Less than four percent of private investment in health R&D targets the developing world

A recent report published by the Brookings Private Sector Global Health R&D Project found that the private sector devotes at least $159.9 billion to investments related to health research and development (R&D) annually. That total includes $156.7 billion from pharmaceutical companies and $3.2 billion from venture capital firms, and encompasses investments focused on both the developed and developing world. But when the researchers further broke out the spending, they found that an exceedingly small share was dedicated to the developing world.

The figure below summarizes the private sector spending on overall health R&D, global health R&D (that is, spending that emphasizes medical treatments in the developing world), and neglected disease R&D. Of the total $159.9 billion spent on overall health R&D, only 3.7 percent, or $5.9 billion was focused on the developing world, with $5.6 billion coming from pharmaceutical firms and $225.8 million from venture capital companies. The researchers also examined what share of private sector investment was directed toward drugs, vaccines, and therapeutics to treat 35 specific illnesses that primarily afflict impoverished nations. These neglected diseases attracted the least private R&D money. According to the report, neglected disease R&D spending totaled $511 million (with $471 million coming from pharmaceutical funders and $40 million from impact investors).

Maximizing the impact of global health R&D will require a sustained effort on the part of the private as well as the public and charitable sectors. And these current levels of private sector funding fall short of what is required to help people in the developing world deal with illnesses such as HIV/AIDS, tuberculosis, and malaria.

For that reason, the Brookings Private Sector Global Health R&D Project has emphasized ways to strengthen private investment in global health R&D. The third report published by the project provides a detailed overview of the factors limiting private sector investment, and each of the publications associated with the project includes recommendations for increasing such investment. A March 2018 blog post identifies and summarizes five potentially high-impact ways to improve private investment in global health drugs and vaccines. They include:

1. Lower barriers to investment
2. Increase legal flexibility
3. More systematic and transparent data
4. Lower cost structures
5. Lower cost structures