Funding the Development and Distribution of Medicines and Diagnostics for Developing and

Emerging Economies

Proposal for an International Finance Facility for neglected diseases – IFFnd –

SecureAid

December 2007

Innovative Funding for Vaccine Distribution

Sustainable Vaccination Programmes

SecureAid

Push Funding e.g. IFF

IFFIm – Funding GAVI vaccination programs. US$1bn bond issues Nov 2006, a further US$3bn of sovereign pledges to draw on

MARKETS

PUBLIC

PRIVATE

Creating a Global Fund to Develop Affordable Medicines

Effective allocation of Capital

SecureAid

Making a critical intervention in the drug development Pipeline, fixing a gap to ensure

a sustainable flow of affordable medicines from Research to Utilisation

Diversified Portfolio of Medicines, Vaccines and Diagnostics

IN CLINICAL DEVELOPMENT

Currently 16 to 20 Phase I to Phase III

TREASURY FUNCTION – ENSURING CAPITAL IS AVAILABLE TO KEEP A PIPELINE FLOWING

Creating a Global Fund to Develop Affordable Medicines

Effective allocation of Capital

SecureAid

Diversified Portfolio of Medicines, Vaccines and

DiagnosticsIN CLINICAL DEVELOPMENT

Push Funding e.g. IFF

Pull Funding e.g. AMC, Subsidies,

Prize funds

ODA Grant Funds

Private Funds

Making a critical intervention in the drug development Pipeline, fixing a gap to ensure

a sustainable flow of affordable medicines from Research to Utilisation

MARKETS

PUBLIC

PRIVATE

TREASURY FUNCTION – ENSURING CAPITAL IS AVAILABLE TO KEEP THE PIPELINE FLOWING

LARGE SCALE HIGH IMPACT INTERVENTION IN HEALTCARE SUPPLY

FOR EMERGING ECONOMIES

Harness private sector financial and

management skills to create sustainable and affordable pipelines of medicines formulated

for developing and middle income

countries

SECURITISE PLEDGES to CREATE LONG TERM

LARGE SCALE FUNDING1. Secure Sovereign

Pledges and Prize Funds structure and

issue bonds.Assure affordable

pricing. 2. Manage

Development with Existing teams.

3. Engage with The Global Fund

procurement and distribution processes.

SUSTAINABLE FUNDING for SELF SUFFICIENT

HEALTHCARE1. Incremental

substitution of Trade for Aid as economies

strengthen.2. Engage the

Intellectual Capital in emerging economies to assure self sufficiency

3. Transfer private sector investment and

management skills

PURPOSE MODEL OBJECTIVES

SOURCING MEDICINESLarge Pharma and Not

for Profit Pharma (PPP)

DISTRIBUTIONThe Global Fund

OVERVIEW

Private Sector Skills creating Public Sector Impact

SECURING PLEDGES1. Developed countries

2. Middle income Economies – BRICS3. Differential price

contributions

Create a series of Structured Funds in

which the proportion of Public to Private proportions are

incrementally reversed with each fund

SecureAid

SecureAidSlide 6

*Global Alliance for Neglected Diseases (GAND)

BACKGROUNDBACKGROUND on IFFnd/*GAND• It has been 3 years in formulation aided by a prior 3 years on work on a

commercial model.• It is being informally led by SecureAid with support from a shadow board,

including Goldman Sachs, Linklaters, PwC, Deloitte, leading PDPPP and GFATM.

• The Netherlands and German governments are prepared to discuss support and UK Treasury will consider discussing support if another country takes a lead. GFATM will take proposals to Japan prior to G8.

• GFATM, GBC, GAVI, WHO, Large Pharma, World Bank, SHELL Rockefeller and Gates Foundations are in discussion and leading businesses are being approached.

