A Social Enterprise to Make Quality Hearing Aids Affordable and Accessible
The Challenge of Hearing Impairment: The World Health Organization estimates that
250 million hearing impaired people could benefit from using a hearing aid and that the
global annual need for hearing aids is 32 million. Hearing aid sales worldwide in 2002
were only 6 million units. Of these, only 12% were sold to the developing world, home to
70% of the global population. In the US, there are 28 million Americans with a hearing
loss. However, only 23% of this population owns a hearing instrument, and seven
million cannot afford to purchase them.
The cost of hearing aids is prohibitively high for the vast majority of the hearing
impaired, who are poor. In 2003, the average cost of a hearing aid in developed country
markets was US $1,700. In developing countries, quality hearing aids sell for $500-2000.
Hearing aid companies are oriented toward the markets of developed countries, where
they realize a high profit margin. The current specifications of "low-priced" hearing aids
available in developing countries have resulted in poor quality and low client satisfaction.
The developing countries lack cost-effective, financially self-sustaining service delivery
models that yield affordable hearing aids and services for the hearing impaired.
In the US, few insurance companies cover hearing aids. Hard of hearing children may
qualify for Medicaid, but services usually don’t cover the cost of better quality
instruments. The high price to perceived value ratio prevents most who know they need a
hearing aid from getting one—most typically wait 7 years before getting one. In most
countries, approximately 10% of the population is hearing impaired and in need of
hearing aids. Historically penetration rates have not changed by more than 1-2%. Thus
over time, the untapped hearing aid market is projected to grow as fast as the hearing
impaired population grows which is ~8-10% per year. .
The need for appropriate and affordable hearing aids in developing countries is largely
ignored by the hearing aid industry. Most manufacturers have neglected developing
country markets since they have not appreciated the size of the potential market and have
preferred to stay with a low-volume, high cost approach.
Project Impact has developed the Affordable Hearing Project (AHAP) to address this
extreme market failure in the hearing industry. The mission of the Affordable Hearing
Aid Project is to alleviate the burden of hearing loss in as large a population as possible
by providing quality hearing aids via ethical dispensing at a significantly lower price than
currently exists in both developing and developed countries; and to do this in a
financially self sustaining fashion, based on earned income from sales of hearing aids.
AHAP will implement a business strategy that relies on high volume sales with low profit
margins. The enterprise will implement with distribution partners a multi-tiered pricing
system under which the higher revenue realized from hearing aid sales to wealthier
patients will be used to cross-subsidize the sale of hearing aids to poorer patients.
AHAP’s goal is to dramatically change the pricing structure of the hearing aid industry
enabling millions of people to gain access to hearing aids. The average retail price for
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digital hearing aids in 2003 was $2000; for digitally programmable it was $1250.
Average retail prices for digitally programmable analog were $600-800. AHAP’s pricing
will range from $60-170 for the digitally programmable and $100-250 for the digital.
Those who cannot afford these prices will receive hearing aids for free.
Progress to Date: Project Impact has raised $3.1 million to accomplish the following: A
fully equipped hearing AID R&D lab has been established in NJ. A digitally
programmable analog two-channel, two memory hearing aid has been developed. This
product normally retails for $1500 and wholesales for over $800. Production became
operational in January 2003 at Aurolab, a non-profit manufacturer, under contract to
Project Impact at its plant in south India. Initial costs of goods are $60. Development
has been completed on a fully digital 4-channel 4-memory line of hearing aids that covers
the full range of hearing loss, including people with severe hearing loss. Projected per
unit manufacturing cost is $90. The AHAP Impact1 hearing aid has the longest battery
life of any known hearing aid on the market today. The hearing aid accommodates both
rechargeable non-rechargeable batteries. A solar re-charging unit has been designed and
manufactured that charges re-chargeable batteries for hearing aids. Per unit
manufacturing cost is $3; four re-chargeable batteries brings the package cost to $5. The
AHAP Hearing Aid had US FDA marketing clearance and CE Mark Certification for
European sales. A clinical trial at University of Washington is completed with excellent
results and high client satisfaction. Approximately 10,000 hearing aids have been
manufactured and distributed. Over $400,000 in revenue has been realized to date.
