An interesting new initiative that aims to channel more private sector funds to global health launched this week in New York. Global Health Investment Fund will advance the development of medicines, vaccines, diagnostics and other life-saving technologies for diseases that disproportionately affect developing countries.
Initial investors include J.P. Morgan, Germany’s development bank KfW, Grand Challenges Canada, and the Bill & Melinda Gates Foundation. It hopes to raise $100 million in initial funds and the minimum commitment of an investor is $250,000.
Global health has, in the past decade, received a great deal of attention – and funding. As a result, we are closer than ever before to controlling a number of deadly infectious diseases, and certain indicators, such as the number of children who die before the age of five have been improving, year on year.
Co-investment mechanisms aimed at attracting more private sector funding to global health already exist, such as (RED)- which is part of ONE. So what role will the Global Health Investment Fund play?
I talked to Peter L. Scher, Executive Vice President and Global Head of Corporate Responsibility at JPMorgan Chase to find out.
Peter Scher: When we first began discussions with the Bill & Melinda Gates Foundation about developing the Global Health Investment Fund, we found a remarkable pipeline of global health innovations—with as many as 200 new products currently under development through philanthropic, governmental and pharmaceutical industry resources—but lacking capital sufficient to bring them to market.
Photo caption: Peter L. Scher, Executive Vice President and Global Head of Corporate Responsibility at JPMorgan Chase
Late-stage clinical trials are costly, and development expenses are outpacing charitable support. These innovations, including vaccines and other technology, have the potential to save millions of additional lives if they make it out of clinical trials and into the market, so we used our expertise to develop a vehicle that can bring new resources from capital markets into this process.
We believe these new investments have the potential to accelerate the development of the most promising technologies. If successful, this fund could be a new model for financing global health research and development that brings a new source of sustainable financial resources to bear on this problem.
ONE: What issues does the Global Health Investment Fund aim to tackle?
Peter Scher: The Global Health Investment Fund will invest in new drugs and vaccines, emerging diagnostic tools, child-friendly formulations of existing products, expanding manufacturing capacity and other applications that will help bring hope and support to those most in need. The Global Health Investment Fund will aim to advance the most promising interventions to fight challenges in low-income countries such as malaria, tuberculosis, HIV/AIDS and maternal and infant mortality.
Which types of organizations will receive support from the Global Health Investment Fund?
The Fund will partner with Product Development Partnerships (PDPs). PDPs are non-profit organizations with scientific, technical, clinical development and policy experience, which manage and advance promising global health products for low-income populations. The Fund will also partner directly with pharmaceutical companies, emerging biotech companies, academia and developing world manufacturers on innovations that fall outside of the current PDP pipeline.
What incentives do investors have to join the Fund and how will the Fund ensure transparent funding sources and streams?
The potential of the Global Health Investment Fund to advance technology that will save and improve millions of lives in a financially sustainable way is the primary incentive for the investor group. Drawing upon the scientific and financial expertise of its management and oversight teams, the Fund will seek a financial return for investors, thus creating a self-sustaining structure that can grow and continue to make meaningful investments over time. As this is a first-of-its-kind structure, the Gates Foundation and the Swedish International Development Cooperation Agency have committed to limit investors’ downside if the Fund’s investments are not successful.
The Fund has closed with investments from the following entities: qualified individual clients of the J.P. Morgan Private Bank and institutions including the Bill & Melinda Gates Foundation, Grand Challenges Canada, KfW Bankengruppe, the Children’s Investment Fund Foundation, the International Finance Corporation, glaxosmithkline, Merck, The Pfizer Foundation, Storebrand and JP Morgan Chase’s Social Finance unit. Any additional investors in the Fund would have to be approved by the original investor group.
Transparency and an unwavering commitment to advancing life-saving technologies for low-income populations will be ensured by the Charitability Oversight Committee (COC). The COC will be appointed by the Gates Foundation to review compliance with charitability requirements, and monitor the Fund’s performance against its social impact objectives. Investors will be regularly apprised of social and financial performance through written and telephonic reporting, in addition to annual events featuring Gates Foundation executives and scientists, with periodic opportunities to make clinical trial site visits.
Why has JP Morgan Chase decided to invest in the Fund?
J.P. Morgan’s Social Finance business, which committed the firm’s capital to this project, has dedicated itself to supporting financially sustainable efforts that can have real impact saving and improving lives, particularly in low-income countries. Our ultimate goal is to encourage broader investment alongside our own from a diverse group of investors that might otherwise not have invested and to unlock new sources of capital for high-impact projects and businesses. The Global Health Investment Fund provides a tangible demonstration of that goal being realized.
Find out more about ONE’s work on two other innovative financing mechanisms in global health: the Global Fund to Fight AIDS, Tuberculosis and Malaria and GAVI.