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UNITAID

UNITAID. WHO EXPERT WORKING GROUP ON R&D* FINANCING     Geneva, 13 January 2009 Dr. Philippe Douste-Blazy, Chairman, UNITAID. The innovative funding. US$. 2000 2004 2008 2011 2015. The innovative funding.

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UNITAID

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  1. UNITAID WHO EXPERT WORKING GROUP ON R&D* FINANCING     Geneva, 13 January 2009 Dr. Philippe Douste-Blazy, Chairman, UNITAID

  2. The innovative funding US$ 2000 2004 2008 2011 2015

  3. The innovative funding Quantitative and qualitative criteria for innovative financing • Significant increase of funds to achieve the MDGs • Additionality with current aid flows to prevent any decrease in traditional aid • Stability and sustainability to enable efficient planning • Political feasability to minimize negotiation time • Rapid disbursement of funds to respect the 2015 deadline • Transparency and traceability to build confidence among donors

  4. UNITAID : a lab for the innovative financing and the efficient aid for a common future

  5. Five founding countries (September 2006) Official signature of the five founding countries when UNITAID was launched, on 19 September 2006, at the United Nations General Assembly, New York

  6. Tax received on each ticket by UNITAID (in France) 1 HIV-positive child under treatment for 1 year First class or business Antimalarial treatment for 2 children Flight in France or in Europe Economy class International flight 1 € 10 € 4 € 40 € UNITAID membership ex: flight Paris - Berlin ex: flight Paris - Dakar An aircraft with 300 passengers on board leaving from Paris will cover the treatment for 1 person with multi drug resistant tuberculosis (approx. 4.000 $) or 60 HIV-positive children for one year Furthermore… no economic impact on air traffic

  7. UNITAID : a lab for innovative financing Over $600 millioncollected in less than 2 years mainly through air travel tax No economic distortion for the air industry A solidarity movement

  8. UNITAID : a lab for innovative financing • Up to present, in cooperation with the Clinton Foundation, the Project of UNITAID on Antiretrovirals against HIV/AIDS for children : • has reduced the price of ARVs on average by 40% • is funding the supply of diagnostics and treatment for more than 102,000 children, including more than 62,000 new treatments, in 38 developing countries.

  9. UNITAID initiatives have already driven major price reductions (partnering with CHAI) Change in peds ARV prices (AZT FDC vs. individual syrups) US$/patient per year Change in 2nd-line ARV prices (TDF+3TC) US$/patient per year $130 $315 50% 50% $66 $159 2006 Q1 2008 Q1 2008 2006

  10. Better products at lower price Before: Single dose syrups16 bottles of syrup monthly 200 $ per patient per year Now (UNITAID-CHAI): Fixed dose combination3 tablets a day 60 $per patient per year

  11. UNITAID : a lab for innovative financing • UNITAID, in partnership with UNICEF and WHO, delivered more than 1.4 million malaria treatmentsin Burundi and Liberia. • UNITAID, in conjunction with the Stop TB Partnership’s Global Drug Facility, is funding pediatric therapies against tuberculosis for approximately 180,000 children in 30 countries to be supplied from September 2007 at a cost of US$ 5.6 million. UNITAID plans to continue to finance this program until 2010 with the aim of providing treatment to the 900,000 children who need it.

  12. UNITAID ongoing actions More than 90 countries already receive UNITAID support… HIV / AIDS 53 recipient countries Malaria 22 recipient countries Tuberculosis 58 recipient countries • ACT • LLIN • - First line TB • - Pediatric TB • MDR-TB • Diagnostics - Pediatric ARV - Second line ARV - PMTCT

  13. Innovative Financing : Tax or Voluntary Contribution ?

  14. Voluntary Solidarity Contribution could allow Unitaid to reach countries – like the US – unlikely to be part of the tax on airline tickets mechanism • UNITAID’s tax on airline tickets has been a success in the last two years • UNITAID will continue to encourage new countries to implement the tax • (e.g., Portugal is likely to join in 2009) • But some countries are not likely to join this initiative: • The US (first airline market) already is not likely to implement it because of the “tax” dimension • Voluntary Solidarity Contribution (VSC) would allow UNITAID to reach non-member countries unlikely to implement the tax, by involving citizens on a voluntary basis