Project Impact has established a wholly owned Indian commercial company, ActivEar to
distribute AHAP in India. ActivEar handles all AHAP import and exports in India and
relates to Aurolab, our contract-manufacturing site. The first non profit distribution site
has been established in S. India and is 60% financially sustainable in it’s first year.
History: Project Impact, Inc. (www.project-impact.net) is a Berkeley, CA based not-forprofit organization in operation since 2000. Project Impact is dedicated to making
medical technology and health care services sustainable, affordable, and accessible to all,
particularly to the poorer two thirds of humanity living mostly in developing countries.
Project Impact is rooted in the earlier work of its founder and Executive Director, David
Green. David is an Ashoka fellow and is recognized by Schwab Foundation as a leading
social entrepreneur. He is also a MacArthur Fellow. His most significant work is the
development of an economic paradigm for making health care products and services
available and affordable to the poor. This paradigm of ‘compassionate capitalism’
utilizes production capacity and surplus revenue to serve all economic strata, rich and
poor alike, in a way that is both financially self-sustaining and affordable to all members
of society.
Project Impact started the Affordable Hearing Aid Project, AHAP, in 2000, in partnership
with Impact Foundation UK. The vision for developing an affordable, high-quality
hearing aid came from Lady Jean Wilson and the late Sir John Wilson, who are well
known for their leadership in galvanizing many individuals and organizations around the
world to alleviate disabilities. Sir John passed away in November 1999 and Lady Jean
Wilson continues to actively advise this project. The Wilson’s founded the Impact
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network of organizations, of which Project Impact is a member. With the expertise of
Sunil Chojar, former head of R&D of both Siemens and Starkey, Project Impact has
developed the ability to produce quality digital hearing aids.
AHAP’s Business Strategy: Current efforts to ameliorate hearing impairment in both
developing and developed countries represent an extreme market failure. Pricing is too
high for most and health insurance does not cover hearing aids in most markets except
the few European countries that have socialized medicine. AHAP’s strategy is to grow
the hearing aid market by offering a high-quality low-priced product to the untapped
price-sensitive market through novel and existing sales channels.
US Channels: Most potential customers in the US are retired people on fixed incomes
who do not have health insurance that covers hearing instruments. Discretionary income
is first spent on life maintaining pharmaceuticals well ahead of hearing aids, especially
when the average cost to equip both ears with hearing instrument is $3,800- $5,000.
AHAP will address these phenomena by pricing it’s hearing aids and related fitting
services to be approximately $600 for a binaural fitting($90 for the actual hearing aid) via
the Lions and other non profit channels such as the US Veterans Administration and
academic audiology programs at wholesale prices that will be 50 to 70% less than current
pricing.
Non-profit Distribution Channels via the Lions: Project Impact has a strong
relationship with Lions Club International Foundation (LCIF), which is the largest
international service club organization in the world with a global membership of 1.4
million. Lions are a major partner for distribution worldwide and have announced AHAP
as a major funding priority. Our hearing aid is being offered as a membership benefit to
the 1.4 million Lions worldwide. Approximately 4500 hearing aids have been sold to
Lions programs to date, and demand is projected to be 10,000+ in the coming year for
Lions generated sales. LCIF has a staff of four who are animating distribution via the
Lions network worldwide.
Social Franchising: Project Impact will create hearing aid distribution with its non-profit
partners via social franchising of the clinical and economic model. Project Impact will
provide the following services to partners, where partners maintain local ownership:
training technicians for dispensing; setting up and training for mold making; start up and
initial operating expenses financing; business planning and systems development;
research to set pricing; supply of equipment and initial hearing aid inventory; continued
upgrading of staff skills; ongoing monitoring of quality and adherence to social mission;
and ongoing supply of new products. In addition to Lions, discussions are underway with
the following distribution partners: PDA in Thailand, Grameen Bank in Bangladesh, Al
Noor Foundation in the Middle East, Mobility Aide and Appliances research and
Development Centre in Nigeria, AAPPE in Brazil, and The China Disabled People’s
Federation in China.
