UNITAID

WHO EXPERT WORKING GROUP ON R&D* FINANCING    

Geneva, 13 January 2009

Dr. Philippe Douste-Blazy, Chairman, UNITAID

2000 2004 2008 2011 2015

US$

The innovative funding

Quantitative and qualitative criteria for innovative financing

Significant increase of funds to achieve the MDGs

Additionality with current aid flows to prevent any decrease in traditional aid

Stability and sustainability to enable efficient planning

Political feasability to minimize negotiation time

Rapid disbursement of funds to respect the 2015 deadline

Transparency and traceability to build confidence among donors

The innovative funding

UNITAID : a lab for the innovative financing and the efficient aid for a

common future

Official signature of the five founding countries when UNITAID was launched, on 19 September 2006, at the United Nations General Assembly, New York

Five founding countries (September 2006)

Tax received on each ticket by

UNITAID (in France)

Economy classFirst class or

business

Flight in France or in

Europe

1 € 10 €

International flight

4 € 40 €

An aircraft with 300 passengers on board leaving from Paris will cover the treatment for 1 person with multi drug resistant tuberculosis (approx. 4.000 $) or 60 HIV-positive children for one year

Antimalarial treatment for 2 children

1 HIV-positive childunder treatment

for 1 year

ex: flight Paris - Berlin

ex: flight Paris - Dakar

Furthermore… no economic impact on air traffic

UNITAID membership

Over $600 million collected in less than 2 years mainly through air travel tax

No economic distortion for the air industry

A solidarity movement

UNITAID : a lab for innovative financing

Up to present, in cooperation with the Clinton Foundation, the Project of UNITAID on Antiretrovirals against HIV/AIDS for children :

has reduced the price of ARVs on average by 40%

is funding the supply of diagnostics and treatment for more than 102,000 children, including more than 62,000 new treatments, in 38 developing countries.

UNITAID : a lab for innovative financing

UNITAID initiatives have already driven major price reductions (partnering with CHAI)

Change in peds ARV prices

(AZT FDC vs. individual syrups)US$/patient per year

2006 Q1 2008

50%

$66

$130

Change in 2nd-line ARV prices(TDF+3TC)US$/patient per year

2006 Q1 2008

50%

$159

$315

Now (UNITAID-CHAI):Fixed dose combination

3 tablets a day60 $per patient per year

Before: Single dose syrups

16 bottles of syrup monthly200 $ per patient per year

Better products at lower price

UNITAID, in partnership with UNICEF and WHO, delivered more than 1.4 million malaria treatments in Burundi and Liberia.

UNITAID, in conjunction with the Stop TB Partnership’s Global Drug Facility, is funding pediatric therapies against tuberculosis for approximately 180,000 children in 30 countries to be supplied from September 2007 at a cost of US$ 5.6 million. UNITAID plans to continue to finance this program until 2010 with the aim of providing treatment to the 900,000 children who need it.

UNITAID : a lab for innovative financing

More than 90 countries already receive UNITAID support…

UNITAID ongoing actions

HIV / AIDS53 recipient countries

Malaria22 recipient countries

Tuberculosis58 recipient countries

- Pediatric ARV- Second line ARV- PMTCT

- ACT- LLIN

- First line TB- Pediatric TB- MDR-TB- Diagnostics

Innovative Financing :

Tax

or

Voluntary Contribution ?

Voluntary Solidarity Contribution could allow Unitaid to reach countries – like the US – unlikely to be part of the tax on airline tickets mechanism

• UNITAID’s tax on airline tickets has been a success in the last two years

• UNITAID will continue to encourage new countries to implement the tax (e.g., Portugal is likely to join in 2009)

• But some countries are not likely to join this initiative: –The US (first airline market) already is not likely to implement it because of

the “tax” dimension

• Voluntary Solidarity Contribution (VSC) would allow UNITAID to reach non-member countries unlikely to implement the tax, by involving citizens on a voluntary basis

Voluntary Solidarity-Contribution is a concept to raise funds : •From individuals and corporations who purchase plane tickets• •2 ($,€,£) solidarity contribution per ticket

•Entirely voluntary, simple and hassle-free process

•Traceable donation experience

The VSC project constitutes a great opportunity to develop a massive citizen movement

Physicalagencies

Online

Phone

Individuals

Corporations

“[…] so, Mr. Smith, an amount of 2$ (or 2€/2£ depending on location) per flight will be charged on your ticket as part of the UNITAID program against infectious diseases in the world.If you would like to give more, I can also specify a free additional amount now that will also be included in the global price of the ticket […]”.

The VSC project constitutes a great opportunity to develop a massive citizen movement

The Voluntary Solidarity Contribution (VSC) project has demonstrated a revenue potential of USD ~1 billion by 2011 in the travel industry and its feasibility from a market and technical standpoint thanks to strong support from potential partners

Voluntary Solidarity Contribution Revenue Potential

19

980210

770

Revenue from travel agencies and e-brokers

Revenue fromairlines and low-costs

Total revenue

ASSUMING NO TAX

(1)All targetable countries(2)Compound of 73% implementation rate for travel agencies and e-brokers (GDS volume: 65%) and 44% implementation rate for direct sales (direct volume: 35%) i.e., 16 first airlines / low-costs(3)10% of GDS activities (car rentals, hotels, trains, cruises)(4)% of donors to charities donate to UNITAID(5)02 ($, €, and £) per ticket in economy class and 20 in business/first classesSource:PhocusWright, ICAO, Amadeus, Star Alliance report 2003, Back Aviation OAS database 2007, Project Team analysis

USD millions; based on 2006 volumes

Voluntary Solidarity Contributionproposed on 848m (39%) travels out of 2,200m worldwide air tickets

Core case hypotheses

• 771m airline tickets worldwide

– 125 countries(1)