  15. The VSC project constitutes a great opportunity to develop a massive citizen movement • Voluntary Solidarity-Contribution is a concept to raise funds : • From individuals and corporations who purchase plane tickets • 2 ($,€,£) solidarity contribution per ticket • Entirely voluntary, simple and hassle-free process • Traceable donation experience

  16. Physicalagencies Phone The VSC project constitutes a great opportunity to develop a massive citizen movement “[…] so, Mr. Smith, an amount of 2$ (or 2€/2£ depending on location) per flight will be charged on your ticket as part of the UNITAID program against infectious diseases in the world. If you would like to give more, I can also specify a free additional amount now that will also be included in the global price of the ticket […]”. Individuals Corporations Online

  17. Voluntary Solidarity Contribution Revenue Potential The Voluntary Solidarity Contribution (VSC) project has demonstrated a revenue potential of USD ~1 billion by 2011 in the travel industry and its feasibility from a market and technical standpoint thanks to strong support from potential partners

  18. 980 The VSC project has demonstrated a revenue potential of USD 1 BN by 2011 in the travel industry USD millions; based on 2006 volumes ASSUMING NO TAX Core case hypotheses Voluntary Solidarity Contributionproposed on 848m (39%) travels out of 2,200m worldwide air tickets • 771m airline tickets worldwide • 125 countries(1) • Credit card payments only • Implemented for 63% of tickets(2) • 77m “easy to capture” other types of travel(3) Travelers donate Revenue from travel agencies and e-brokers Revenue from airlines and low-costs Total revenue • 27% of the time(4) • An average amount of USD 4.3(5) Pessimistic and optimistic cases range from USD ~120m to ~1,800m (1) All targetable countries (2) Compound of 73% implementation rate for travel agencies and e-brokers (GDS volume: 65%) and 44% implementation rate for direct sales (direct volume: 35%) i.e., 16 first airlines / low-costs (3) 10% of GDS activities (car rentals, hotels, trains, cruises) (4) % of donors to charities donate to UNITAID (5) 02 ($, €, and £) per ticket in economy class and 20 in business/first classes Source: PhocusWright, ICAO, Amadeus, Star Alliance report 2003, Back Aviation OAS database 2007, Project Team analysis

  19. WORLD AIR TRAVEL STRUCTURE Share of passengers % Customers Distributors Intermediaries Providers GDS Airlines Travel agencies Indirect sales Airlines 47% 65%* Managed business e- brokers 41% 18% Airlines GDS as software provider Leisure and unmanaged business Direct sales 59% 24% 35%** LCC 11% * Among which 48% offline and 17% online ** Among which 14% offline and 21% online Tourism Organization 2007, ING Oct 2004, ICAO, Euromonitor 2006, PhoCusWright 2005 & 2006, Analysys international 2007, ProjeSource: World ct Team analysis

  20. 35 VSC is feasible from a market standpoint thanks to high concentration of tickets sold 3 main GDSs Percent Sabre 19 Galileo/ Travelport ** Amadeus Sabre (infini) Amadeus UK Amadeus 3 main GDSs could allow UNITAID to technically reach ~100% of indirect volume* in tier 1 countries Sabre Galileo/ Travelport** Sabre Galileo/ Travelport Japan Galileo/ Travelport Other US Germany Amadeus China Travelsky * If implemented in all distribution channels. Indirect volumes represent ~65% of all air travel tickets sold worldwide ** Worldspan and Galileo are now part of Travelport Group Source: Amadeus, PhocusWright 2006 ; Experts interviews

