Innovative financing to boost COVID-19 vaccine access

Increasing access to COVID-19 vaccines requires the creative use of financial tools, according to experts speaking Monday at a Devex event on the future of development finance. “The time is now for us to invest. The time is now for us to be creative,” said Nafisa Jiwani, managing director of health initiatives at the U.S. International Development Finance Corporation. This includes efforts to decentralize vaccine manufacturing, she said. The African continent currently imports 99% of its vaccines. “We're seeing ... history in the making. And you're starting to see this decentralization of vaccine manufacturing,” Jiwani said. The first deal that the African Union made for COVID-19 vaccines was with Johnson & Johnson, securing 400 million doses for countries to purchase. These vaccines are partially produced, through the “fill and finish” process, by Aspen Pharmacare in South Africa. DFC and its partners announced a €600 million long-term financing package for Aspen in June to expand its production capacities. Jiwani said DFC is now exploring other opportunities in the African manufacturing sector, with the agency figuring out the right financial tools to use. For Aspen, working capital was required, given the maturity of the company’s portfolio. But in other cases, technical assistance or grant funding might be more appropriate, if a manufacturer’s work is more nascent. “It’s almost like creating the perfect recipe for a project to move forward,” Jiwani said, underlining the need for de-risking. She also cited off-take agreements and volume guarantees as potential factors. The financial sector is late to the game, as sizable efforts around decentralizing manufacturing should have started earlier, said Michael Anderson, chief executive officer at MedAccess. “The ‘vaccine nationalism’ that prevented the supply of vaccines to low-income countries and middle-income countries — especially in Africa — over the last year is tragic. And we ought to be ashamed and shocked with what has happened. And we cannot allow that to happen again,” he said. Part of the efforts to restructure the relevant systems includes providing traditional equity and debt finance, either directly to companies or structured in project finance, Anderson said. The vaccine manufacturing sector has special challenges, he said, pointing to the need for enough people with the right skill sets to run facilities, for technology transfers from pharmaceutical companies to manufacturers, and for maintaining high levels of quality control. Because vaccine markets are perceived to be risky and difficult, investors are often cautious. And manufacturers don’t always have enough visibility into future demand. “It is a difficult business to engage in,” Anderson said. Because of this, grant finance has a role to play — especially in the early stages — for project preparation, market analysis, and technical assistance, he said. MedAccess is also involved in demand forecasting. It talks to major purchasing entities of vaccines and aims to find out what high and low demand might look like in the coming years for any given vaccine. The organization then provides volume guarantees for the off-take to ensure predictable sales in the coming years so that companies can feel more comfortable with investing. If sales fall below a certain level, the businesses are provided with compensation. “That helps give them the confidence to invest,” Anderson said. “Companies are using the best of science to produce amazing products, but they're not getting into the hands of those who need them. And that is a gap that we can all address.” --— Michael Anderson, chief executive officer, MedAccess One example is a joint agreement between MedAccess; Gavi, the Vaccine Alliance; and GlaxoSmithKline for a new malaria vaccine. The agreement was made before the vaccine received World Health Organization approval and sought to encourage GSK to continue with antigen production, despite uncertainties around the future use of the vaccine. “We said, ‘Well, our assessment of the clinical situation, the funding situation is this vaccine is important, and it will be approved, and we will take on that risk,’” Anderson said. “Our core function is helping businesses to de-risk the business of scaling up their volume and holding the prices at a reasonable level.” But in building up local vaccine manufacturing capacities, “we don’t put all of our eggs in the COVID basket,” he said, because some point in the future could have an oversupply of vaccines for the disease. “It's really, really important that we're building sustainable businesses that have multiple vaccines with multiple channels,” Anderson said. The progress that India has made in recent decades can serve as an example to guide other countries in building up their manufacturing sectors, he said. Last month, DFC unveiled a deal with Biological E. Ltd. to expand the company’s vaccine manufacturing facility in Hyderabad, India, including its capacity to produce COVID-19 vaccines. Biological E. already has a portfolio of vaccines, including an agreement to fill and finish doses of Johnson & Johnson’s COVID-19 vaccine. DFC’s financing is expected to help the Indian company boost its capacity to do so, Jiwani said. Biological E. provides a template for what could happen on the African continent, Anderson said. When the amount of pentavalent vaccine — which protects against five diseases — was running low globally and coming from just two suppliers, Biological E. stepped in, with support from the Bill & Melinda Gates Foundation and others, to ramp up production. “It’s not by chance that you're seeing growth in India in the pharma space,” Jiwani said. “That was incredibly intentional. And hopefully, we can take a road map and say, ‘What are the things that we've learned from this?’ And then contextualize it for other parts of the world, including the African continent.” Beyond manufacturing, DFC announced in September that it would provide $383 million in political risk insurance — one of the conditions for self-financing countries to obtain COVID-19 vaccines from Gavi. “We live in a world where companies are using the best of science to produce amazing products, but they're not getting into the hands of those who need them. And that is a gap that we can all address. Finance is part of the story. It's not all of it. But we can mobilize better with creative, smart, structured solutions to help those markets work better,” Anderson said.