1. 1 Who will innovate to meet the health needs of low income populations in developing countries? Joanna Chataway ESRC INNOGEN Centre Dinar Kale ESRC INNOGEN Centre February 2010

2. 2 What is the problem? The 10/90 gap - global expenditure on health research was US$ 160.3 billion in 2005; - many more actors are now engaged in funding or conducting health research relevant to the needs of low- and middle- income country populations but less than $3 billion on neglected diseases in 2008; - Also worrying shifts in epidemiology of diseases has shifted substantially, so that many low- and middle-income countries are now experiencing high burdens of non-communicable diseases (cancer, diabetes, heart disease and stroke)

3. 3 Traditional Markets/ Traditional Technologies New Markets/ Traditional Technologies Traditional Markets/New Technologies New Markets/New Technologies Technology/ Market Matrix

4. 4 Where will solutions come from? Large MNCs? New focus in existing facilities R&D investment in developing countries Emerging market firms? Larger established firms Smaller firms New social technology? PDPs Range of other partnerships and initiatives

5. 5 Large companies find bottom or middle of the Pyramid? World’s upper and middle class 2 billion on below $2.5 a day Poorest of poor with no income

6. 6 Something is happening....... GSK In 2009 only 30% of GSK’s revenue was derived from traditional ‘white pill/western market’ compared with 38% in 2008. Astra Zeneca 30% of revenue coming from emerging markets in 5 years

7. 7 Segmented markets and different marketing strategies? “My preference is not a high price and 100 units of profit for 100 patients, but to drop the price and make 100 of profit from 500 patients” Abbas Hussein, Head of Emerging Markets in GSK, Financial Times interview.

8. 8 Pressure to drop prices GSK and other companies have been forced to reduce prices recently by healthcare policy makers in developing countries. For example 2009 the Phillipines imposed sharp reductions for all drug manufacturers. Post 2005 TRIPs a number of developing countries have issued compulsory licenses to waive patent claims and source medicine from low cost non- patent producers in cases deemed to be public health crisis.

9. 9 Novartis and something different? Novartis in India is looking at possibilities for using Pepsi supply chains to supply common pain relief drugs Pepsi supplies to places where there are no pharmacies Idea is that this would represent a new business opportunity for Pepsi and Novartis Not new physical technology but this is new social technology

10. 10 Social and physical technologies …a recipe characterisation of what needs to be done represses the fact that many economic activities involve multiple actors, and require some kind of a coordinating mechanism to assure that the various aspects of the recipe are performed in the relationships to each other needed to make the recipe work. The standard notion of a recipe is mute about how this is done….[We] propose that it might be useful to call the recipe aspect of an activity its “physical” technology, and the way work is divided and coordinated its “social” technology (Nelson,2008:1-11)

11. 11 MNC new social technologies MNCs immediate commercial activities do not seem to constitute significant moves to address the needs of low income users in developing countries for new products. The current mix of social and physical technologies are probably not going to deliver this in the near term. In the longer term social technologies may lead to new physical technologies. But can it be done with private sector financing? More likely that partnerships will be needed.

12. 12 The limits of MNC solutions GSK’s patent pool seems not to be attracting fellow swimmers Regulatory pressures drive up costs – no effective alternative to FDA and multiple national systems Profit driven emerging market involvement largely extending a model rather than changing the model.

13. 13 Traditional Markets/ Traditional Technologies New Markets/ Traditional Technologies Traditional Markets/New Technologies New Markets/New Technologies Technology/ Market Matrix

14. 14 If not western MNCs, then what? MNCs, small pharma and emerging firms are forming complex partnerships with public sector and charitable foundations. New social technologies based on partnerships to generate physical technologies The Gates Foundation and other foundation funding has been crucial but are now also supported by development funders.

15. 15 Product Development Partnerships International AIDS Vaccine Initiative Knowledge integrator pulling together science around defined problems Supporter of other R&D and clinical trial efforts in developing and industrialised countries Development broker working with a wide range of actors involved in AIDS/HIV support and prevention in developing countries

16. 16 Product Development Partnerships Malaria Vaccine Initiative Innovation Integrator aiming to have at least 8 products in its development pipeline at any one time. Works closely with GSK and has a current phase 3 clinical trial for a vaccine. Works closely with multi-lateral development agencies and national health systems.

17. 17 Other types of partnership GSK – FioCruz in Brazil - Dengue fever vaccine - Pneumococcal vaccine PATH – Intercell, AG - Pneumococcal vaccine

18. 18 Emerging market MNCs Developing country markets Western markets Generics Cardiovascular and ‘diseases of the rich’ Involvement in complex partnerships for neglected diseases. R&D and new products

19. 19 SMEs in developing countries Recent study shows that small biotech firms in developing countries such as Brazil, South Africa and India are targeting diseases affecting low income users in developing countries (Frew et al, 2009) This is promising but small firms in developing countries will confront many of the same hurdles that small firms in industrialised countries do. Involvement in PDPs may be an option.

20. 20 Conclusion  Not so much a case of Bottom of the Pyramid as a search for new social technologies which will make health R&D for neglected diseases and global health targets a real possibility.  Need to put more effort into social technologies and not just into physical technologies.