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Catalyzing capital for global health innovation

ImpactAlpha, June 20 — More innovation, and low-cost risk capital, is needed to meet global healthcare demand. Scaling up medicines, vaccines, bed nets, medical devices and other existing health interventions won’t be enough to meet the 2030 goals laid out in SDG No. 3 (Ensure healthy lives and promote well-being).

Earlier this week USAID’s Center for Innovation and Impact and UBS Optimus Foundation convened investors and health innovators in New York to explore ways in which the former can fund the latter. On the agenda was USAID CII’s recent report, “Unleashing private capital for global health innovation.”

  • The gap. The investment gap to meet global health goals in low- and middle-income countries is an estimated $134 billion a year. That gap could rise to $371 billion by 2030, suggesting an urgent need for private capital.
  • Valley of death. Health innovators especially need early- and growth-stage capital, including patient and concessionary capital in the “archetype” stage; more debt and equity to transition from proof of concept to early scale; and more working capital in the growth and scale stages. Innovators require industry expertise to understand and meet customer demand and refine business models.
  • Matching risk and reward. The few investors focused on global health generally target growth-stage ventures. Investors say they need improved risk-return profiles of innovators, better information and dealflow, as well as technical support to build funds.
  • Catalytic capital. Two investment vehicles could help match the needs of health innovators and investors. An ‘innovator’ support facility would help increase the number of companies able to attract and absorb private capital. An ‘investor’ support facility could provide low cost risk capital to boost risk-adjusted returns in global health. The goal: “crowd-in’ a wider array of private investors.

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