Excerpts: The Profits of Nonprofit

The Profits of Nonprofit

The surprising results when drug development and altruism collide

By Megan Scudellari | January 1, 2011

“In 2002, the company identified a promising off-patent antibiotic once cast aside by a large pharmaceutical company for its lack of profitability. Since the drug had been previously approved and marketed in the late 1950s as a broad-spectrum antibiotic, iOWH was able to skip directly to a phase III clinical trial to test the drug as a treatment for visceral leishmaniasis. The trial commenced in 2003, and just three years later—record time in the drug development world—paromomycin was approved for sale in India…”

“Though the idea of a nonprofit pharmaceutical company is still new, nonprofit foundations and institutes have long been a staple in biomedical research funding in the United States. But they too are breaching the barriers between profit and nonprofit, adopting best practices from the for-profit business world…”

“Victoria Hale has also made a move toward borrowing business strategies, this time not only to enable nonprofits to develop drugs, but to make and market them without Big Pharma’s help. In 2008, she left iOWH to found a “second-generation” nonprofit pharmaceutical company called Medicines360. With a focus on women and children’s health, Medicines360 aims to become self-sustaining over time, using revenue from sales of its products at a premium price in the West to subsidize the same products for those who can’t afford them in developing countries. The company is currently developing an intrauterine device (IUD) for contraception…”

“In the United States, L3Cs, low-profit, limited-liability companies, now bridge that gap. Eight states have passed legislation that permits the creation of L3Cs—defined as socially beneficial for-profit ventures. Many companies have adopted the status, including alternative-energy companies, newspapers, and food companies, but no pharmaceutical or biotech company has yet attempted the model, according to L3C experts. That’s not to say they won’t, however.”


Source

The Scientist: The Profits of Nonprofit

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