I feel a little bad for the big pharmaceutical companies. Their big announcement today amounted to little more than a mention in the “more news” section of the NYTimes, sidelined by breathless articles about Obama signing the health reform bill. But more news is truly big news: both Pfizer and GlaxoSmithKline have signed up to give hundreds of millions of vaccine doses for pneumonia at 90% of the commercial price.
The strategy is called Advance Market Commitments (AMC) and is the brainchild of the GAVI Alliance, a nonprofit organization that was incubated by the Gates Foundation. Essentially donor money is used to guarantee purchase of a product over a specified period of time at a committed cost. The commitments build a market that might not otherwise exist, for vaccines that might not otherwise have been developed. GSK’s CEO Andrew Witty was quoted as saying that this strategy will close the window called the ‘vaccine gap’ which delays rollout of a vaccine to developing countries by 15-20 years.
GAVI has been a pioneer in innovative financing mechanisms for vaccine initiatives. Starting in 2006, GAVI has partnered with the International Financing Facility for Immunization (IFFI) to issue AAA-rated bonds that are backed by 6 governments, and raise funds for vaccine initiatives. The opportunity was opened to retail investors and the first buyers were the Pope and the Archbishop of Canterbury. Invest today – HSBC offers a fixed-return ‘vaccine bond’ with a return of more than 16%.