Policy Research Working Paper July 2004

1 IAVI, “Global Investment and Expenditures on Preventive HIV Vaccines: Methods and Results for 2002,” July 2004. The science of an HIV vaccine is complicated, with only modest progress so far on overcoming the scientific barriers to producing a vaccine that will consistently induce a strong immune response in humans. The research and product development process is very expensive, requiring more than a decade and hundreds of millions of dollars to bring a vaccine to market. Many small companies who are willing to take more risks on discovery and early testing often lack the capital and expertise. The public health and social benefits of an AIDS vaccine would be enormous. However, the financial benefits to a private company selling a vaccine globally are far less certain, given that more than 90% of HIV infections occur in developing countries where the ability to pay for a vaccine is limited. This lower or unpredictable financial return serves as a disincentive to invest in AIDS vaccine R&D.