The International Finance Corporation’s Investments in the Pharmaceutical and Life Sciences Sector
Chapter 4 | The International Finance Corporation’s Portfolio in Pharma and Life Sciences
IFC’s investments in the sector have surged since the pandemic but still represent a small portion of the manufacturing, agribusiness, and services industry.
- Commitments increased sharply in 2021–22—driven by various pandemic response programs, including GHP—but tapered off in 2023 (figures 4.1 and 4.2).
- The advisory portfolio in the pharma sector started growing in 2019; seven projects were approved in 2019–22. Projects were concentrated in Asia (35 percent, mostly in India and China), the region that receives the most private investments (figure 4.3, panel a). IFC also supported projects in Latin America and the Caribbean (29 percent) and Africa (22 percent).
- Of the projects, 82 percent supported medicine manufacturing, while 18 percent targeted medicine distribution (wholesale and retail; figure 4.3, panel b).
- Debt (87 percent) was the most common instrument in IFC’s pharma investments.
Figure 4.1. IFC Commitments to the Pharma Sector, 2014–23
Figure 4.1. IFC Commitments to the Pharma Sector, 2014–23
Source: International Finance Corporation Management Information System, as of December 31, 2023.
Figure 4.2. Share of Pharma Projects in the Manufacturing, Agribusiness, and Services Industry, 2014–23
Figure 4.2. Share of Pharma Projects in the Manufacturing, Agribusiness, and Services Industry, 2014–23
Source: International Finance Corporation Management Information System, as of December 31, 2023.
Figure 4.3. Share of Pharma Projects, by Region and Subsector (percent)
Figure 4.3. Share of Pharma Projects, by Region and Subsector (percent)
Source: International Finance Corporation Management Information System, as of December 31, 2023
Note: AFR=Africa; CAT=Central Asia and Türkiye; LAC = Latin America and the Caribbean; ME = Middle East.
- Pharma investments had lower development outcome success rates than other MAS sectors. The existing evaluation evidence was limited for pharma investments, with just 7 of 45 projects committed during 2013–23 being evaluated (boxes 4.1 and 4.2). Only 2 of 7 previously evaluated pharma projects had positive development outcomes (figure 4.4):
- 86 percent of pharma projects had satisfactory or better E&S effects.
- However, most projects had low success rates in achieving their business performance and economic sustainability objectives.
- Only half of the projects produced overall positive market effects beyond the project.
Box 4.1. Pharma Manufacturing Projects (five projects)
- Projects with high development outcomes (two projects) increased the production and availability of quality medicines, despite being affected by high price competition and local currency devaluations. The clients’ capacity and experience contributed to positive outcomes for projects.
- Projects with low development outcomes (three projects) were challenged by the implementation of quality standards, regulatory deadlines for operationalizing a local plant, aggressive and unsustainable inorganic growth, lack of management depth to integrate and operate acquired businesses or to complete the planned acquisitions, misalignment of interests between sponsor and investors, liquidity issues, and lack of internal controls.
Source: Independent Evaluation Group.
Box 4.2. Pharma Distribution Projects (two projects)
- Projects had fallen short on operational and financial performance because of an adverse macroeconomic environment, increased competition, and sponsor or management capacity issues.
- Although their performance was below expectations, the projects contributed to increasing access to higher-quality and affordable medicines and personal care products by expanding retail distribution.
Source: Independent Evaluation Group.
Figure 4.4. Share of Projects with Positive Ratings, Commitment Period 2013–23 (percent)
Figure 4.4. Share of Projects with Positive Ratings, Commitment Period 2013–23 (percent)
Source: Independent Evaluation Group.