The Rockefeller Foundation, an organization whose objective is to enrich and sustain the lives and livelihoods of poor and excluded people throughout the world. BCG has worked with the organization since 1999, primarily toward improving the health of individuals in the developing world.
Tuberculosis causes more deaths than any infectious agent other than HIV/AIDS, and takes a particularly harsh toll in developing countries, where limited markets discourage the private sector from investing in cures and preventives. The public sector lacks the required expertise for large-scale development activities. There have been no significant new developments in the treatment of the disease since 1963.
To tackle the problem, Rockefeller asked BCG to assist and advise on the creation of a global private-public partnership that would develop new tuberculosis treatments. With BCG's assistance, the organization had previously catalyzed several sustainable partnerships between private companies and public organizations that were seeking solutions for malaria, HIV, and numerous other maladies. Rockefeller believed it was time to address tuberculosis, and BCG was once again its preferred partner.
"The Rockefeller Foundation engaged us because it had seen, first-hand, the results of the application of BCG-style analysis to global health problems," said a member of the project team. "It believed we were uniquely suited to handle this challenge as well, given our experience and contacts in the health care and pharmaceutical industries and our ability to build consensus among disparate players in the private and not-for-profit sectors."
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BCG worked closely with Rockefeller throughout the effort. BCG devoted two partners, a project leader, and three consultants to the project; the Rockefeller team consisted of a dedicated program manager and representatives from each of the project's stakeholders, including the World Health Organization and the Centers for Disease Control.
The joint team took a three-pronged approach to the task. First, it analyzed the entire TB drug-development process, from research through product launch, looking at the investment required at each stage. Its objective was to determine where it became unprofitable for private companies to make further investments, leading to termination of drugs' development.
Second, the team identified tuberculosis-relevant chemical compounds that had already been developed. Pharmaceutical companies had created numerous compounds during the course of their research, but had shelved most of them because of a lack of available funds or the absence of a profitable business model. The team evaluated the investment required for the licensing of each of these compounds and also determined the expected payback.
Third, the team designed a framework for a stand-alone business comprising private-sector businesses and not-for-profit organizations that would fund, develop, and launch TB treatments. Such an alliance would need to bring together exceptional management talent, drug-development expertise, and financial backing. The team put together a short list of potential candidates and mapped the ideal organizational structure.
The work yielded four key insights that would guide the new organization:
- The development of tuberculosis drugs typically stops at the cost-intensive late-clinical-trial stage, primarily because of funding limitations. Providing capital at this stage for the most promising drugs is therefore essential. To help identify those compounds, the team developed a unique analytical framework (based on statistical analysis and expert interviews) to evaluate a compound's viability at each stage of development and identify the best candidates for advancement
- A range of existing compounds that had been shelved by pharmaceutical companies would be valuable to license
- The development process should be outsourced, making the organization a virtual R&D facility
- Control of intellectual property rights is critical. The team addressed this by developing licensing agreements that would protect the respective parties
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Within a remarkably short time—seven months—the BCG/client team had structured and launched the new business, obtained more than $40 million in investment, and struck partnership deals with leading pharmaceutical companies to transfer key compounds. The effort's subsequent success has been nothing short of profound: the pipeline of tuberculosis treatments has expanded from 2 drugs to 11, a fivefold increase in under four years. And progress is continuing.
By creating novel incentives for private companies and public entities to become partners and leverage their respective strengths, BCG and the Rockefeller Foundation were able to make major inroads in the battle against a major disease. Although tuberculosis has not been eradicated, its end is now clearly in sight.
