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Can social enterprise be used in global medicine?

Published 12 December 2012

Can social enterprise be used in global medicine?

"The social enterprise model is still being tested in the global health space, but a few companies are already making it work, and have taken drug candidates to late stages of clinical development."

Does the social enterprise model have the potential to drive the development of new medicines for low and middle income countries? A new report, authored by Gates Cambridge alumnus Andrew Robertson, suggests that this may be the case.

The report, released by the Center for Global Health R&D Policy Assessment and titled The Global Health Social Enterprise: An Emerging Approach to Global Health Research and Development, looks at the issue from a US perspective, discussing the social enterprise model's advantages and drawbacks compared to other models for medical product development.

Several companies were identified in the US that have successfully used a for-profit model for developing new medicines for diseases of the poor, such as tuberculosis, cholera, and leishmaniasis. The report identifies advantages that the social enterprise model has over non-profit "product development partnerships" (PDPs) - the predominant vehicle for neglected disease drug development - including increased corporate flexibility and access to additional sources of capital.

The report also discusses the role of the growing impact investor movement, which focuses financing on for-profit companies with a deliberate social mission.

However, it also notes difficult challenges faced by social enterprise drug development, such as justifying to investors the pursuit of medicines for developing world in an industry that requires high levels of financing, long development timelines, expensive clinical testing and top scientific expertise. Finally, the role of new legal corporate models, such as the Flexible Purpose Corporation, a type of corporation which is permitted to pursue social or environmental objectives as well as financial returns for its shareholders, are considered as tools to strengthen social enterprises in global health.

Andrew [2001] says: "The social enterprise model is still being tested in the global health space, but a few companies are already making it work, and have taken drug candidates to late stages of clinical development. As philanthropic funding becomes tighter and the PDP space becomes more competitive, global health social enterprises may be a promising strategy in developing new medicines for low and middle income countries."

The report was conducted over a six-month period with interviews of US-based social enterprises working in global health, and was done in cooperation with the non-profit Results for Development Institute and through funding by the Bill & Melinda Gates Foundation.

Read the full report. The Results for Development Institute will be hosting a webinar on the report on Friday 21st December from 10:30-11:30am EST.

Picture credit: renjith krishnan and www.freedigitalphotos.net

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