Children playing near a river in South Horr, in Kenya, are susceptible to blindness. © Jerome Starkey
Give it away might not sound like a profitable business strategy to most corporations, but IFC client Global Health Investment Fund (GHIF) has figured out a way to get medicines to those who need them most—and have someone else pay for them. Medicines Development for Global Health (MDGH), an investee company of GHIF, plans to donate Moxidectin, a drug used in the treatment of river blindness.
Moxidectin has the potential to eradicate the disease, which affects 37 million people, most of them in Sub-Saharan Africa. It is transmitted by the bite of a black fly that lives near riverbanks, and those affected lose the ability to work and care for their families.
GHIF is a social impact fund established in 2012 by the Bill and Melinda Gates Foundation to finance the development of drugs, vaccines, and diagnostic tests for diseases that primarily affect low- and middle-income countries. The Gates Foundation structured GHIF to emphasize financial sustainability alongside social impact, measured by lives saved and improved.
IFC invested $10 million, which helped GHIF attract a total of $108 million of capital from a diverse group of investors. GHIF launched operations in 2014 and in just two years, it invested in seven companies for the development and manufacture of treatments for diseases such as cholera, river blindness, and parasitic worm infections, as well as diagnostic tests for tuberculosis, HIV, malaria, dengue, preeclampsia, and gestational diabetes. By the end of 2016, three portfolio companies had commercialized products.
Although neglected tropical diseases like river blindness affect more than one billion people—most of them poor—global drug companies are not producing new cures. The sufferers and victims of these widespread communicable diseases have limited ability to pay out-of-pocket.
That’s why GHIF stepped in with a pioneering plan to recoup the large investment required to research, test, and bring to market new pharmaceuticals like Moxidectin. Once the drug is approved by the U.S. Food and Drug Agency (FDA), the company plans to auction off its Priority Review Voucher—which allows the purchaser to leapfrog over others in the standard FDA approval line for other drugs.
The FDA created these vouchers, which can shave months off the time required to launch a drug in the lucrative US market, to provide incentives for companies to address neglected diseases—those that do not attract much commercial research and development funding. It’s a model that has already proven its worth: the last few vouchers auctioned have raised over $200 million each.
If Moxidectin is approved and MDGH can sell its Priority Review Voucher at a similar price, it will use the proceeds to donate the drug to vulnerable populations and pursue registration of Moxidectin for scabies and head lice.
This partnership among GHIF, IFC, and other investors like Merck, AXA, and Pfizer draws on these organizations’ combined industry expertise, development of impact metrics, and identification of investment opportunities.
Alongside direct financial support to GHIF, IFC also contributed expertise in structuring protective covenants and terms for investments that make them more secure and offer conformity with international best practices. IFC’s biggest direct contribution has been reviewing environmental and social safeguard issues for all of the investee companies.
As GHIF charts a new path to ensure drugs, vaccines, and medical devices are affordable for public health systems in developing countries, IFC continues to deliver lasting solutions for development in places we can achieve the greatest impact.
Read more about GHIF in the report Saving the Lives of the Most Vulnerable—With Financial Returns
To learn more about IFC’s work in health, visit www.ifc.org/health
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Published in January 2017