The Business Skills of Nonprofit Business

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January 1, 2011; Source: The Scientist | Big Pharma, watch out. In 2001, the Institute for OneWorld Health became the nation's first nonprofit pharmaceutical company, established by pharmaceutical chemist Victoria Hale. Since OneWorld's founding, it has received more than $200 million in grants from the Bill & Melinda Gates Foundation.

Making and sponsoring the manufacturing of "drugs for all of humanity – drugs that don't necessarily pull a profit," iOWH has had some significant impact, including marketing a drug to treat visceral leishmaniasis (according to The Scientist, "the world's second-largest parasitic killer after malaria") as well as drugs for malaria, diarrheal diseases, and parasitic worm infections – all diseases of the developing world.

To do some of this, it partners with for-profit pharmaceutical companies that it convinces to forego their profits, as in the case of making and distributing paramomycin to treat visceral leishmaniasis. iOWH partnered with an Indian for-profit, Gland Pharmaceuticals, to manufacture and distribute the drug at cost – resulting in a pricetag of $10-$15 for the full 21 injection treatment regime. It has also partnered with the for-profit Sanofi-Aventis to produce an affordable anti-malaria drug, a synthetic version of the typical drug based on the costly process of harvesting and processing wormwood in Asia and Africa.

iOWH's success has spurred others such as the Biotechnology for Sustainable Development in Africa Foundation in Montreal and the Pacific Northwest Diabetes Research Institute in Seattle. Other successful nonprofit pharmaceutical companies also get covered in this interesting article linked to above.

Where the article goes off course is its digression into wondering about the efficacy of creating hybrid pharmaceutical companies such as by using the L3C (low profit limited liability corporation) structure. It didn't follow. All of the nonprofit examples in the article were achieving great things in part due to their nonprofit structure (such as accessing foundation funds or attracting PIs who didn't want to be associated with for-profit pharmaceuticals). It didn't appear that these nonprofits were lacking for skills, professionalism, or business savvy despite their nonprofit structure and tax status. In fact, they are great examples of the businesslike skill of nonprofit businesses.—Rick Cohen

  • Arthur Wood

    Lets call a spade a spade a traditional Not for profit (501c3) is one type of fiduciary structure – a closed ended investment trust that gives 5% away with a tax break – this is how we allocate 98% of funds in the philanthropic world – and for some reason some people believe the only one where social mission can be gauranteed,

    Why not bring the full range of fidiciary and capital market skills developed in the 20th century to bear for social purpose?

    Why not create new structures that allow collaboration between diferent players – for profit / not for profit – but with a social miussion hard wired into the structure?

    Specifically why not support this when the status quo spends 50 cents on the dollar raisng for the most part unleveraged , unannuitised income ?