Making Capitalism Work for the Poor

One of the most important guideposts for the work of our foundation is the annual letter that Bill and Melinda Gates release at the start of each year. The 2015 annual letter has just come out, and it spells out an innovation-centered approach to global health and development.

This year’s letter revolves around a single big bet: The lives of people in poor countries will improve faster over the next 15 years than at any other time in history—and their lives will improve more than anyone else’s during this period.

Central to the attainment of this goal will be breakthroughs in health, agriculture, banking, and education. We are betting that innovative approaches will help drive improvements in all of these areas.

One type of innovation that I think is especially important in the sphere of global health is the new class of category-bending partnerships that are taking collaboration between business, philanthropy, academia, and government to a whole new level.

Nowhere is this kind of innovation more important than in the development of products—specifically vaccines and other medical technologies—that serve the world’s poor.

What makes this kind of innovation so necessary is the fact that the market, left to its own devices, won’t do the job. If it could, it would have done so already.

The most effective engine of product development is the business sector. No other entity can match its combination of capital resources, nimbleness, and sheer ability to deliver.

But businesses can deploy those attributes only within certain limits; after all, their very survival depends on their attention to profits. This consideration can be especially unforgiving in the biotech and pharmaceutical industries, given the very high costs (and long timeframes) of product development and regulatory compliance.

I know these truths very well, both as a physician and a 16-year industry veteran. But I also know, as the CEO of the Gates Foundation, that the need for these products is urgent. A sudden crisis like the Ebola epidemic throws this need into sharp relief, but it goes much deeper than that.

Consider a few basic facts. Despite extraordinary progress in vaccination campaigns worldwide, the World Health Organization estimates that each year almost 22 million infants go under-immunized—and about 1.5 million children under five die from vaccine-preventable illnesses. Despite the great gains humanity has made against the ancient scourge of malaria, the disease continues to kill about 600,000 people annually—more than 1,500 on an average day.

These are just a couple of examples illustrating a broader point: Vaccines and medications are still not reaching enough of the people who most urgently need them. The market won’t—and can’t—address this need without some kind of innovative intervention from outside.

One powerful tool for such intervention is the public-private partnership. Agreements between companies, government agencies, and philanthropic foundations can result in funding streams that reduce market risks and free the business sector to unleash its unique innovative capacities.

These can take a variety of forms, from direct equity investments by philanthropies to volume guaranties that give companies the assurance of sufficient market demand.

We have seen this kind of partnership at work in the development of GSK’s candidate Ebola vaccine. Here, an international group of government agencies and nonprofits (as well as our own foundation) provided GSK with grants and other support to help move product development forward much faster than it would have otherwise.

A celebrated example of such a partnership is Gavi, the Vaccine Alliance. The need to find innovative, market-based ways to cut vaccine costs led our foundation to provide the seed money to create Gavi, which works to increase the capacity and competitiveness of manufacturers willing to produce vaccines for the developing world.

This has spurred manufacturers—including some in emerging markets, such as the Serum Institute of India—to offer vaccines at unprecedented low prices.

The payoff of such partnership is quite tangible, and in this case we can measure it in lives saved. Since its inception, the alliance has helped low-income countries reach an additional 440 million children with lifesaving vaccines, averting an estimated 6 million deaths.

Another example of making capitalism work for the poor is our 2012 partnership with the President’s Emergency Plan for AIDS Relief (PEPFAR), USAID, UNITAID, and the American diagnostics company Cepheid. Each partner contributed funding to help "buy down" the cost of Cepheid’s Xpert MTB/RIF rapid tuberculosis-test cartridges specifically for countries with high burdens of multi-drug-resistant TB. The partnership helped reduce the cost of the cartridges by 40 percent.

In my experience as a senior executive in business, academia, and now in philanthropy, I’ve seen a growing eagerness to cooperate across sectors. Leaders are seeing the urgency—and the value—of this kind of teamwork.

This is an entire field of organizational innovation unto itself, one that will demand more attention as the success cases pile up—and as the clear economic and social benefits of such partnerships become more widely understood.

Partnering with the private sector will give us an historic opportunity to eradicate or sharply reduce the spread of some of the world’s most devastating diseases. It will be very interesting—and exciting—to see what other problems we can solve through this kind of large-scale, imaginative, cross-sector collaboration.

Read more stories by Sue Desmond-Hellmann.