Fast Company

Health and the Profit Motive

Victoria Hale creates the country's first nonprofit pharmaceutical company.

It was the spring of 2000, and Victoria Hale was riding in a taxi on her way into Manhattan from John F. Kennedy Airport and making small talk with her cabbie, as she often liked to do. She learned that he was from Africa, and she told him that she was from Maryland. He asked her what she did for a living. When she replied, "I'm a pharmaceutical scientist," his response was the last thing she expected: He simply burst out laughing. "You guys have all the money," he said. And that was how the Institute for OneWorld Health, the first nonprofit pharmaceutical company in the United States, was born.

"He was right," Hale says. "Our industry does have all the money. We decide which drugs to make -- and it's always about the profit margin. I decided right there that it would have to be me that separated profit from the scientific process of deciding which drugs are to move forward."

As soon as she returned home, Hale dug out a personal essay that she had written two years before. It contained her thoughts on five disease categories that she believed could benefit from aggressive drug-development efforts -- but that would likely never move forward purely because of financial considerations. That essay became her preliminary business plan; the next day, she incorporated the Institute for OneWorld Health. Her premise was simple: Find research on neglected diseases that has been completed but that hasn't passed the profit hurdle. Next, persuade the companies that own the research to donate the information to her nonprofit institute in return for attractive tax write-offs and public-relations benefits. Then use grant money and donations to bring affordable drugs to those who desperately need them.

Having incorporated her company, Hale immediately began writing grants and shopping her idea around the pharmaceutical community. In two short years, she has garnered impressive support. Last year, the Institute received $4.7 million in grants from the Bill and Melinda Gates Foundation, earmarked for disease research in the developing world. It also negotiated multimillion-dollar partnership commitments with the World Health Organization and the National Institutes of Health to perform clinical trials on drugs in the Institute's development pipeline. And in February 2002, Celera, the Rockville, Maryland - based biotech giant, signed a deal with the Institute to donate its research on an enzyme inhibitor that could kill the parasite that causes Chagas disease, which is an incurable illness that kills nearly 50,000 people each year in Central and South America.

Hale's deal with Celera offers an example of how the Institute can change the game in the pharmaceuticals business. Celera owned the right to an enzyme inhibitor that had been developed years ago by Axys Pharmaceuticals, which was acquired by Celera in 2001. But because developing a cure for Chagas is not a profitable venture, the research has languished on the shelves. By donating its research to the Institute, Celera can write off the future value of a Chagas cure -- and Hale can move 18 million people one step closer to a cure.

The Institute's success depends on partnerships like those, and Hale is uniquely positioned to make more of them happen. She has been a senior reviewer at the FDA; an associate professor at the University of California at San Francisco; an adviser to the World Health Organization; a senior scientist at Genentech; and a founder of her own drug-development consultancy, Axiom BioMedical Inc.

Hale employs 4 full-time staffers and 15 part-time scientists, who together work on multiple projects. "The idea is to fill the development pipeline," Hale says. She adds, "I'd like to see us take on a couple of products with a small profit margin, just enough to pay our costs."

Hale hopes that this will move the Institute closer to self-sustainability: "We will always be reliant on the pharma companies for that initial research, but it's a win-win for industry, because we allow them to do good through us."

Learn more about OneWorld Health on the Web (www.oneworldhealth.org).

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