The document discusses the challenges faced in the vector control market, particularly regarding malaria, highlighting the need for innovative tools due to insecticide resistance and outdoor biting. It notes that the current market does not incentivize the development of new products, compounded by industry consolidation and complex regulatory pathways. However, there are ongoing efforts and innovations aimed at addressing these challenges and accelerating the introduction of effective vector control solutions.

1. Bringing innovation to the front-line
Vector Control market features and incentives for
innovation
Madrid - May 11-12, 2017

2. Vector Business model and incentives for innovation sent.pptx 1Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
Vector control tools have been responsible for significant
gains against malaria
Immense gains in fight against Malaria Attributed at 68% to bednets
Source: WHO Malaria report 2016, "The effect of malaria control on Plasmodium falciparum in Africa between 2000 and 2015", S. Bhatt & al
1,000
800
600
400
200
0
2013
2012
2011
2010
2005
2000
# malaria deaths (000')
2015
2014
864
429
554
741
2000 2015

3. Vector Business model and incentives for innovation sent.pptx 2Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
However, we are facing important challenges
Insecticide resistance
threatens current tools
New tools are needed
against outdoor biting
Too many people still
die or are affected
• ~210,000,000 cases/year
• ~430,000 deaths/year
• Insecticide resistance
identified in 60+ countries
• No effective tool available
against outdoor
These challenges call for the development and introduction
of new tools and active ingredients

4. Vector Business model and incentives for innovation sent.pptx 3Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
The market does not provide the incentives to develop the
innovative products to overcome these challenges
Source: Phillips McDougall 2016 (AgChem industry journal), GFATM PQR database, interviews
AgChem and VC-focused
companies play...
AgChemVC-focused
Yorkool
Life Ideas
20082000
~180M
~260M
...and development costs
rise as prices are falling
AI development cost
LLIN price
0
2
4
6
2010 2011 2012 2013 2014 2015
...in markets where vector
control is very small...
AgChem = ~$55B
>>>>
Vector Control = ~$0.7-1.0B
AI share = ~$0.05-0.1B
Public health market only
Public health market only

5. Vector Business model and incentives for innovation sent.pptx 4Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
Additionally, consolidation in the industry has resulted in
very few players remaining in AI development
1994 By 1997 By 1999 TodayThe Big 6
Source: Company materials, Phillips McDougall 2015
R&D capabilities are becoming increasingly concentrated
in a limited number of companies
MAI rebranded as
Adama in 2014

6. Vector Business model and incentives for innovation sent.pptx 5Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
Country
registration
And despite current efforts, pathway to market remains less
clear than for other health products, like drugs
Simplified
drugpathway
Product
dev
EMA/FDA
approval
PQ listing
WHO
policy
guidance
Global /
country
procurement
Up until
recently,
manufacturers
could not
submit own
data to WHO
There is no
equivalent of
Article 58
(EMA-WHO
collaboration)
in VC with EPA
Relatively
complex policy
guidance
structure with
VCTEG, VCAG,
MPAC, STAG, etc.
No 90-day
collaborative
procedure for
vector control,
to accelerate
country
registration
No Expert Review
Panel (ERP) for
procurers to fast-
track
procurement of
much-needed VC
products
Limited
harmonization
across country
systems to
facilitate
registration
Source: BCG experience and research

7. Vector Business model and incentives for innovation sent.pptx 6Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
0
10
20
30
2001199819951992198919861983198019771974197119681965196219591956195319501947
Annual Als
This resulted in no new AIs being developed for public
health since the 1970'
New AI Launches (1947-2003)
Organophosphates
Organochlorines
Carbamates
Acaricides
Bacillus t.
Juvenile Hormone Mirnics (IGR)
Nereistoxins
Avermectins
Neonicotinoids
Pirazoles/
Hydrazides (IGR)
Purples
Oxadiazines
Pyridine-
carboxamides
Public health AI classes
Pyrethrolds
Source: Liverpool School of Tropical Medicine
New AIs - for public health - currently in development by
AgChem and IVCC will be the first since 40+ years