  21. 4 125 targetable countries represent 1,800 million tickets out of 2,200 worldwide Number of airline tickets* sold (in millions) ; 2006 Non-member countries Percentage of total** UNITED STATES 730 32.6 • 125 targetable countries represent 1,800 m tickets out of 2,200 worldwide • Deep understanding of Tier 1 countries (~55% of total number of targetable countries) is necessary to assess revenue potential • Priority targeted countries: • United States • Germany • Japan • United Kingdom CHINA*** 7.1 Tier 1 UNITED KINGDOM 54.8%, 5.7 GERMANY 4.8 JAPAN 4.6 FRANCE 2.7 SPAIN 2.6 AUSTRALIA 2.4 IRELAND 2.3 CANADA 2.1 Tier 2 BRAZIL 14.1%, 2.0 INDIA*** 1.8 ITALY 1.8 RUSSIAN FEDERATION 1.7 REPUBLIC OF KOREA 1.6 SCANDINAVIA 1.5 INDONESIA 1.3 NETHERLANDS 1.3 Tier 3 TURKEY 1.2 8.4%, GULF STATES 1.1 CHINA, HONG KONG SAR 1.0 MEXICO 1.0 THAILAND 0.9 SINGAPORE 0.9 MALAYSIA 0.8 SAUDI ARABIA 0.8 IRAN (ISLAMIC REPUBLIC OF) 0.7 SOUTH AFRICA 0.6 NEW ZEALAND 0.6 SWITZERLAND 0.5 COLOMBIA 0.5 AUSTRIA 0.5 GREECE 0.4 PORTUGAL 0.4 FINLAND 0.4 0.4 PHILIPPINES 0.3 ARGENTINA 0.3 QATAR CZECH REPUBLIC 0.3 0.3 CHILE 0.3 PAKISTAN 0.2 EGYPT VIET NAM 0.2 VENEZUELA 0.2 Total 2,200**** ISRAEL 0.2 TUNISIA 0.2 0.2 PERU 0.2 MOROCCO * Approximated from number of passengers carried, 2006 ** 48 first countries account for 95% of number of tickets sold *** Not considered for Voluntary Micro-Contribution because potential tax contributors **** Among which ~1.88 billion tickets sold in non-UNITAID member countries Source: ICAO 2006, www.unitaid.eu, Project Team analysis

  22. Implementation • Pilots (Australia – Italy) can be run in April 2009 • Roll-out can be effective ~ 6 months later Amadeus designed a fully integrated solution Description of the solution Features • Fully integrated within travel agencies and e-brokers booking flow • Implementation first in travel agent/e-broker but extendable to airline/LCC direct sales • Only credit card payment permitted • Payment Service Providers (PSPs, e.g., Bibit, Cybersource, others) for money collection: fees to negotiate • Risk of double password entry may occur in 2 years at the earliest Travel agencies / e-brokers Ticket Contribution BSP/ARC PSP Bibit, Cybersource Airlines Millenium Foundation

  23. Over the past years, charitable trends have demonstrated that more occasions to donate people have, the more generous they tend to be PRELIMINARY Number of charities with >USD 25,000 budgets in the US USD thousands Internet charitable giving development (American Red Cross, United Way,…) • In the US, the past 15 years have demonstrated a correlation between people's generosity and number of opportunities to give (approximated by the number of charities) Large media campaigns + new "niches" initiative (Harvest Foundation of the Piedmont) "Historic" donations (Religious, Communitarian giving – Salvation Army,…) Total charitable giving, US USD billions 1990 1995 2000 2006 Source: Project Team, Giving USA, Pew Charitable Trust, Chronicle of Philanthropy, Bridgespan

  24. Other innovative financing opportunities could be explored • The VSC project could find applications in many other industries worldwide: • Web transactions and e-gambling • Other industries • These opportunities have to be further explored to confirm both their presumably large revenue potential and feasibility

  25. Growing interest for the VSC project • In addition, the VSC project has already prompted support from major institutions (Google, Amadeus...) and personalities (Ban Ki-moon, Bill and Melinda Gates, • Bill Clinton...)

  26. Thank you

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