The Gates Foundation In China: Where Funding Healthcare Innovation Is Serious Business

Dr. Ray Yip, country director of the Bill and Melinda Gates Foundation in China, shares the triumphs and challenges of working with the Chinese government to provide better public health solutions in China.

AsianScientist (June 1, 2015) – China has undoubtedly made significant progress in improving the health of its people, showing great political resolve and commitment. According to the most recent report on the Millennium Development Goals (MDG) by the Ministry of Foreign Affairs, China has already met seven out of eight goals ahead of schedule, with the exception of environmental sustainability. Further evidence of the government’s commitment to public health can be seen in the rollout of a universal health insurance scheme as well as the halving of tuberculosis prevalence five years ahead of schedule as reported by a study in The Lancet.

Although he applauds the progress that has been made, Dr. Ray Yip, country director for China of the Bill and Melinda Gates Foundation, notes that there are still serious public health issues to be dealt with. Prior to his appointment at the Gates Foundation, Yip spent five years as China director for the United States Center for Disease Control and Prevention (CDC) and seven years as the chief of health and nutrition for the United Nations Children’s Fund (UNICEF) in Indonesia and China.

“There is a lot of disparity in China. The average looks really good, but if you disaggregate the data, the western part of the country could still have two to three times the reported infant mortality rate, for example,” he said.

The Gates Foundation has tackled these problems with the Grand Challenges Initiative. Since 2003, US$450 million in grants have been committed to developing innovative global health and development solutions under this scheme. Successful grant applicants are awarded US$100,000 to execute their ideas and if the work lives up to its potential, a follow-on grant of up to US$1 million may be given.

Very often, the best ideas have come from outside the establishment.

“It is always open to everybody, you don’t have to be an established scientist. A lot of students and people at the junior level will apply and usually they are the ones that get it. This is because the professors already have fixed ideas,” Yip said.

The Gates Foundation ‘business model’

Finding bold new ideas and taking on risk is an integral part of the Gates Foundation funding strategy. In the case of pharmaceutical products, research and development (R&D) is often the most expensive step in making new treatments available. By bearing the costs and risks of R&D, the Gates Foundation hopes to encourage the development of drugs for neglected diseases and make them cheaper for the poor.

“We see ourselves as investing in the development of products and solutions on behalf of the poor people, that is our business model,” Yip said. “We fund the most expensive part, so that when the product actually becomes good enough to manufacture, then the company can only charge the manufacturing part, which often is the smaller part.”

The foundation focuses on areas that big multinational firms tend to neglect, acting in such a way as to correct the market failure.

“There are millions of people suffering from malaria and TB, but they just don’t have the purchasing power. If a multinational makes those products, they won’t necessarily be able to capture the cost. But if they sell at a high price, then nobody can afford it. This is where we come in,” he explained.

In contrast to more traditional grant awarding agencies which tend to shy away from riskier projects, the Gates Foundation embraces risk using an investment-based approach. They recognize that some of the ideas may fail, just as only one in ten novel drug compounds eventually make it to the market for example and are willing to take on the high risk involved.

The JE vaccine: A successful investment

One of the successful gambles is the Japanese encephalitis (JE) vaccine. JE is a mosquito-borne disease that can cause brain damage or death and currently can only be treated symptomatically. The Gates Foundation first partnered with the government-owned China National Biotec Group (CNBG), a subsidiary of China National Pharmaceutical Group Corporation (Sinopharm), to develop a vaccine for JE in 2003.

In 2013, the vaccine became the first Chinese-made vaccine to receive prequalification status by the World Health Organization (WHO). The prequalification allows United Nations procurement agencies to purchase the vaccine for global use and is an indication that the vaccine has met international standards of quality, safety and efficacy.

The single dose vaccine can be used on children, the group most affected by JE and is also much cheaper than existing vaccines.

“Because of our investment they agreed to sell it only for 25 cents a dose. The next cheapest vaccine made by Vietnam costs US$2 a dose,” Yip said. “That’s a good example of the kind of work we do. We work in China to identify globally needed products and solutions in health and agriculture, then we provide support to either improve them or help them become global.”

Tobacco control:Brokering public private partnerships

Smoking is another serious health issue in China that the Gates Foundation is addressing. According to a 2012 report in The Lancet, there are more than 300 million smokers in China and at least 100 million of them will die from tobacco-related diseases.

To reduce the immense health burden, the Gates Foundation has pursued public-private partnerships, reaching out both to the central government as well as private media companies.

