’re going to grow many-fold and become a central player in that market.”

Bryan agrees: “There are opportunities [for Kiwi entrepreneurs] but over a longer time period and with higher cultural and economic risks. But if you pick the right people to go into business with, and have a focused attack, you’re likely to have financial success.”

What all these entrepreneurs have in common is that they genuinely began looking to these markets as a way to help break a cycle of poverty. Donating learned skills to help those in developing countries has traditionally been left to health professionals, but Kiwi business people are joining the ranks of those donating their time.

Still, we need to be humble in our approach, says Macintyre. “New Zealanders often have swelled with pride at the thought of being entrepreneurial. We are entrepreneurial and extremely clever, but if you hand a piece of No. 8 wire to a Vietnamese man with absolutely nothing, he will slice the wire into a thousand pieces and then start working with it in a way that is so creative that we look crude by comparison. These people are strong and they can still manage to laugh at the end of the day and, in a way, that makes them far stronger than anybody in the West.”

Originally published in Idealog #12, page 38

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Comments

Darrin Eades-Smith

hopefully this product can benefit all people.

Good article - more in this space / area of innovation would be awesome.


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