Commodities Procurement Organization (CEPEO)(Brazil) : final evaluation report, July 1994-July 1997

PROFIT implemented the subproject with assistance from SOMARC and Pathfinder International. CEPEO is a small company that sells IUDs and other contraceptives through public sector commodity bids and sales to NGOs and private doctors. IUDs represent over 80% of sales, followed by condoms, diaphragms, and spermicidal jelly. CEPEO's principal market is the public sector, which represents 75% of sales. Between 3/95 and 6/97, 129,508 IUDs were sold, generating 453,278 CYPs (couple years of protection). Implementation of CEPEO evolved through three phases: design (5/92-12/93); pre-operational implementation (1/94-3/95); and subsidized operations (3/95-present). Pre-operational implementation took a year longer than expected due to complex company and product registration procedures and difficulties in hiring a general manager. CEPEO's product line was modified during this phase to focus on IUDs because pills and condoms were widely available through other commercial and donor sources. CEPEO accomplished its short-term goals, selling more IUDs per year to social sector clients than USAID was donating per year. CEPEO also maintained a lower price per IUD than its competitors. CEPEO is surpassing its revenue targets, and losses have been lower than projected; the company is expected to break even in 1997, on schedule with original projections. In accord with its long-term plans, CEPEO has also added four new products and doubled its higher-margin IUD sales to private physicians. In 1997, as agreed with USAID, PROFIT managed the sale of CEPEO to local investors. Several lessons were learned about establishing a commercial supplier of contraceptives to address phase-out of donated contraceptives: (1) Choice of a commercial supplier requires careful analysis of market niches, evidence that social sector organizations are willing and able to pay for contraceptive commodities, and a detailed financial analysis that demonstrates a potential for self-sustainability. (2) Successfully implementing this strategy requires hiring staff with appropriate skills and experience, providing flexible funding to cover start-up costs and ongoing cash shortfalls, and providing close supervision and TA to guide and support the company through the start-up phase. (3) Start-up of a commercial company in a developing country is time-consuming, a fact that must be factored into planning.