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Investment Fund to Finance Global Health Technologies

Girls at a malaria prevention event in Ghana (USAID.gov)

Girls at a malaria prevention event in Ghana (USAID.gov)

A consortium of private sector, foundation, and government partners formed the Global Health Investment Fund, to finance higher-risk, late-stage development of vaccines and other public health innovations in low-income countries. The fund is led by the bank JPMorgan Chase and the Bill & Melinda Gates Foundation, with contributions from Grand Challenges Canada (funded by the Government of Canada), German Ministry for Economic Cooperation and Development, Swedish International Development Cooperation Agency, and Children’s Investment Fund Foundation.

Global Health Investment Fund will invest in new drugs and vaccines, diagnostic tools, as well as child-friendly formulations of existing products, and expansion of manufacturing capacity of affordable medical technologies. Its investments are expected to lead to innovations addressing diseases and health challenges such as malaria, tuberculosis, HIV/AIDS, nutrition, family planning, and maternal and infant mortality.

The fund, which so far collected $94 million, will support development of health technologies in later clinical stages, where their higher costs are out-stripping current financing from foundations, governments, and pharmaceutical companies. Other contributors to the fund include International Finance Corporation, GlaxoSmithKline, Merck, The Pfizer Foundation, and Storebrand, a financial services company in Norway.

Investments are expected to be made as mezzanine debt instruments, a hybrid of debt and equity financing that’s issued as debt, but with equity features built in. Lion’s Head Global Partners, a London-based investment bank, will manage the Global Health Investment Fund portfolio. The company manages funds for several health, education, and sustainable development programs, including the Gates Foundation’s Global Polio Eradication Initiative.

The Gates Foundation and the Swedish International Development Cooperation Agency committed to provide loss protection for part of the fund’s capital. Their guarantee will cover an initial loss of up to 20 percent of invested capital, with investors covering 50 percent of further losses.

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Hat tip: Fortune/Term Sheet

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