Building with BRICS

One of my topics of interest is the role that companies in the low- and middle-income countries (rest-of-world or ROW countries) may have in developing new technology and products to address global health problems (e.g., my posts, “Healthy, Wealthy, and Wise Reprise” and “Missing the Boat from the Other Direction”).  I think these ROW companies, in addition to being more effective and efficient in the long run than the traditional aid programs in bringing widespread improvements in health, may also present partnering opportunities for the many biotech and medtech companies that have powerful technologies but will not be among the lucky few to attract multiple rounds of VC funding or lucrative corporate buy-outs.  They may also be potential licensees of the many global-health-oriented proto-products being cooked up by the many proto-ventures started up by recently-graduated, socially-minded entrepreneurs.  Finally, I also think that, given the pressing need to control health care costs in the US and Europe, these ROW companies have a good shot at exporting their affordable products to the “first” world markets and thus helping me in my dotage.

While trolling the web for recent information on the topic, I found a relevant report, “Shifting Paradigm:  How the BRICS Are Reshaping Global Health and Development” (GSHi report), that was published in April 2012 by  a new-to-me group, Global Health Strategies initiatives (sic).  This organization is described as an affiliate of Global Health Strategies, an international communications and advocacy consultancy based in New York with offices in India, Brazil, and China (GHS).  The report was sponsored by the Bill & Melinda Gates Foundation, but seems to be a one-off, since I found no news about GHS initiatives or its work since the report’s publication.  Here are some of the major points made in the BRICS (Brazil, Russia, India, China, South Africa) report.

  • While the dollar amount of foreign development assistance given by the BRICS is less than 10% of the seven top donor countries’ assistance ($6 billion vs. $100 billion in 2010), the growth rate in the assistance over the past five years has been about five times greater (10 to 30% vs. 4%).
  • The BRICS prefer bilateral health aid programs as opposed to multilateral such as the Global Fund, mostly likely because the former is more cost-efficient in building international prestige and trade relationships.
  • Support of health R and D and innovation by the BRICS governments is small relative to that of wealthier countries, but is growing and exceeds that of the private sector.
  • In the BRICS, a few companies have created some new technology and products while the governments are trying a range of innovative health care delivery programs.
  • Not surprising, the BRICS have huge domestic health care challenges; for example, in South Africa, 42% of the annual mortality is caused by HIV/TB with one-fifth of the population being infected by HIV and China has one-third of the world’s hepatitis B carriers.
  • Also noted in the report are the “beyond BRICS” countries of Indonesia, the Gulf States, Turkey, Mexico, and South Korea that have growing economies, a more active foreign assistance programs, and a growing health care export aims.

The GSHi report is also a good source for the various BRICS government programs that encourage health care technology development by companies and may be a source of funding for north-south (developed-developing world) company collaborations.  With few details, they are:

  • The Brazilian Development Bank’s (BNDES) Profarma program provides favorable financing to public and private companies that invest in health R&D.  Also the Brazilian government’s Fiocruz, primarily a vaccine R and D institute, has a nascent Center for Technological Development in Health which aims to mix public sector research and the private sector’s product development expertise.
  • In 2009, the Russian government committed $4.4 billion to Pharma 2020, a plan to significantly increase domestic capacity for health care technology production and innovation in partnership (and, unfortunately, with co-funding) with non-Russian companies.  Not mentioned in the report, but of interest to US nano/healthcare technology startups, is Rusnano, a government venture capital fund that has been active in the US (Rusnano USA).
  • The government of India’s Department of Biotechnology has a Small Business Innovation Research Initiative to fund proof-of-concept research and late-stage product development in small and medium biotechnology companies and a Biotechnology Industry Partnership Programme to fund companies on a cost-sharing basis in developing technologies to address the country’s health care problems.
  • While China’s Ministry of Science and Technology (MOST) is spending about $150 billion on domestic R and D across sectors, including about $1.3 billion on health R and D, the report identified only one unnamed program aimed a public-private partnerships in global health.  In September 2011, the Gates Foundation and MOST signed a memorandum of understanding that committed a total of $400 million to four areas, one of which was the development of new products for global health (Gates press release, Gates press release).  As far as I can tell, this program is still in the rollout phase with two efforts funded.  One was a conference in September 2011 to encourage Chinese companies to invent new diagnostics for global health (Gates blog) and the other was research grant program at Tsinghua University (TU grant program).  Achieving success in the former will be difficult in my opinion since the Chinese diagnostics industry is under-resourced for R and D since it is composed of 300-400 companies with the largest having only a 4% market share (Market Publishers report).

The model industry for successful public-private cooperation in global health product development is the vaccine industry of India.  Recently FierceVaccine reported there are a dozen major vaccine manufacturers in India, exporting to 150 countries, and their domestic and export revenues are forecast to increase by 150% by 2016, reaching $870 million from about $350 million today (FV article).  And China is emerging as competitor for public health vaccines, recently gaining WHO approval for its companies to apply for prequalification to supply UN agencies.  The first vaccine to be approved is likely to be a Japanese encephalitis vaccine invented and developed by the Chengdu Institute, part of the China National Biotec Group, the largest (state-owned) biotech company in China (Reuters article).  It remains to be seen how many of the other 36 vaccine companies will be able to meet international standards but high interest exists (Interview with PATH’s Zhang and partial company list at List of manufacturers).

Not exactly Lego-scale variety, but for companies with the global health ambitions, there are pieces to play with.

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