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The Gates Foundation plans to take equity stakes in up to a dozen biotech companies this year, signalling a shift towards a “venture capital” approach at the world’s biggest philanthropic organisation.
Trevor Mundel, the foundation’s recently appointed head of global health, told the Financial Times he hoped to oversee a series of investments in companies each likely to be worth several million dollars.
The move – still on a small financial scale given the foundation’s endowment of $37bn – marks a further move away from its traditional approach of grant-giving and towards a more business-oriented way to support the development of treatments and vaccines for infectious diseases affecting the world’s poor.
The Gates Foundation, which gives out about $1.5bn a year in grants to academics, non-profit groups and companies working on global health, long took the view that its endowment should be invested to maximise future returns rather than support programmes.
However, it has more recently softened its approach, and made a $10m investment last year in Liquidia, a US company which has developed the “print” technology for precision moulding of nano- and micro-particles that could help produce a range of more affordable vaccines and drugs.
Since 2009 it has earmarked $400m in “programme-related investments” across Foundation activities, in health as well as global development projects such as microfinance.
Although the Foundation would potentially gain financially through a series of such new equity investments, its objective is to ensure that fledgling companies with promising products can receive sufficient support to continue their work.
The equity stakes – accompanied by a non-executive directorship or observer status – would give the organisation influence over decision-making and the option to negotiate affordable access to technologies relevant to the diseases and low income countries which are its priorities.
The biotech businesses in which the Foundation invests will retain the option to commercialise their products with others in richer countries, while offering low-cost licences for their use in developing nations.
Mr Mundel, who like his predecessor Tachi Yamada joined the Foundation from a large pharmaceutical company, said: “We will make the investment and not ask for a return but for global access . . . We will specify the countries and the diseases.”
He said discussions were being finalised to take an investment in a company developing a diagnostic “platform” that had applications in identifying a number of diseases.
The Foundation continues to foster partnerships with existing larger pharmaceutical companies, and he cited discussions with Teva, the world’s largest generic drugs company, on the more efficient formulation of medicines.
However, the move points to growing interest in working directly with companies rather than primarily through co-operating via non-profit “product development partnerships” or intermediaries such as the Medicines for Malaria Venture and the Tuberculosis Alliance.