NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Rockefeller’s New Leader

When Raj Shah left USAID as its administrator in 2015, he went on to form – not a charity, not an NGO – but a private equity fund, Latitude Capital, which invests in power and infrastructure projects in emerging markets.

The New York Times was first with the story of Shah’s decision to sign on as president of the Rockefeller Foundation, succeeding Judith Rodin – a job he initially declined. Shah, who at 43 would be the youngest president at Rockefeller, told the Times he had gained more appreciation for public-private partnerships since leaving the agency and establishing the private equity fund.

“I’ve seen what’s possible when people come together,” he said in an interview this week. “We were able to save tens of thousands, if not millions, of lives.”

Shaw is a medical doctor who had senior roles in agriculture and health at the Bill and Melinda Gates Foundation. While at Gates he helped create both the Alliance for a Green Revolution in Africa and the International Finance Facility for Immunization, which raised more than $5 billion for child immunization. During his six years leading USAID, he created the Global Development Lab, whose mission is to connect public and private sector partners around water, health, food security, nutrition, energy, education and climate change.

In awarding millions in grants and shaping the philanthropic world more broadly, Rockefeller has focused on “resilience” – whether it’s from climate change, economic shifts or other disruptions. It’s also made a lot of news by divesting its stakes in fossil fuel companies.

I have no direct insight into how Shah will steer the $3.4 billion organization, but a quote from 2014 interview might offer a few clues:

“Companies want to know that there’s stability in the rule structure that defines and oversees their investments and without that they’ll be very hesitant to make investments, whether it’s social or looking for full market returns. And I also think over 15, 20 years, you should see massive reductions in extreme poverty as the signature result, but you should also see a huge emerging consumer class in sub-Saharan Africa. That is a real market where people are making a lot of money, and that’s why this can work for both investors and for those who are extraordinarily focused on the result of ending extreme poverty.”

GSK investing in vaccines … and it’s paying off

Here’s a potential feel-good story to help launch the global health calendar: A huge pharmaceutical firm is focusing on low-margin vaccines rather than high-priced treatments aimed at Western customers – and is making money doing it.

GlaxoSmithKline recently opened a global vaccines R&D center in Rockville, Md., pledging to spend $50 million over the next two years on technology and equipment. That center is preparing to address emerging global health threats going forward.

The move certainly makes sense from an overall health care perspective, but what about the health of GSK’s balance sheet? How can the firm buck biopharma’s trend toward blockbuster drugs in favor of vaccines? CEO Andrew Witty told FiercePharma it’s all about “the shape of the return curves.”

He said the number of patients treated by the last 20 top-selling pharmaceuticals has dropped dramatically since the ’80s, while “vaccines are going the other way. … The pharmaceutical business tends to be a lot of go, go and then some stop. You have a lot of excitement when a new product is out, but it doesn’t last all that long typically. And with biosimilars, the era of believing that you can turn pharmaceuticals into super-long annuity business I think is becoming rightly unlikely.”

He’s betting that long-term returns from vaccines will ultimately beat those from pharmaceuticals. So far, so good, it seems. FiercePharma notes that in 2016, GSK “vaccines posted 23 percent growth in the first quarter and outperformed other groups in the second and third quarters.”

Those are certainly return curves that people in developing countries can live with.

A Frontrunner Emerges in India’s Mobile Wallet Wars?

India’s mobile wallet space is seeing explosive growth – the removal of 86 percent of a country’s currency in circulation will tend to do that. But several powerful players, from banks and telcos to well-funded startups, have been battling to dominate the market since long before Prime Minister Modi’s demonetization policy took effect last November. This week, a clear frontrunner may have emerged, as Paytm achieved two major milestones: First, it announced that its user-base of 177 million customers performed one billion transactions across the country during 2016. Then, it received regulatory approval from the Reserve Bank of India to launch a Payments Bank, a development that Paytm founder and CEO Vijay Shekhar Sharma said “changes everything” for the company.

Why is the move so significant? Payments Banks are a type of financial institution created by the Indian government in 2014, that offer pared down financial services focused on boosting access to underserved populations. They offer small savings accounts (with limits on their balances), debit cards, and other payment and remittance services, but cannot offer credit. But even these limited services could be a boon for Paytm, allowing its customers to use their mobile wallets at places that previously didn’t accept the service, and making it easier for customers to convert their digital money into cash. Even better: As a Payment Bank, Paytm could offer users interest on the cash they store in the wallet, making the service more attractive to customers.

Though its marketing efforts and the government’s recent demonetization strategy have made it arguably the strongest brand among India’s mobile wallets, the path ahead for Paytm isn’t easy: Airtel, India’s largest telecom operator and a mobile wallet competitor, launched its own Payments Bank in pilot phase in November. Indian banks are starting to push back against the company, hoping to promote their own mobile wallet services. And the country’s Prime Minister recently announced a new government initiative: a UPI-based app that will let people send and receive money through both smart and feature phones by linking their bank accounts to them. But if recent research is right and India’s mobile wallet industry is poised for 160 percent annual growth through 2022, there may be enough (digital) cash to go around.

Diabetes care in a developing market

Diabetes is expanding along with waistlines around the world. (If you want to see just how fast the world became fat, check this out.)

So it was especially good news this week when Yostra Labs Pvt. Ltd., a Bengaluru-based startup that manufactures devices to treat diabetes-related complications, raised an undisclosed amount of funding from Marico Innovation Foundation and social enterprise incubator Villgro.

Yostra, founded in 2014, is developing a diagnostic device for diabetes-related damage to nerves in the feet – diabetic peripheral neuropathy (DPN) – and another device for diabetic foot ulcers. “Both our products have been developed specifically to enable mass screening and treatment of diabetic patients at primary and secondary health care centres and resource-poor settings making treatment accessible to patients from all socioeconomic strata,” said Vinayak Nandalike, one of the founders.

According to Villgro, about 30 percent of diabetics in low- and middle-income countries have DPN, and the number of DPN patients worldwide is expected to increase from 37 million in 2015 to 69 million patients by 2040.

Social 30 Under 30 Entrepreneurs

If you’d like a heaping helping of optimism from a whole bunch of entrepreneurs who are bursting with unbridled optimism … well look somewhere else. Instead, I’d offer the Forbes 30 Social Entrepreneurs Under 30, which came out this week. Don’t get me wrong, there is a lot of inspiring work on display from these entrepreneurs and technologists. But cockeyed or even blind optimism? I didn’t find any. Instead, what I saw were dedicated and pragmatic professionals putting their talents into creative ways of improving nutrition, education, sanitation and the environment.

One of those recognized entrepreneurs is Teju Ravilochan, cofounder and CEO of the Unreasonable Institute, a past NB contributor and, I would add, a friend of our site. Unreasonable is an accelerator for startups run by social entrepreneurs that has “graduated 148 startups that have raised over $155 million to date,” reports Forbes. Congrats to him and to all of those recognized on this prestigious list.

Photo credit: DFID – UK Department for International Development, via Flickr.

Homepage photo: Milo Mitchell, International Food Policy Research Institute, via Flickr.