Manufacturing At Aurolab: Components for the hearing aid are sourced through
suppliers who have given AHAP a million part price. Aurolab, an Indian non-profit
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contract manufacturer, produces the hearing aid. Approximately 10,000 have been
produced to date. In 1992, David Green directed the establishment of Aurolab (India), the
first non-profit manufacturing facility in a developing country to produce affordable
intraocular lenses (IOLs), suture, pharmaceuticals and eyeglasses. Aurolab is one of the
largest manufacturers of IOLs in the world, with sales of 600,000+ units per year to 86
countries. David also directed the establishment of suture (wound closure product)
manufacturing at Aurolab.
R&D and Product Service Center: In 2001, Project Impact established a hearing aid
technology research and development lab in Lebanon, New Jersey. The New Jersey lab
has three full time hearing aid engineers, all of whom have considerable experience in
product development for hearing aids. Sunil Chojar is responsible for developing our
state-of-the art hearing aids. Earlier he served as Director of Research and Development
at Siemens, the largest hearing aid company in the world (1993 to 1999), and as Director
of Research and Development at Starkey (1986 to 1993), a major hearing aid
manufacturer. The other two members of our R&D team include Marcel Ruiz, former
Production Manager for Siemens at their Houston Texas facility, and Arun Desai,
formerly of Siemens R&D. Four technicians will be hired in the first year to augment the
present team for product support and R&D functions.
As AHAP begins production and assembly of ITE and CIC hearing aids, the New Jersey
lab will also serve as a service center, handling customer/product service that will fulfill
the following technical and customer support functions: assembly and service of in-theear and behind the-ear hearing aids; custom mold and shell making; maintenance,
distribution and servicing/training for programming software; quality assurance for India
manufacturing and & US facility; ongoing software and hearing aid improvements based
on field results; R&D for new hearing aids; maintaining inventory of finished hearing
aids and drop shipments; new products implementation for Aurolab; and management of
supply chain and purchasing of components.
Sales: AHAP will hire staff to animate non-profit sales. Project Impact has a broad
association with many consultants in the field of audiology, business development and
legal and regulatory affairs that can be tapped.
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Donors and Partners to the Affordable Hearing Aid Project up to 2003
AHAP donations 2001-2003
AHAP donations on PI books
SEVA
786 Foundation (Mary LaMar, Mike Price)
World Bank
Social Profit Network
Lions Club International Foundation
Acumen
Impact UK
Schwab Foundation
Tom Wilmore
Rick Mashon/Kids Care
Leapfrog
Peninsula Community Foundation
Tom Wilmore
INNW
Leadership Grant (INNW)
Total
Impact UK grants for AHAP not on PI books*
Component grant
Tech development
Manufacturing equipment and set up
Total
Other AHAP grants not on PI books
Ashoka (fellowship for 3 yrs.)
Grand total all Grants
$1,803.80
$220,000.00
$100,000.00
$490,000.00
$600,000.00
$400,000.00
$98,467.23
$911.35
$4,000.00
$250,000.00
$10,000.00
$60,000.00
$1,500.00
$20,000.00
$10,000.00
$2,266,682.38
$389,636.77
100,000.00
140,000.00
629,636.77
165,000.00
3,061,319.15
*during FY 2003 Impact UK donated approximately $400,104 for purchase of hearing
aid components and $140,000 for manufacturing equipment and training some of which
did not flow through Project Impact books, but went directly from Impact UK to the
vendors. Impact UK also gave an initial grant of $100,000 for AHAP not reflected on
Project Impact books.
AHAP is a collaborative effort of a network of international non-profit organizations,
U.S. electronics manufacturers, and academic institutions. Among other duties, Project
Impact coordinates the network.
Several members of the network previously
collaborated on successful projects to manufacture medical devices for distribution to
programs serving the poor and on projects to provide eye care surgical services that have
restored the sight of hundreds of thousands of individuals in Asia, Africa, and the Middle
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East. The hallmark of each of these projects is that they are affordable to the poor and
financially self-sustaining from user fees.
