The For-profit/Non-profit Hybrid Model: Why and How?
PharmAfrican, a Montreal-based privately owned biopharmaceutical company, was founded in 2006 to develop and commercialize health nutrition products and botanical drugs in collaboration with local African producers.
In addition to the profit-making company, the Biotechnology for Bio-sustainable Development in Africa Foundation (BDA, a Canadian and US-based non-profit), was launched to prepare the work in Africa of pedagogical and training programs for medical plant farmers, to build a quality controlled supply chain, and to build an entrepreneurial agricultural incubator to launch the trained farmers’ agri-businesses.
The foundation’s strategic relationship with the biopharmaceutical company is designed to leverage the unique value creation mechanisms of philanthropy (BDA Foundation) to create an industry in medicinal plants in the Congo. Simultaneously, the model uses the unique value creation mechanisms of business (PharmAfrican) to create the market for medicinal plants in North America and around the globe.
In this “hybrid model,” the blend between for-profit and non-profit structures came as we searched for solutions to the challenge of helping African farmers create a high quality supply of medicinal plants for the growing nutriceutical and botanical drug markets.
In the conventional model of pharmaceutical development, the risk is aggregated in the R&D phases, while in this hybrid model the risk is located in the production phases: agricultural in the Congo. Yet it is precisely this commitment to keeping the agriculture of these plants in their local habitat that allows for real social and environmental uplift.
Here are some of the challenges we have faced:
• Knowing how to position both organizations: due to their synergistic creation they tend to confound conventional investors/donors
• Manage the different organizational cultures: high energy western bio-pharma company versus methodical pace of in-country agricultural programming
• Deal with the challenges that accompany all start-ups with international scope.
Some of our questions for the Social Edge community:
• What general learning from the ideas, practices, and experience of social entrepreneurship can be applied to this sort of for-profit/non-profit hybrid model?
• What has been learned about positioning this sort of a hybrid for investment?
• What experiences can members share with us about their own successes and failures with hybrid ventures that attempt to create a “fair trade” type industry with triple bottom lines?
Questions? Comments? Join Richard Klopp in the conversation.