Poppy for Medicine / P4M Business Model

Summary

1. The economics of Poppy for Medicine Projects: production and sale of medicines

2. Pilot P4M Projects



3. The economic vehicle of Poppy for Medicine projects: cooperative associations

4. Economic Diversification through Poppy for Medicine projects

2. Case study Poppy for Medicine project

This case study provides a strictly hypothetical description of an individual villagebased Poppy for Medicine project, to shed light on the project model. Although all the figures would need to be carefully reassessed for a smaller Pilot Project or larger village project, nevertheless, the case study provides interesting insights and allows conclusions to be drawn regarding the potential economic impact of a Poppy for Medicine project.

In a hypothetical Poppy for Medicine project village, poppy would be cultivated on twenty-five small licensed farms of 0.37 hectares, or two jeribs, each. Sown in autumn, the crops would be ready for harvest by project field workers the following spring. Comprising a total of 9.25 hectares, the twenty-five farms would together yield a total of at least 340 kg of raw poppy materials over the three-week harvest period. At the end of each day, the day’s harvest would be collected and brought to the project village’s storage facility, to be documented and tested for morphine content. Throughout the harvest period, trained project workers would begin the medicine production process by drying the raw poppy materials. This initial transformation step would yield around 310 kg of semi-processed raw poppy materials.

These semi-processed raw materials would then be securely transported to the wellequipped district processing facility and transformed into morphine by professional pharmaceutical chemists, with the support of project participants trained as laboratory workers. The morphine would then be further processed into 10 mg tablets at the district processing facility.

In total, approximately 30 kg of morphine would be transformed in morphine tablets in a single hypothetical Poppy for Medicine project,43 for a total production cost of USD 76,000. More than two thirds of these costs would be recycled back into the local economy. After further quality control tests, the finished medicines would then be sold to the Afghan government for a total of USD 96,000, bringing the hypothetical village project a net profit of USD 20,000 to invest in local economic diversification projects.

The locally produced morphine would be securely transported to Kabul, where the Afghan government would prepare the medicines for international export, possibly through a special state-owned Afghan National Pharma Company. The packaged and labelled medicines would then be exported at a price of USD 3,800 per kg of morphine to a country with extensive morphine needs, such as Brazil.
Transport and export costs to Brazil, including all taxes and duties, can represent as much as 80% of the value of finished morphine based medicines. However, medicines imported for a Brazilian public institution are exempted of most of the import duties. A conservative assumption that the full range of costs and taxes apply brings the price of Afghan made medicine morphine exported to Brazil to USD 7,700 per kg, or USD 7.7 per gram. After including distribution costs, it is likely that one gram of Afghan-made morphine would cost the Brazil government less than USD 10 [representing a hundred 10 mg doses], well below the Brazilian market price of USD 49.5. A Poppy for Medicine project would provide affordable medicines to guaranteed markets, and in doing so, would help to respond to a largely un-met need.

Local level costs and revenues


Value chain comparisons