8. Vector Business model and incentives for innovation sent.pptx 7Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
Investment of
$100M in R&D1 ...
...to capture $150M
of VC market2 ...
...with potential to
earn $9M/year3 ...
...yields an 11 year
payback period4
200
100
100
0
50
100
150
200
$M
IVCC
investment
AgChem
investment
Total R&D
1. Assumption: R&D will cost $200M for novel AI (IVCC estimate), and IVCC will cover 50% of costs. 2. Assumption: based on WHO World Malaria Report 2015 estimate of LLIN expenditures,
with assumption of 15% market share captured. 3. Assumption: Average margins of 6% on LLINs. 4. Assumption: No additional fixed costs; 100% of profit towards recouping investment.
Source: IVCC, WHO World Malaria Report 2015, R4D analysis provided during phone conversation and in internal R4D report, BCG Analysis
Illustrative example: And opportunity to earn return-on-
investment in VC market is small
150
1 000
0
200
400
600
800
1 000
Potential
share
$M
Total market
Assume
15% market
by spend
9
150
0
50
100
150
$M
Potential
profit
Potential
revenue
Assume able
to keep 6%
margins
NPV of
-$19.5M
through 2040
Payback
period of
11 years

9. Vector Business model and incentives for innovation sent.pptx 8Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
Good news is that there are plenty of innovations in the
pipeline
So we need all stakeholders to work hard together to bring these
much-needed innovations to market and end Malaria and other NTDs
Indoor transmission Outdoor transmission
ChemicalBiological
Non-exhaustive list of innovations
• Duo-insecticide LLINs
• Long-lasting IRS (LLIRS)
• Spatial repellents
• Insecticide-treated wall-liners (ITWL)
• Indoor attractive toxic sugar baits
(ATSB)
• Eave tubes
• ...
• Outdoor attractive toxic sugar baits
(ATSB)
• Spatial repellents
• Aerial spray (by plane, drone, etc.)
• Larvicides
• Swarm control
• ...
• Wolbachia
• Gene drive
• ...

10. Vector Business model and incentives for innovation sent.pptx 9Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
There are several ongoing efforts and initiatives aiming at
bringing these innovations faster to market
Stakeholders Short description of initiative
Researching and developing new (repurposed and novel) actives
ingredients (AIs), delivery mechanisms, and products for vector control
Screening innovation, partnering (and funding) with developers and
manufacturers to bring new tools to market
Undertaking significant transformation of vector control evaluation and
policy systems, notably with transition of evaluation to PQ
Implementing a market shaping initiative (called NGenIRS) to help
countries procure novel long-lasting IRS and increase coverage
Supporting all stakeholders in value chain to make system change and
enable high-quality and innovative tools to get faster to market
Funding several stakeholders in their vector control activities (e.g., IVCC,
WHO, I2I, UNITAID, etc.)
We need to amplify and accelerate these efforts
Non-exhaustive list of initiatives
Yorkool
Life Ideas

11. Vector Business model and incentives for innovation sent.pptx 11Draft—for discussion only
Copyright©2017byTheBostonConsultingGroup,Inc.Allrightsreserved.
The services and materials provided by The Boston Consulting Group (BCG) are subject to BCG's Standard Terms
(a copy of which is available upon request) or such other agreement as may have been previously executed by BCG. BCG does
not provide legal, accounting, or tax advice. The Client is responsible for obtaining independent advice concerning these matters.
This advice may affect the guidance given by BCG. Further, BCG has made no undertaking to update these materials after the
date hereof, notwithstanding that such information may become outdated or inaccurate.
The materials contained in this presentation are designed for the sole use by the board of directors or senior management of the
Client and solely for the limited purposes described in the presentation. The materials shall not be copied or given to any person
or entity other than the Client ("Third Party") without the prior written consent of BCG. These materials serve only as the focus for
discussion; they are incomplete without the accompanying oral commentary and may not be relied on as a stand-alone
document. Further, Third Parties may not, and it is unreasonable for any Third Party to, rely on these materials for any purpose
whatsoever. To the fullest extent permitted by law (and except to the extent otherwise agreed in a signed writing by BCG), BCG
shall have no liability whatsoever to any Third Party, and any Third Party hereby waives any rights and claims it may have at any
time against BCG with regard to the services, this presentation, or other materials, including the accuracy or completeness
thereof. Receipt and review of this document shall be deemed agreement with and consideration for the foregoing.
BCG does not provide fairness opinions or valuations of market transactions, and these materials should not be relied on or
construed as such. Further, the financial evaluations, projected market and financial information, and conclusions contained in
these materials are based upon standard valuation methodologies, are not definitive forecasts, and are not guaranteed by BCG.
BCG has used public and/or confidential data and assumptions provided to BCG by the Client. BCG has not independently
verified the data and assumptions used in these analyses. Changes in the underlying data or operating assumptions will clearly
impact the analyses and conclusions.
Disclaimer

12. Thank you
bcg.com | bcgperspectives.com