The collective role of the non-profit organizations within the network is to establish
hearing aid assembly and dispensing outlets in the numerous countries in which these
organizations are active. Non-profit organizations in the network and their respective
resources and roles are:
Impact Foundation, UK --Established in 1985, the Foundation’s mission is to prevent
and cure avoidable disability. Impact Foundation and its sister organizations in 11
countries work closely with other agencies and organizations of and for disabled people
and has a formal affiliation with WHO, UNICEF and the United Nations Development
Program. Impact Foundation supports AHAP through financial grants, administrative
assistance, and intellectual capital. Impact Foundation and Project Impact have
collaborated on AHAP since its inception in 1998.
Lions Club International Foundation (LCIF) -- LCIF is the grant-making arm of Lions
Clubs International. Its mission is to support the efforts of Lions clubs worldwide in
serving their local communities and the world community as they carry out essential
humanitarian service projects. LCIF is funding two of its members to carry out projects
to distribute hearing aids provided by AHAP. The lead partners in the pilot projects are
the Northwest Lions Foundation for Sight and Hearing in the U.S. and Lions of South
India. The projects are designed to develop and implement financially self-sustaining
models for the delivery of affordable hearing aids to all economic strata, with an
emphasis on serving the poor.
Aurolab, India -- Aurolab is the initial site for manufacturing the hearing aids.
Established as a non-profit trust, Aurolab has manufactured medical devices since 1992.
With an organizational mandate to maximize product availability and affordability to the
poor, it is a natural partner for AHAP. In a previous collaboration with several AHAP
partners, Aurolab developed low-priced, high quality, sight restoring intraocular lenses
and surgical sutures for developing country markets.
Ashoka Innovators for the Public - Ashoka's mission is to develop the profession of
social entrepreneurship around the world. Ashoka is a global non-profit organization that
identifies and invests in social entrepreneurs through stipends and professional services
that allow "Ashoka Fellows" to focus fulltime on their ideas for leading social change in
education and youth development, health care, environment, human rights, access to
technology and economic development. David Green, the Executive Director of Project
Impact, is an Ashoka fellow.
Al Noor Foundation, Egypt, Saudi Arabia – Established in 1989, the mission of the
Foundation is to develop sight restoration and blindness prevention programs in Africa,
the Middle East and Asia. In addition to the funding it has already provided to the project,
Al Noor will establish training programs for hearing aid technicians to dispense hearing
aids and cost-effective, self-sustaining service delivery sites for prescribing and fitting
6
hearing aids. Al Noor is associated with a group of 15 eye and ear hospitals located
throughout the Middle East, which will also distribute our hearing aid.
Acumen Fund - Acumen Fund is a new, independent organization underwritten by the
Rockefeller and Cisco Foundations and individual philanthropists. The organization is
pioneering a portfolio approach to global social investing that is setting a new standard
for the management and distribution of philanthropic capital. Acumen’s first portfolio
supports innovations that leverage technologies to radically lower the costs and barriers
to healthcare for poor people in developing countries. This portfolio is focused
specifically on health technologies in South Asia and Africa. AHAP is the first initiative
to be supported by the Acumen Fund. The Fund supports quality investments through
rigorous due diligence as well as through the development of assessment and reporting
tools.
World Bank - The World Bank supports the Affordable Hearing Aid Project with a grant
from its Development Marketplace program. The Development Marketplace aims to
identify and nurture the most innovative ideas in the development community. In a
competition open to all, including NGOs, businesses, academia, and foundations, the
Development Marketplace awards start-up funds to ideas that test new approaches to
fight poverty and bring people and institutions together with the greatest promise of
moving from concept to results. In 2002, the Development Marketplace had a very
competitive selection process. Of the initial 2400 submissions from over 122 countries,
less than 10% reached the finalist round. In the final round, 29 projects were selected to
receive grants.
Social Profit Network: SPN has supported the Affordable hearing Aid Project with
unrestricted grants of $600,000, pro bono legal support and business advise. They are a
small silicon vally based venture philanthropy grop to at supports six high profile social
enterises, of which Project Impact is noe. The grolup was founded and is run by Robert
Levenson.