– Credit card payments only

– Implemented for 63% of tickets(2)

• 77m “easy to capture” other types of travel(3)

Travelers donate

• 27% of the time(4)

• An average amount of USD 4.3(5)

Pessimistic and optimistic cases range from USD ~120m to ~1,800m

The VSC project has demonstrated a revenue potential of USD 1 BN by 2011 in the travel industry

*Among which 48% offline and 17% online**Among which 14% offline and 21% onlineTourism Organization 2007, ING Oct 2004, ICAO, Euromonitor 2006, PhoCusWright 2005 & 2006, Analysys international 2007, ProjeSource: World ct Team analysis

Distributors

Travel agencies

Managed business

41%

Leisure and unmanaged business

59%

47%

% Share of passengers

Intermediaries

65%*

35%**

ProvidersCustomers

e-brokers

18%

Airlines

LCC

24%

11%

Indirect sales

Direct sales

Airlines

GDS as software provider

GDS

Airlines

WORLD AIR TRAVEL STRUCTURE

*If implemented in all distribution channels. Indirect volumes represent ~65% of all air travel tickets sold worldwide**Worldspan and Galileo are now part of Travelport GroupSource: Amadeus, PhocusWright 2006 ; Experts interviews

Percent

Galileo/Travelport

AmadeusSabre

10

90

Travelsky

Other

3 main GDSs could allow UNITAID to technically reach ~100% of indirect volume* in tier 1 countries

14

8

78

Amadeus

Galileo/Travelport

Sabre

US

Germany

15

35

50

Sabre (infini)

Galileo/Travelport**

Amadeus24 57

SabreGalileo/Travelport**

Amadeus

19

China

Japan

UK

VSC is feasible from a market standpoint thanks to high concentration of tickets sold 3 main GDSs

*Approximated from number of passengers carried, 2006**48 first countries account for 95% of number of tickets sold***Not considered for Voluntary Micro-Contribution because potential tax contributors****Among which ~1.88 billion tickets sold in non-UNITAID member countriesSource:ICAO 2006, www.unitaid.eu, Project Team analysis

Non-member countries

45555556677789101010111212131518182020222225272930333738394044475153

6061

104109

127160

GERMANYJAPANFRANCESPAINAUSTRALIAIRELANDCANADABRAZILINDIA***ITALYRUSSIAN FEDERATIONREPUBLIC OF KOREASCANDINAVIAINDONESIANETHERLANDSTURKEYGULF STATESCHINA, HONG KONG SARMEXICOTHAILANDSINGAPOREMALAYSIASAUDI ARABIAIRAN (ISLAMIC REPUBLIC OF)SOUTH AFRICANEW ZEALANDSWITZERLANDCOLOMBIAAUSTRIAGREECEPORTUGALFINLANDPHILIPPINESARGENTINAQATARCZECH REPUBLIC

730

PAKISTANEGYPTVIET NAM

UNITED STATESCHINA***

CHILE

ISRAELTUNISIAPERUMOROCCO

UNITED KINGDOM

VENEZUELA

• 125 targetable countries represent 1,800 m tickets out of 2,200 worldwide

• Deep understanding of Tier 1 countries (~55% of total number of targetable countries) is necessary to assess revenue potential

• Priority targeted countries: – United States– Germany– Japan– United Kingdom

Total 2,200****

Tier 1

Tier 2

Tier 3

Percentage of total**

32.67.15.74.84.62.72.62.42.32.12.01.81.81.71.61.51.31.31.21.11.01.00.90.90.80.80.70.60.60.50.50.50.40.40.40.40.30.30.30.30.30.20.20.20.20.20.20.2

54.8%,

14.1%,

8.4%,

Number of airline tickets* sold (in millions) ; 2006

125 targetable countries represent 1,800 million tickets out of 2,200 worldwide

Description of the solution Features

• Fully integrated within travel agencies and e-brokers booking flow

• Implementation first in travel agent/e-broker but extendable to airline/LCC direct sales

• Only credit card payment permitted

• Payment Service Providers (PSPs, e.g., Bibit, Cybersource, others) for money collection: fees to negotiate

• Risk of double password entry may occur in 2 years at the earliest

PSPBibit, Cybersource

Ticket Contribution

Travel agencies / e-brokers

Airlines

BSP/ARC

Implementation• Pilots (Australia

– Italy) can be run in April 2009

• Roll-out can be effective ~ 6 months later

Millenium Foundation

Amadeus designed a fully integrated solution

295

250

158150

 100

 200

 300

1990 1995 2000 2006

Total charitable giving, USUSD billions

• In the US, the past 15 years have demonstrated a correlation between people's generosity and number of opportunities to give (approximated by the number of charities)

PRELIMINARY

Source:Project Team, Giving USA, Pew Charitable Trust, Chronicle of Philanthropy, Bridgespan

Large media campaigns + new "niches" initiative (Harvest

Foundation of the Piedmont)

Internet charitable giving development (American Red

Cross, United Way,…)

"Historic" donations (Religious, Communitarian giving –

Salvation Army,…)

332

183

 150 175 200 225 250 275 300 325 350

1998 2000 2002 2004 2006

Number of charities with >USD 25,000 budgets in the USUSD thousands

Over the past years, charitable trends have demonstrated that more occasions to donate people have, the more generous they tend to be

•The VSC project could find applications in many other industries worldwide:–Web transactions and e-gambling–Other industries

•These opportunities have to be further explored to confirm both their presumably large revenue potential and feasibility

Other innovative financing opportunities could be explored

In addition, the VSC project has already prompted support from major institutions (Google, Amadeus...) and

personalities (Ban Ki-moon, Bill and Melinda Gates, Bill Clinton...)

Growing interest for the VSC project

Thank youThank you