Investing in NCDs prevention and care in LMICs

Investing in NCDs prevention and care in LMICs is often viewed by traditional private-sector investors to be too high-risk and low-reward. Real and perceived risk-adjusted returns are affected by business model, financial and macro risks: The business model risks refer to the lack of innovators with strong business models. When the entrepreneurs don’t have strategic, financial, or operational acumen, it represents a barrier to scale and a deterrent to investors to get involved. The financial/transaction risks are related to the difficulty of sourcing, performing due diligence, and executing deals and the risk of failure. The transaction costs are high, and the currency volatility forces to increase the hedging requirements. Liquidity and exit options are limited given that the end capital markets are under-developed. The macro/exogenous risks refer to the complex and cumbersome legal and regulatory structure, high local corruption, as well as weak IP protection. Moreover, the local infrastructure doesn’t allow companies to scale, creating a difficult overall investment climate. Weak networks, limited knowledge sharing and lack of healthcare-specific expertise, are additional barriers for investors to invest in “Bottom-Of-the-Pyramid” (BOP) health innovation.