786 Foundation: 786 is a private family foundation that has supported many of the
technology transfer initiatives of David Green, including the first intraocular lens
manufacturing unit, suture, hearing aid, and more recently, the foldable hydrophobic IOL
project of Project Impact.
Population and Community Development Association (PDA) – PDA will be Project
Impact’s partnering organization for sales throughout Thailand. Founded in 1974, PDA is
one of Thailand's most well-established and diverse non-government organizations.
Operating from Bangkok, 16 regional development centers and branch offices in rural
Thailand, PDA's programs are based on the belief that local people are best suited to
shape and sustain their own development. PDA has pioneered grassroots growth marked
by extensive villager involvement not only as beneficiaries but also as planners,
managers and leaders. Globally recognized social entrepreneur, Schwab Fellow, Thai
Senator, and Ambassador to UN AIDS. Mechai Viravaidya runs PDA.
7
The law firm of Fried, Frank, Harris, Shriver & Jacobson represents Project Impact
in a broad range of matters on a pro bono basis. Founded at the turn of the twentieth
century, Fried Frank has about 550 attorneys at offices in London, Los Angeles, New
York City, Paris, and Washington. The firm’s wide-ranging pro bono program helps
deserving individuals and not-for-profit organizations both nationally and locally and has
been recognized through numerous awards over the years. The firm’s contribution of
services was arranged by Ashoka and the International Senior Lawyers Project. AHAP
has benefited greatly by having access to the firm’s top-flight attorneys, especially as we
move from the product development phase to the manufacturing and distribution phases.
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Project Impact India and Lions of S. India Collaboration to make Hearing
Affordable and Available
First Distribution Site: Project Impact established the first multi-tiered pricing
distribution model for hearing aids in Madurai India in mid 2003. This unit is
approaching financial sustainability. This site has a multi-tiered pricing model similar to
the successful eye care delivery models implemented in eye care. Project Impact India is
incorporated as a Trust under Indian law and has a staff of 15.
ActivEar Indian Subsidiary: Project Impact has established a wholly owned Indian
commercial company. ActivEar India Limited is a sales organization designed to
distribute hearing aid products throughout India via both non-profit and commercial
channels. Through ActivEar, our products have been well received by audiologists in
major Indian metropolitan centers. ActivEar handles all AHAP import and export in
India and relates to Aurolab, our contract-manufacturing site. This entity has a staff of
seven.
Distribution S. India
 Staff: 13, including audiologists, ENT, technicians, outreach
 Building site operational
 Services: Fixed site and hearing camps
 In operation since January 2003
 Strong partnership with local Lions
Lions India Start-up Costs
Affordable Hearing Aid Project
South India Lions Proposal
2 Year Budget
Original Budget
Adjust-mentsRevised Budget
April 2002
Service Delivery Start-up Costs*
$
Training Costs
$
Service Delivery Operation Costs - Year 1 $
Service Delivery Operation Costs - Year 2 $
Outreach - Startup and Operations (2 Years)
$
Total
$
14,178
33,170
36,363
42,476
23,692
149,878
$
$
$
$
$
$
4,949 $
$
(580) $
$
(1,100)$
3,269
$
19,126
33,170
35,783
42,476
22,592
153,147
*Equipment, furniture, renovation
Results To Date, Year One:



Over 500 people served with hearing aids and fitting services
Program is 60% financially self-sustaining and expects to be fully self sustaining
by end of 2005.
In conjunction with Lions, conducted over 33 screening camps to identify people
with hearing loss and fit them with hearing aids
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Annex 1: Competitive Strategies for India
Current Market: The Indian hearing aid market is under developed by almost all
available metrics. Indian industry analysts estimate the current Indian market between Rs.
20 and 30 crore (4-6Million USD) annually. While the US Market is at least 500 times
larger in dollar value, most experts agree that the Indian market is growing much faster—
some say as fast as 100% per year. In terms of unit sales, approximations of annual
volume range from about 145,000 to 200,000 units.
