Mountain View company to offer low-cost birth control in developing world
Kathryn Tunstall, chairwoman of the board of the medical device company Conceptus, Inc. in Mountain View, Calif., believes passionately in the need for better global health care for women.
A former marketing and finance executive in the pharmaceutical and biotech industries, Tunstall recalls the time a woman in India told her about the lengths women there would go to in order to control their fertility.
“Local organizations would make announcements in the villages, in a very broad geographic area, that they were going to be in a certain village on a certain day, and women would start traveling with their blankets and their children,” she explained, choking up with emotion. “And they would do them [tubal ligation procedures] outside… and women died of horrible infections. It was terrible.
So I thought, how can we get to the larger market, which is the public healthcare market, where the most critical need is?”
In 1992, this passion for helping other women led Tunstall to join Conceptus, a company that manufactures and distributes a permanent birth control procedure and fallopian tube-blocking device called Essure, which is less invasive and more effective than tubal ligation.
Earlier this year, Tunstall led Conceptus to sign a partnership with WomanCare Global, LLC, a not-for-profit subsidiary of Ipas, an international nongovernmental organization based in Chapel Hill, NC. Founded in 1973, Ipas says its focus is to ensure that women are able to make safe reproductive health choices, according to its website.
WomanCare Global, which is also based in Chapel Hill, doesn’t manufacture any products. Instead, the company searches for quality and innovative reproductive health products and technologies to distribute — often at a discount — through its established channels in over 80 countries, with a focus on helping women in the developing world.
The two companies announced an exclusive distribution agreement Jan. 10. WomanCare Global will provide sales, marketing, training and distribution of Conceptus’ Essure procedure in Ghana, Kenya, Mexico, Puerto Rico and Turkey.
Besides for Mexico, these are new markets for Conceptus.
“International’s been a growth driver for Conceptus,” said Matt Roth, an analyst who covers the company for Roth Capital Partners. “It’s another kind of logical step towards expansion, but there’s no way you’re going to be able to quantify that in terms of profits right away.” In 2010, international sales accounted for about 22 percent of Conceptus’ net sales, a seven percent increase year over year from 2009.
WomanCare Global, however, has a good idea of how it is going to fund the distribution of Essure. The company uses profits from operations in countries like Mexico, Turkey and Puerto Rico to fund its operations in countries like Kenya and Ghana in what Saundra Pelletier, the company’s Chief Operating Officer, calls a “hybrid” business model.
“For [Conceptus] to have to go and build an infrastructure in these countries would not have been time appropriate,” Pelletier explained. She noted that as a relatively small company — Conceptus has a market cap of $412 million — and only one product, it didn’t have the leverage necessary to quickly enter of some of these foreign markets, which typically requires approval from and registration with the local government.
“The reason that we needed to exist is because we are able to go into these markets and look at them not from an NGO or pharmaceutical standpoint, but somewhere in the middle,” Pelletier explained. WomanCare Global operates with what it considers to be the best and most innovative products in women’s healthcare, but is not required to turn a profit at the end of the year. That allows the company a lot more flexibility in its operational decisions that a for-profit company would have.
Pelletier, who found out about Tunstall and Conceptus purely by chance, recalls that their first encounter was a truly a meeting of the minds.
“What was so incredible was once we sat down and started talking, she said to me, ‘You know, we considered starting a non-profit arm,’” Pelletier said. “’It almost seems that you’re the non-profit that we wanted to create.’”
Tunstall describes the partnership with WomanCare Global as a “perfect marriage. It was one of those things that you just say, ‘It was meant to be.’”
Pelletier added that both companies believe that every woman should have access to a quality sterilization product. “I think Conceptus found us to speak the same language,” she said.
Tunstall explained that other organizations working to help women in the third world have found that some small amount of education and microfinance loans, along with contraception, are the two changes that make the biggest difference in halting the cycle of poverty for women.
“If you’re not having a baby every year, and if you have some way of supporting yourself, all of a sudden you have a little more power in your relationships, and you can support your children,” she explained.
WomanCare Global was attracted to the Essure product and procedure because it can be done in a provider’s office in less than 10 minutes, without general anesthesia, at a cost that is one half to one third that of tubal ligation (on average about $1,925 versus $3,660), and with a much lower risk of post-procedure complications.
“In some of these countries in particular, it’s not the procedure you’re concerned about, but the care post-surgery — cleaning, infection,” said Alan Hart, WomenCare Global’s vice president for strategic development and operations. “That’s why Essure’s been a success in the United States. Why shouldn’t the women in Asia, Africa, and Latin America benefit from that as well?”
And they will, if WomanCare Global’s “Robin Hood” business model, in which money made in richer countries is used to fund its operations in poorer countries, proves sustainable.
“We say to people that we’re business minded, but we’re mission driven,” Pelletier explained.
Hart added that this model of taking from the rich and giving to the poor is becoming more popular among non-profits, “but it’s still relatively new.”
Currently, WomanCare Global, which already distributes other products in Turkey, Mexico, Puerto Rico, Kenya and Ghana, is in the process of getting approval from local governments to begin its distribution of Essure.
“In Ghana, Kenya, and Turkey we’re in the process of filing for approval. In Puerto Rico, most of it rides on the FDA in the United States,” Hart said. “I think we’re targeting June right now to begin operations.”
Tunstall said that Conceptus is supporting everything WomanCare Global is doing in regards to the distribution of Essure. “As part of our agreement, we’re providing 10 percent of sales [of Essure through WomanCare Global] to train providers to do the procedure,” she added.
Training will begin once the local governments’ respective drug regulatory authorities approve the distribution of the procedure. WomanCare Global and Conceptus both believe that approval is imminent, citing the slow-moving pace of government bureaucracy for the wait.
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