Investment Institute

Impact investing: Vaccines – a case study

  • 04 March 2019 (7 min read)

The objective of impact investing is to simultaneously deliver both financial and societal returns.

These two criteria are not conflicting but are both demanding. The financial targets are not token but competitive, market rate returns. The societal objectives require a demonstration of clear, intentional and measurable benefits. Our clients hold us to exacting standards on both.

Here we look at how one of our impact investment strategies works in practice – transforming tomorrow with a new generation of innovative private market projects.


Case study – Vaccines

Balancing the double objective of creating positive social impact and financial returns requires the ability to seek out innovative projects. A combination of innovation and investment can help generate more effective impact results.

Below we outline how we go about setting and measuring the positive social and financial outcomes of a project within one of our impact strategies.


Social impact requirements

Starting with the overall theme of Health and Well-being, this investment strategy centres around UN Sustainable Development Goal 3 – ensure healthy lives and promote well-being for all ages. Underlying this goal is a range of issues, including financial risk protection, access to quality essential healthcare services and access to safe, effective, and affordable essential medicines and vaccines.

As part of the investment framework, we identified the key impact objective: to tackle global health challenges in developing countries.


To meet this objective, we identified two specific impact targets, which were:

  • To improve the lives of approximately 10 million people annually by 2025 through the provision of early diagnosis, vaccines, and drugs at accessible price points
  • To save the lives of approximately 100,000 people annually by 2025

Did you know? 1.6 billion people require mass or individual treatment and care for neglected tropical diseases.


Financial requirements

The strategy’s financial returns are generated by providing equity, debt, and project financing to late stage clinical programmes. Financing is provided to a range of organisations including product development partnerships, contract research organisations, and pharmaceutical companies and must be deployed towards developing products that primarily target neglected diseases or maternal and infant health issues.

The strategy can generate financial returns through equity appreciation and liquidation, by receiving interest on loans, and through royalty payments. The strategy also pursues 'defined exits' through incentive programmes like the US Food and Drug Administration’s (FDA) Priority Review Voucher Program.

The FDA’s Priority Review Voucher (PRV) Program was set up to motivate more treatments for neglected and rare diseases and also speed the approval of potential blockbuster therapies. A developer of a treatment for a neglected or orphan disease receives a voucher for priority review from the FDA to be used with a product of its choice or sold to another developer.


Laying out the framework

The strategy has targeted a range of neglected diseases including cholera, river blindness, hepatitis C, malaria, dengue, HIV, soil-transmitted helminth infections as well as maternal health.

For each of these diseases, the investment framework defines impact objectives, targets and outcomes to identify the specific desired results.

A notable early success from this investment has been the development and distribution of a cholera vaccine, Euvichol, which was financed through this vehicle. The vaccine has now been used to treat numerous cholera outbreaks and with 16.2 million doses delivered in 11 countries, the vaccine has achieved significant positive outcomes.

The products financed by the vehicle, including Euvichol, are monitored against global health statistics provided by organisations like the World Health Organisation to assess how vaccines like Euvichol are helping to solve global health challenges.


The Cholera impact challenge

A few short years ago, cholera and the lack of access to suitable, affordable vaccines presented substantial global challenges:

  • 2-4 million cases of cholera and over 100,000 deaths annually
  • The economic burden of cholera was estimated at US$2bn per year in healthcare costs and lost productivity
  • Significant shortage of affordable cholera vaccine


The impact investment framework for cholera

Haiti faced a fresh outbreak of cholera in 2016 after Hurricane Matthew hit the area, flooding rivers and fouling wells, forcing people to drink contaminated storm water. It is the second outbreak of the water-borne disease to affect the island; it recorded its first outbreak after the 2010 earthquake.


Targeting better health outcomes: A Healthcare R&D Fund

The company is active in the development of vaccines targeting a range of preventable diseases impacting on the developing world.

In 2014, the fund provided US$5m in equity and debt capital to the company to develop an improved cholera vaccine to target the significant shortage of affordable and appropriate cholera vaccines. At the time of the investment only c4 million doses were produced each year, in contrast with a global demand of over 20 million doses – a substantial availability gap.

In Somalia, lack of rain caused severe drought, displacing hundreds of thousands of people. Although the rainy season brought some relief, the flooding it caused likely increased the number of cholera cases.


Delivering on the dual objective: positive impacts and financial returns

The company has succeeded in its mission. The drug produced by the company has:

  • Addressed the cholera vaccine shortage with the production of millions of doses that have been used to address outbreaks in countries such as Haiti, Sierra Leone and Somalia
  • 16.2 million doses of Euvichol cholera vaccine have been delivered in 11 countries
  • The fund calculates that 8.3 million cholera cases and 100,000 deaths have been averted
  • With the entry of Euvichol, the annual manufacturing capacity for cholera vaccine has been increased to 29 million doses
  • Affordability of the vaccine has improved - with a 35% reduction in price


In January 2018, the fund completed an exit of their equity in this investment with the IPO of the company. This resulted in:

  • A gross realisation of US$6.7m on the equity investment of US$2.4m, 2.8x multiple on invested cash and 44% IRR
  • Further returns on the Loan notes of 6% are expected when fully repaid in 2021


Concrete, quantifiable results

The results above show concrete, quantifiable evidence of the kind of positive social outcomes that can be achieved through impact investing. The increased supply of Euvichol has prevented an estimated 8.3 million cases of cholera to date and saved an estimated 100,000 people from dying of the disease.

Since the vaccine’s development, the world’s manufacturing capacity for cholera vaccines has increased by more than seven-fold (from 4 to 29 million), and buyers ranging from global health authorities to local ministries of health now have a more affordable, more accessible intervention for cholera. In less than five years, the availability gap has effectively been eradicated.

Importantly, we expect this positive societal impact to be sustained well into the future, with an expected 9.5 million cholera cases averted between 2016 and 2030.


Application to the UN SDGs

The strategy shows that investments linked to the UN SDGs can tackle challenges such as ending communicable disease epidemics while maintaining financial integrity.

In this example, financing an enterprise that has developed an essential vaccine has clearly made a positive impact on the health and well-being of people in countries such as Somalia and Haiti.

These results have been achieved in conjunction with robust oversight - which included monitoring product quality, safety, and business ethics - helping to ensure financial results are delivered in a responsible way.

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