On the public side, anti-smoking advocates have successfully influenced different parts of the administrative system, including the People’s Congress, through dialogue and presenting data as evidence.

“At the end of 2013, the central government state council office and the central party office required all government and party official members to observe indoor non-smoking and take a lead in smoking cessation,” Yip noted. “Now the movement is starting. It’s not there yet but the announcement was a major breakthrough.”

With the legislation in place, the Gates Foundation is now working on social marketing campaigns to increase acceptance and compliance with the new rules.

“We work with large media companies in social media outreach; they help to communicate and transmit the message. They believe in reducing the damage of tobacco on the people and are willing to partner the government on it. We become the broker of that kind of relationship,” Yip said.

HIV: Building relationships with the central government

In other cases, the government itself is a grantee of the Gates Foundation. Yip stressed that such partnerships must be based on jointly agreed plans. He cites the example of how the Gates Foundation managed to convince health authorities to move their HIV prevention strategy away from high-risk behavior communication, a method that has been shown to be ineffective, in favor of increased testing coverage.

“How you convince them is to let them try it,” he said. “If you have an outdated way of controlling HIV, but I give you money for a new project, of course you are happy to accept trying out a new potentially improved way. Once you try it and you say, ‘Oh, it really works much better, I like it.’ then it becomes yours. So that’s the way we work.”

The Gates Foundation believes in building these partnerships with governments because they are trying to change the way the whole country works. Smaller private organizations might be able to implement the same projects, but they would not have been able to influence policy.

“That’s the way to engineer change,” Yip explained.

Nevertheless, working with the government has not been without its challenges, which include working with multiple layers of bureaucracy and resistance to change. Yip stressed that these challenges are part and parcel of any partnership and highlighted the need for compromise and relationship building.

“Coming up with a compromise, that’s the challenge. But the key is to build relationships over the years. Once you get to know the people and work together, you develop trust and respect. They know you don’t have any other agenda. If you make them feel good and look good on one project, then they will be much more interested to do the next one,” he said.

The Bill Gates effect

Mr. Bill Gates, founder of the software giant Microsoft and co-chairman of the Gates Foundation, has been instrumental in this relationship building process.

“He’s very well respected by the top leaders, so usually we can have very strong conversations with them, different ideas on how to do things. His voice has been a very powerful tool in moving some ideas and policy oriented agenda,” Yip revealed.

This access to top leaders has been particularly useful in the Chinese context. With the extremely top down system, one person’s decision can truly matter, Yip said.

“Because Bill Gates is such a respected person in Asia in general, but in China specifically, it gives us a very unusual ability to do business and have access to a level that most other organizations do not have. When Mr. Gates is in town, every top leader is happy to have coffee or tea with him.”

“That actually is the most powerful part, not the money. The money we spend is comparatively very small. Globally, our expenditure compared with other foundations is large, close to US$4 billion a year. But in China the amount of money we spend is very low,” Yip said.

The Gates Foundation intends to move beyond their present success and build platforms in China that are applicable elsewhere.

“Those projects we are talking about now are to prepare for the day when China can produce high quality drugs and vaccines against malaria, TB and other diseases. Not only can these solutions be made in China for internal use, but we envision that they can be used as China’s foreign assistance to other countries, to improve the lives of others around the globe,” Yip said.

Although people usually think of the US or the European Union when foreign aid is mentioned, Yip believes China can also rise to prominence in this area.

“We are betting on China to play that role too and maybe even do a better job,” he said, citing the example of how no US company is likely to develop a TB drug because there is no domestic market, but China, which still has a million new patients every year, is likely to come up with a solution that will also benefit India and countries in Africa.

“The long term view is to support China in becoming a more enlightened and capable country, not only for themselves but also by helping others,” Yip said. “We hope to start creating this concept, enlarging their vision so that it is not only about reducing their own poverty and making themselves stronger, but reminding them that they also have a global responsibility. That’s our long term goal.”

This article was first published in the print version of Asian Scientist Magazine, Jul 2014.


Photo: World Economic Forum/Flickr/CC.

To read more, subscribe to Asian Scientist Magazine in print and receive four issues of Asian Scientist Magazine delivered directly to your mailing address for 12 months, inclusive of taxes and postage.

Rebecca did her PhD at the National University of Singapore where she studied how macrophages integrate multiple signals from the toll-like receptor system. She was formerly the editor-in-chief of Asian Scientist Magazine.

Related Stories from Asian Scientist