In a market once dominated by inexpensive analog body worn hearing aids, newer
technologies are now emerging and gaining popularity. The approximate breakdown of
sales is as follows:
Body Worn
Behind the Ear (BTE)
In The Ear (ITE)
Completely in the Canal (CIC)
40%
40%
10%
10%
Body worn aids are typically not programmable, are not fitted with customized molds,
and are far less expensive than other form factors. They are more common among
children, rural populations, and lower middle class customers. BTE instruments are more
common among older, urban, middle class customers. ITE and CIC sales are exclusive to
urban markets where they are sold in all age groups that can afford them. ITE and CIC
are also more popular among image-conscious teenagers, who resist more visible
technologies.
Market Potential
As in the American market, the Indian market unit size is projected to grow through
increases in: number of hearing impaired people; percentage of upgrade/ replacement
purchases; and penetration rates (i.e. % of hearing impaired people who purchase hearing
aids).
According to Widex India market research, 9 out of 10 of India’s 100+ million hearing
impaired individuals do not yet own a hearing aid. The Indian market penetration is
therefore around 10%, less than half that of the United States. The untapped Indian
market is therefore 9-10 times larger than the current annual market, giving ample room
for growth. Project Impact research suggests that the Widex data may overestimate
current hearing aid ownership.
Major barriers to market penetration in India include all of those present in the United
States (listed above), but there is some indication to suggest that the barriers are more
exaggerated in India. As in the US, one of the primary barriers is purchase price. There is
a stigma of abnormality or low intelligence associated with hearing impairment, and this
may be compounded by resentment by the parents/family of the hearing impaired.
10
American problems of lack of education and awareness, absence of screening, and
customer misinformation are all prevalent in India as well.
Competition: Many of the major hearing aid manufacturers are sold in India, including
Elkon, Oticon, GN Resound, Widex, Unitron and Phonak. Their respective market
shares, based on a preliminary assessment, are summarized in the table below:
CroreRs. Million USD
% Total
Siemens
15
$3.3
54%
Dynavox
5
$1.1
18%
Widex
2
$0.4
7%
Phonak
2
$0.4
7%
Alps
2
$0.4
7%
Others
2
$0.4
7%
Total
28
$6.0
100%
As in the United States, five manufacturers dominate the market, but Siemens’
dominance is even more pronounced in India, at over 50% of the dollar value.
Given that most Indian customers have less purchasing power than their American
counterparts, vendors pay special attention to capturing sales from price sensitive
customers. This accounts for the popularity of very low cost non-programmable body
worn hearing aids, which can have prices around Rs. 500 (around $10-11). Low price,
however, does not correspond with good value. Non-programmable devices are
uncomfortable to wear, usually do not have a customized mold (necessary for moderate
to sever hearing loss in order to avoid sound feedback) and overall provide a poor quality
listening result.. Customers who can afford programmable technology usually opt for it.
Distribution: The Indian market suffers from an absence of formal distribution channels.
The “every man for himself” nature of distribution is further complicated by the lack of
regulations or enforcement to govern distribution. The only known guideline is the
manufacturers maximum retail price (MRP) which is printed on hearing aid packaging
and theoretically legally binding, but not enforced.
In the absence of buying groups, India has developed two layers of customers:
intermediaries and end-user practitioners. These dispensers, including even trained ENT
doctors and audiologists, often do not have appropriate technical backgrounds for
properly fitting programmable hearing aids. In cases where programming of the hearing
aid is required, many dispensers lack the necessary equipment to diagnose a patient’s
hearing loss or correctly program the instrument. Nevertheless, there is substantial
financial incentive for the vendor to sell these higher margin programmable devices, and
incorrect or unnecessary prescriptions are common. Dispenser background, capability,
and trustworthiness varies from region to region within particular states. Data on the
extent of the problem is understandably difficult to collect.
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The MRP for all hearing aids are substantially lower than their American counterparts.
The table below summarizes the lowest published price found for BTE hearing aids of
different brands and different technologies as well as their approximate wholesale prices
as determined from interviews with practicing Indian dispensers.
