For most of the 1990s, the development of anti-malaria drugs was almost non-existent. Meanwhile, growing parasite resistance meant that the anti-malarials in use steadily grew less effective.
The painful reality was that pharmaceutical companies had little financial incentive to create anti-malarial drugs – or, indeed, other medicines – for the African market. Drug and vaccine development is a long and uncertain process, often taking a decade or more.
Investing in the discovery, development and manufacture of drugs to combat tropical and poverty-related diseases in African countries with limited resources to fund research or pay for treatments was a commercial non-starter.
A response to market failure
The product development partnership (PDP) model, which emerged in the late 90s, was a response to this market failure. The rationale behind the model was that the drug companies wouldn’t fund the research and clinical development by themselves, so the public and philanthropic sectors would need to share the risk.
PDPs reduce industry and donor risks for investment in research by spreading funding across portfolios to support broad product pipelines, allowing partners – including governments and private sector players – to contribute to R&D without having to bear the entire cost and risk themselves.
There are now 16 major PDPs operating globally, each with a specialised focus on vaccines, microbicides, preventative treatments, therapeutic products or diagnostics. Most funding for the work of PDPs has focused on the “big three” diseases in sub-Saharan Africa: HIV/AIDS, malaria and tuberculosis.
The Gates Foundation, Rockefeller Foundation, and the London-based Wellcome Trust are among the main private philanthropic organisations involved in PDPs. The Gates Foundation, for example, has a 50% stake in Medicines for Malaria Venture (MMV), one of the leading PDPs.
MMV’s programme includes 65 projects and nine drugs in clinical development. International funding for malaria control and elimination was $2.7bn in 2013, a threefold increase since 2005.
For Jo Mulligan, a senior health adviser at the UK’s Department for International Development (DFID), PDPs are “basically the middle man” – bearing the risk of developing drugs and vaccines with the pharmaceutical companies. Supporters of the public-private model can point to a range of new drugs including more effective anti-malarials, new and improved vaccines for meningitis A, and lower infection and mortality rates across the piece.
The number of new HIV infections among children worldwide has decreased by 50% since 2010, according to the Joint United Nations Programme on HIV/AIDS. Drug companies, meanwhile, can promote their PDP involvement as being part of their corporate social responsibility portfolio.
For example, Mosquirix, so far the most advanced candidate malaria vaccine, was developed by British pharma giant GlaxoSmithKline (GSK) in partnership with the PATH malaria vaccine initiative, and part funded by the Gates foundation.
Most of the clinical testing was done by the Kenya Medical Research Institute (KEMRI) in Kilifi county on the Kenyan coast. GSK, for its part, promised that it would sell the drug at a not-for-profit price, ploughing 5% of the price back into anti-malarial research.
Similarly, French company Sanofi, says that it operates a “no profit no loss” model in its work developing treatment for sleeping sickness with the Geneva-based Drugs for Neglected Diseases Initiative.
Pressure on funding
The question is what comes next, and whether PDPs are merely a passing fashion. There is certainly no guarantee that taxpayer funding for PDPs will continue forever.
According to the G-Finder report, which tracks global investment into research and development for neglected diseases, funding for PDPs fell after the financial crisis but rose for the second year running in 2014. However, much of the extra investment went into Ebola prevention, following the crisis in West Africa in 2014 and 2015, which has had the side effect of starving research into other diseases.
New markets emerge
Health spending as a proportion of GDP is still around 30% lower in sub-Saharan Africa than the global average. In virtually all cases, the majority of spending is private rather than public money, making the spending gap, particularly for the poorest people, that much wider.
But there are emerging commercial opportunities. According to a 2015 report by management consultants McKinsey, the value of Africa’s pharmaceutical industry increased from $4.7bn to $20.8bn between 2003 and 2013, and is forecast to double by the end of the decade.
The major drug companies are now well established in sub-Saharan Africa, particularly major markets such as Kenya, Nigeria and South Africa. Building links, through PDPs, with academic and research institutes across Africa has not purely been an exercise in good public relations.
It has enabled a handful of big pharma companies, such as GSK, Novartis, and Pfizer, to establish partnerships with local manufacturers and distributors and facilitate market access. Yet part of the long-term challenge will be to develop regional and domestic pharmaceutical markets. There are signs that African governments are grasping the opportunity.
At a meeting in November, the six countries of the East African Community (EAC) agreed to offer domestic drug manufacturers a preferential margin of up to 30% as part of a programme to beef up domestic production of essential medicines and health technologies. The EAC also pledged to “increase participation of EAC research institutions in public-private product development partnerships on diagnostics and treatment of tropical and communicable disease.”
One of the lessons of the past 20 years is that big pharma will not come to the rescue out of pure philanthropy. The rise of the PDP model has drastically improved the treatment of hitherto neglected diseases in sub-Saharan Africa. It also has the potential to be a market-maker in the region’s health sector.