• Similar to IFFIm/GAVI, US$4bn over 20 years is being targeted for IFFnd/GAND

OBJECTIVES• Operationally IFFnd funds will enable a Treasury function to be instituted

for efficient allocation of capital to maintain a pipeline of affordable, essential medicines from development to distribution

• Strategically IFFnd provides a financial architecture, structured to allow commerce and middle income and developing governments progressively take on the management and funding of healthcare as their economic growth accelerates assisted by the private sector

SecureAidSlide 7

Improve Health to Reduce Poverty

PURPOSE• Assist developed countries meet their Millennium Development

Goals (MDG) and combat poverty by providing wide based, balanced and sustainable public healthcare programmes

• The predominantly grant based aid from developed world is inadequate to provide for healthcare in developing and middle income countries and existing efforts too fragmented

• This proposal integrates large scale, long term, (20 year term) business driven healthcare models that will accelerate economic growth and progressively enable a business model that integrates, finance, operations, and logistics to accelerate self-sufficiency in healthcare

• The financial component of the integration was pioneered in November 2006 by UK government resulting in a first US$4bn debt issue the International Finance Facility for immunisation programmes (IFFIm) implemented with exemplary governance.

SecureAidSlide 8

Involving Capital Market Innovation to help solve Poverty

MODEL• Involve the capital markets to provide 20 year term, debt based, up to US$4bn

funding for a sustainable pipeline of medicines and vaccines to combat existing diseases and disease resistance (IFFIm provides a foundation on which to build this approach collaborating with G8 governments)

• During the 20 year funding term economies will grow and allow partial repayment of G8 government guaranteed bonds by commercial receipts from various sources OR the size of healthcare funding to be expanded by these receipts

• Portfolios of medicines and vaccines in clinical development (some 24) are being assembled to spread risk and ensure that while some fail there is a sustainable flow of treatments (Similar to upstream oil prospecting that feeds downstream distribution to keep share holders consistently satisfied.)

• Commercial returns from distribution in developed and middle income countries, travellers, expatriate and military markets will be secured and expand the overall healthcare funding. In addition differential co-payments will be secured, initially these will be small, derived from middle income and developing countries but will grow as their economies accelerate by benefiting from improved healthcare

• A key driver is to partner with, and fund, the ‘Intellectual Capital’ from developing and middle income countries to enable progressive self sufficiency and involve large public and private organisations.

SecureAidSlide 9

Collaborating to enable Trade to incrementally replace Aid

OBJECTIVES• Trade needs to substitute for grant based aid to enable the currently developing

countries become self sufficient and the proposed IFF for neglected diseases, IFFnd, has been formulated to accelerate this process

• Operationally IFFnd funds will enable a Treasury function to be instituted for efficient allocation of capital to maintain a pipeline of essential medicines from development to distribution

• Strategically IFFnd provides a financial architecture, structured to allow commerce and middle income and developing governments progressively take on the management and funding of healthcare as their economic growth accelerates assisted by the private sector

• 2007 provides a point of takeoff and all components for this wide based integrated approach are in place. Business ‘know how’ will be incorporated in the committees that are being formed to guide logistics, sustainable project development and relationships with developed and developing governments to make a significant contribution to improving healthcare and reducing poverty.

• All individuals and organisations contributing to IFFnd can gain beneficial exposure from association with government and large public and private institutions whose collective input will enable a new approach to combat poverty and improve health

SecureAidSlide 10

Parties and Benefits

Balancing the interests of Participants

ORGANISATIONS BENEFITS

Bond HoldersGet long dated, high rated

bonds

Government GuarantorsMeet MDGs plus a reducing % of Public funds over repeat bond

issues

PPPs & PharmaReplicable, assured, long

term funding and accessible markets

LMICs - differential payments

Get accelerated public healthcare & economic

growth

Commercial PlayersCan grow equity returns in

emerging markets

SecureAidSlide 11

Enabling Public Health to accelerate Economic Growth

For further information contact

Peter BrownSecureAid 1 Nash House 18 Park Village East LONDON NW1 7PY United Kingdom TEL:     +44 (0)20 7388 4323 MOB:     +44 (0)77 4029 0077 Email:   pb@securepharma.com