Approx USD Wholesale Approx USD Retail
GN Resound
Programmable
Digital
Oticon via ALPS
Conventional
Programmable
Digital
SIEMENS
Conventional
Programmable
Digital
Widex
Programmable
Digital
$176
$338
$282
$609
$72
$202
$260
$109
$324
$467
$130
$178
$356
$195
$285
$641
$163
$181
$261
$326
While printed Maximum Retail Prices (MRP) in India are supposed to be lower than the
US, some dealers have been known to charge well over MRP when they think they can
get away with it. Anecdotal evidence suggests sales in some metropolitan areas at Rs. 2
lakh (over $4300) or more per hearing aid. The profiteering nature of the current industry
highlights the need for a more ethical approach to hearing aid sales.
Pricing:
The main appeal of AHAP hearing aids in India will come from their unmatched value in
the market. In the case of the programmable analog BTE, we are aiming for a price of Rs.
4500 ($98) for wholesale sales to pre-existing dealers and around Rs. 5500 ($120) for
sales to end user practitioners. Project Impact will print an MRP of approximately Rs.
8100 ($176) on the product packaging and include this MRP in advertising. Publication
of the price should discourage scalping of the MRP by educating potential customers on
how much they should expect to pay.
Under this pricing paradigm, programmable analog will fall in the same price range with
a number of conventional analog instruments, yet it will offer the superior experience of a
dual channel, dual memory, programmable device. At Rs. 8100, it will also be sold at
less than two thirds of the price of the next least expensive programmable aid which
cannot offer many of the AHAP features.
Creation of National Network of Ethical Practitioners: Project Impact will help curb
profiteering among distributors by establishing a national network of end-user
practitioners including hospitals, NGO’s, and private practitioners. Project Impact will
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certify member dispensers for technical competence in the fitting of the AHAP hearing
aid as well as a proven track record of ethical behavior. Members of the network will be
able to piggy back on AHAP marketing as they will enjoy the benefit of a national toll
free telephone number that will direct customers to the nearest authorized AHAP network
practitioner dispensing the Project Impact hearing aid. Advertising of this ‘national
network brand’ will also include information about pricing to the potential customer, so
that pricing becomes transparent. Network participants will agree to join the network
with the knowledge that the AHAP brand they sell will have a nationally or regionally
advertised price.
Training:
Even with state-of-the-art technology, hearing aids are often not properly fitted, resulting
in low customer satisfaction and poor market uptake. Presently, all end user practitioners
are trained in a two-day workshop in how to dispense the AHAP programmable hearing
aid using the AHAP software. This training program will continue for all users as we
expand the market, to insure proper fitting methodology.
Fast turn-around for accurate molds and shells: In addition to state-of the art technology
and accurate fitting methodology, hearing aids also require accurate and comfortable
fitting molds for BTE’s and shells for ITE’s. Presently in India a very high percentage of
hearing aids are fitted with no customized mold or shell, resulting in low customer
satisfaction, especially for moderate to severe hearing loss patients who need higher
powered instruments that, without a mold, result in the characteristic whistling of audio
feedback. Project Impact India will provide a mold and shell making service with
national reach with a three-day turn-around time, which is considerably faster than the
usual 2-week turn around. Additionally, we will establish mold and shell making
facilities in major metropolitan areas, once the volume reaches a certain level to justify
the approximately $25,000 start-up costs for a mold/shell lab.
Technology:
The AHAP hearing aid, with a wholesale price of Rs. 4500 is superior to the Oticon
Swift, which is another programmable product, selling at a wholesale price of
approximately Rs. 14,000. The AHAP hearing aid is two-channel, two memory as
compared to the Swift with one channel and only one memory. The sound quality of the
AHAP is better than the Swift in anecdotal testing with customers. In addition to the
digitally programmable BTE and ITE products Project Impact will sell in India, fully
digital products will be added by the third quarter of 2005. This will make possible a very
high powered hearing aid for the very severe hearing impaired as well as 4 channel
digital hearing aids that will have a manufacturing cost of approximately $20 to $30 more
than the present product range. These digital units will have directional microphones and
provide a high end product at an affordable price for the Indian market.
