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Financing
Microbicide development will require public subsidy.
Drug development is a complex and expensive process, normally undertaken by large, well-funded pharmaceutical companies. These companies are some of the most profitable enterprises in the world.
Large pharmaceutical companies have generated many important, life-saving drugs--including anti-retroviral therapy for HIV disease. But often people need drugs or devices that are not profitable for the pharmaceutical industry to develop. In such cases, the market fails and government and donors must step in to ensure that the public interest is served. On this page, you will find:
- Big Pharma is not investing substantially in R&D
- Government and donor money are required to develop a product
- Current government investment is grossly inadequate
- In the long-term, the profit potential for microbicides is promising
Presently, no major pharmaceutical company is investing substantially in microbicide R&D.
Despite repeated efforts to engage their interest, no major pharmaceutical company has yet invested in conducting its own microbicide research & development. Few companies (Merck & Co, Bristol Myers Squibb, GSK and Gilead) have released compounds already on their shelves to the International Partnership for Microbicides and agreed to let the IPM test these compounds to see if they are viable candidates microbicides. But these companies retain the license on these compounds and will be able to take them back if they prove viable.
Given the lack of involvement of Big Pharma, the task of development has fallen to non-profit research institutes, academic scientists and small biotech companies --all of which depend on government grants to move their leads forward. Major pharmaceuticals remain reluctant to get involved because of concerns about scientific and regulatory uncertainty and competing opportunities to invest in products that are potentially more profitable.
Government and donor money are required to bring the first microbicide product to market.
We can not rely on pharmaceutical companies to develop the first microbicides because it is not in their economic self-interest to do so.
As such, microbicides are a classic "public health good", an innovation that would yield enormous returns to society in terms of productivity and health benefits, but where the incentive structure of the private market fails to drive investment. Contraceptives and vaccines to prevent the diseases of poverty such as malaria are other public health goods.
| Sustaining the HIV Prevention Research Agenda: Funding for Research and Development of HIV Vaccines, Microbicides and other New Prevention Options, 2000-2007 - August 2008 |
In 2004, the HIV Vaccines and Microbicides Resource Tracking Working Group was established, to generate and disseminate high-quality, detailed and comparable data on annual investments in preventive HIV vaccine and microbicide research and development (R&D), and policy and advocacy activities. The Working Group is comprised of the AIDS Vaccine Advocacy Coalition (AVAC), the Alliance for Microbicide Development (AMD), the International AIDS Vaccine Initiative (IAVI) and the Joint United Nations Programme on HIV/AIDS (UNAIDS).
In 2008, the Working Group released estimates of investment in preventive HIV vaccine and microbicide research and development from 2000 to 2007. This report also includes estimates of research and development investment in the following new prevention options: male circumcision, HSV-2 suppression, cervical barriers and pre-exposure prophylaxis (PrEP). According to the this report, the public sector invested an estimated about US$ 203 million in microbicides in 2007.
Current government investment is grossly inadequate.
In 2000, roughly $65 (55) million total was being invested globally in microbicide research, development, testing, policy and advocacy. The vast majority of investment was then, and still is, provided by governments and the philanthropic sector.
In 2007, the total global investment for microbicides amounted to $226,5 (153,5) million. Investment levels are significantly higher now than in 2000 (more then trippled) due to sustained activism and growing scientific promise, but the challenge going forward will be to sustain sufficient financial commitment to maintain the research effort.
Annual Investment 2007 in Microbicides Research and Development
| 2007 | US | EU | Other | Multi-laterals | Philantrophic total | Biotechnology companies | Total Global Investment |
| Million | 95,4 | 40,7 | 2,3 | 0,14 | 13 | 3.1 (range 3 to 6) | 153,5 |
| US$Million | 139,8 | 59,6 | 3,4 | 0,2 | 19 | 4.5 (range 3 to 6) | 226,5$ |
According to the Tufts Center for the Study of Drug Development, the average cost in private industry to develop a new drug, including failures, is $802 million.
Funding for Microbicides R&D
- In 2007, total global investment in microbicide R&D was approximately US$226.5 (153.50) million, a 2% increase over 2006 funding levels.
- Annual public and philanthropic R&D funding for microbicides more than tripled from US$65 (44) million in 2000 to US$222 (150.50) million in 2007.
- In 2007, the public sector provided 90% (US$203 / 138 million) of the funds allocated to microbicide R&D. The philanthropic sector provided 8% (US$19 /13 million) and the commercial sector accounted for 2% (US$4.5 / 3 million) of investments made in 2007.
- During the last eight years, European funders increased their commitment to microbicide R&D from US$0.7 / 0.5 million to approximately US$59.4 / 40.3 million. In 2007, R&D activities outside of the US and Europe decreased to about US$3.4 / 2.3 million from US$10 /6.8 million in 2005, but still significantly exceeded investment of each year prior to 2005.
- A breakdown of global funding allocations by type of activity was estimated from a subset of investments on microbicide R&D. Of this, 9% was devoted to basic mechanisms of mucosal transmission; 24% to pre-clinical research; 5% to product formulation; 46% to clinical trials; 7% to social science research; 6% to infrastructure; and 3% to advocacy.
Source: Sustaining the HIV Prevention Research Agenda: Funding for Research and Development of HIV Vaccines, Microbicides and other New Prevention Options, 2000-2007 - August 2008
In the longer-term, the profit potential for microbicides is promising.
In the longer term, microbicides will create enough of a market to attract private investors. The next generation products are estimated to generate a market of $1.5 billion, growing to $1.8 billion in 2020.
Thus, public and philanthropic investment will be required to bring the early generation of products to market, but the public obligation will be short-lived; eventually market forces will take over to propel innovation.
