First to see investment opportunities in hard-to-reach patients in Africa

First to see investment opportunities in hard-to-reach patients in Africa
First to see investment opportunities in hard-to-reach patients in Africa

The World Bank estimates that 48 countries in Africa will need at least $ 12.5 billion to vaccinate 70% of their population. Anadolu Agency

Donors and investors have paid a lot of money for the development of drugs and vaccines against Covid-19. But funding is lacking to distribute them to people in the poorest regions. Some investors want to change this.

This content was published on July 15, 2021 – 08:47

July 15, 2021 – 08:47

Jessica Davis Plüss

Jessica writes about the good, the bad and the ugly when it comes to multinationals and their impact in Switzerland and abroad. He’s always looking for the Swiss connection to his native San Francisco and gladly discusses how his hometown has produced some of the biggest innovations, but it seems unable to solve the housing crisis.

More articles by this author / author | English language editing

Unlike many other diseases, there is an effective vaccine against Covid-19, thanks in large part to the billions of dollars poured into small biotech companies and large pharmaceutical companies. But with only about 1% of its population fully vaccinated, Africa faces a surge in coronavirus cases and the spread of the highly contagious Delta variant.

Covid-19 revealed insufficient funding available for basic health systems, infrastructure and logistical efforts that ensure vaccines and other drugs reach people in developing countries.

“We have left the vulnerable population in Africa without vaccination protection in an environment where health systems are already weak,” Mike Ryan of the World Health Organization’s Health Emergencies Program said at a recent news conference.

The global vaccine pooling mechanism known as Covax aims to distribute sufficient vaccine doses to 20% of the population in developing countries, but it is not enough to meet all needs. The World Bank estimates that 48 countries in Africa will need at least $ 12.5 billion (CHF 11.6 billion) to vaccinate 70% of their population. About 3 billion dollarsExternal Link they are for the supply chain, cold storage and delivery. In a country like the Democratic Republic of the Congo, the estimated cost is five times the government’s per capita health budget.

Globally, according to data from the Kenup Foundation, governments spent 93 billion euros to develop vaccines and therapies against Covid-19 between the start of the pandemic and January 2021. About 95%External Link went to vaccine companies.

“It is important to ensure the supply of vaccines, but if there is a shortage of health workers and the infrastructure to deliver them, then the target will not be met,” warns Maya Ziswiler, head of social finance at the UBS Optimus Foundation.

“These may be more significant barriers to access than vaccine availability,” says Ziswiler, who has worked for many years at the Geneva-based Global Fund to Fight AIDS, Tuberculosis and Malaria.

The missing link

Maximilian Martin heads the department dedicated to philanthropy and innovative finance at the Swiss private bank Lombard Odier. The executive sees the need for funding for the health system as a problem that can be partially solved through innovation and financial markets. The concept is not new, with the so-called ‘first generation’ of innovative funding mechanisms achieving good results.

Both the Global Fund to Fight AIDS, Tuberculosis and Malaria, established in 2002 to significantly expand access to medicines for the three major diseases, and the GAVI Vaccine Alliance, are examples. . Both were created starting from the idea of ​​sharing resources and the demand of countries, in order to guarantee purchases from producers, bringing down prices. More than twenty years later, the idea also underpins GAVI’s Covax Advance Market Commitment (AMC).

But so far, such mechanisms have struggled to establish themselves in primary health care and the infrastructure to make not only vaccines but other medicines available to the poorest.

There are “great philanthropic programs and mechanisms to stop polio and other diseases with free or low-cost drugs, but investing in the provision of primary health care to tackle communicable and noncommunicable diseases is more difficult,” he told SWI Florian Kemmerich, managing partner of the investment company Bamboo Capital, based in Geneva.

“All the efforts made to defeat this pandemic are surprising. But unfortunately they do not solve the systemic problem of poor access to health care,” he notes.

In 2017, the WHO estimated that half of the world’s population lacked access to essential health services and 100 million people were pushed into extreme poverty due to healthcare costs. Experts say the pandemic has made matters worse.

New generation ideas

One of the challenges in attracting investors is the complexity of collaborating with governments.

The Global Financing Facility (GFF), led by the World Bank, is working to make investments safer and thus attract more money for basic care for women and children. Sneha Kanneganti, head of private sector mobilization at the GFF, says many investors may be deterred by political and financial risks in certain countries.

“To make the risk manageable, we just need to find the right structures that provide investors with the incentives they want,” he told SWI

Some investors are trying to do just that by redesigning traditional financial instruments.

A few years ago, the UBS Optimus Foundation granted a $ 400,000 “impact loan” to Hewatele, an East African start-up that produces oxygen. The loan was linked to clear impact objectives related to the supply of oxygen cylinders to new and remote clinics. With the coronavirus crisis, the foundation increased funding so the company could broaden its reach.

The foundation also developed the first health development impact bond to reduce infant and maternal mortality in a region of India. If the social objectives are met, the investors are reimbursed in full with the addition of an internal rate of return of 8%.

Similarly, Lombard Odier worked with the International Committee of the Red Cross, also based in Geneva, to create a humanitarian impact bond to build and operate three rehabilitation centers in Africa. Private investors advance the money and are reimbursed by donors if social goals are met. It has received € 22 million from investors so far.

Bamboo Capital and the Stop TB partnership to fight tuberculosis have just launched HEAL, a $ 75 million fund to invest in both the development and dissemination of medical technologies. Its goal is to fight disease and modernize basic community care. Bamboo and StopTB are now looking for reference investors, such as donors, who can stimulate private investors by reducing financial risks.

Attracting big investors

One category that has a lot of interest in this process is that of the pharmaceutical companies themselves, as Africa is becoming an increasingly attractive market.

“Businesses should support the healthcare system as a precondition for sustaining demand and experimenting with innovative ways to deliver their goods and services,” says UBS’s Maya Ziswiler. Many large pharmaceutical companies already have activities to strengthen health systems, but often as philanthropic projects and not as sustainable and incremental investments.

Florian Kemmerich says Bamboo has had talks with pharmaceutical companies, but it seems unlikely that they will provide the 15 million Swiss francs of capital needed to develop health care access programs.

And why not devise financing tools to incentivize these companies? Maximilian Martin of Lombard Odier does not think it is an impossible idea. Green bonds are already being used to raise money in debt markets to help companies finance clean energy projects.

“From a financial perspective, it would be interesting to bring together the 50 leading companies around the world that have healthcare expertise, supply chain experience or product knowledge and think about developing financial tools that incentivize everyone, as an individual company, to contribute to the common good. “says Martin.

“If you don’t have medicines, it’s difficult to help the patient, but it’s not just about selling a certain number of drugs.”

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