Manufacturing cost reduction:
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Project Impact anticipates that the cost of the present programmable analog product line
will reduce by approximately $10 in the coming year as we explore making the BTE case
in India (instead of the US) as well as the mounting of the chip on the PC board in India
rather than the US. These cost reductions will in some instances be passed on to the
customer or will be used to maximize greater profitability depending on the
circumstances.
Annex 2: Developing Country Market Overview
Because the market for hearing aids in developing countries is poorly developed, there is
a paucity of data on the characteristics of the market. The World Health Organization
estimates that at least 250 million people in the world have a disabling degree of hearing
impairment. Other experts reckon that 7% of the world's population – over 400 million
people – has hearing loss. Hearing loss can retard an individual's development by causing
delays in language acquisition and impeding school progress. It can cause vocational and
economic difficulties and lead to social isolation and stigmatization.
At least half of all hearing impairment can be prevented or reversed by improving the
availability of hearing aids. However, the cost of hearing aids is prohibitively high for
the vast majority of the hearing impaired, who are poor. In 2003, the average cost of a
hearing aid in developed country markets was US $1,600. Hearing aid sales worldwide
in 2000 were estimated to be 6 million units. However, only 12% were sold to the
developing world, which is home to 70% of the global population. WHO estimates that
the annual need for hearing aids in developing countries is at least 32 million units.
Pricing is not affordable for most potential users in developing countries, because hearing
aid companies are oriented toward the markets of developed countries, where they realize
a high profit margin. The current specifications of "low-priced" hearing aids available in
developing countries have resulted in poor quality and low client satisfaction. The
developing countries lack cost-effective, financially self-sustaining service delivery
models that yield affordable hearing aids and services for the hearing impaired.
Because of the increase in world population and lengthening life expectancy, the number
of persons with disabling hearing impairments is expected to substantially increase in the
future. In spite of the pressing needs in the developing world, the supply of hearing aids
falls far short of the demand. Of the hearing aids that do go to developing nations, most
are far too expensive for the average consumer, typically costing from US$ 200 to over
US$ 500. The cost of a hearing aid may represent several months’ salary or more in the
developing world. Further, there is a major shortage of services in developing countries
to fit hearing aids correctly and very few trained personnel to help in that process.
The majority of hearing impaired persons in developing countries reside in the rural
areas. They are poor and have little awareness or information concerning available
rehabilitation services and assistive devices. Although hearing loss is generally associated
with ageing, people in the developing world are more susceptible to this problem at a
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young age. Middle-ear infection, from which many children suffer, can cause long-term
hearing loss if not treated. Meningitis, common in West Africa, and other infections will
also impair hearing. Ototoxic drugs (drugs that damage hearing, such as certain
antibiotics) are a problem in some areas and noise-induced hearing loss is increasing in
many developing countries. Hearing problems can also be inherited. Most sectors of
developing country populations do not have access to preventive interventions or
treatment for these conditions, and are therefore likely to have hearing loss. Childhood
onset hearing impairment frequently results in lifelong disability not only in terms of
hearing but also in terms of speech development and education.
Even though the largest burden of disabling hearing impairment is found in developing
countries, the numbers of hearing impaired that receive hearing aids and related services
in this group is 15 times less than in the developed countries of Europe and over 20 times
less than in North America. The non-profit sector is usually the mechanism for delivering
health services to the poor. However, there are very few organizations devoted to
ameliorating hearing impairment in developing countries. Distribution of hearing aids
takes place primarily via ENT physicians who are clinically oriented and do not take a
public health approach to addressing the problem within a population.
The need for appropriate and affordable hearing aids in developing countries is largely
ignored by the hearing aid industry. Most manufacturers have neglected developing
country markets since they have not appreciated the size of the potential market and have
preferred to stay with a low-volume, high cost approach. In contrast, AHAP implements
a business strategy that relies on high volume sales with low profit margins: a multitiered pricing system under which the higher revenue realized from hearing aid sales to
wealthier patients is used to cross-subsidize the sale of hearing aids to poorer patients.
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