British Diagnostics Biotech becomes social enterprise after acquisition


British rapid diagnostic firm Mologic will turn into a social enterprise after being bought out by a group of philanthropic funds and investors, which experts say could become an increasingly popular trend.

British biotech Mologic will fully reinvest its profits in expanding global access to affordable medical technology after it was acquired in a deal worth at least 35 million euros (30 million euros). pound sterling). Following the takeover, Mologic will become part of Global Access Health (GAH), a selfless initiative led by George Soros’ Economic Development Fund (SEDF) and supported by the Bill and Melinda Gates Foundation.

The shift to a social enterprise – one focused on social goals rather than profit – is unusual in the biotech industry. However, the concept is becoming increasingly important amid growing recognition of global health inequalities during the Covid-19 pandemic and the role biotechnology can play in addressing it. Besides, investors are increasingly attracted sustainable and responsible investment practices that recognize the importance of environmental, social and corporate governance.

Mologic’s transition to a social enterprise is a deliberate, logical and natural step for a company focused on delivering affordable diagnostics and biotechnology to places that have been underserved by the relentless pursuit of profitability.Mologic CEO Mark Davis said in a public statement.

Becoming a Mologic social enterprise represents a new chapter for our company that advances a model that prioritizes access to new technologies for neglected diseases, escalating epidemics and the next pandemic.Mologic Medical Director Joe Fitchett said.

We expect that this model can be successfully adopted to improve access to other medical countermeasures against epidemics such as drugs, vaccines and medical oxygen.

The acquisition includes both Mologic and its sister nonprofit Global Access Diagnostics, which was founded in part with support from SEDF. The fund bought all of the existing Mologic shares, including those held by two private investment managers.

Mologic will now seek to fill gaps in the provision of diagnostics to low-income areas and communities. The company is currently developing lateral flow and rapid diagnostic technologies that include testing for dengue, bilharzia, river blindness and Covid-19.

Mologic’s transition is a sign of movement within the biotech community, as companies seek to balance a need for profitability and social responsibility. In the case of pharmaceutical giant Novartis, this has involved moving away from traditional methods of evaluating the success of its investments.

The Novartis Social Business division makes investment decisions that place equal emphasis on social and financial returns. She applied this principle to the development of heat-stable treatments for bacterial infections in children in low- and middle-income countries.

Novartis also aims to add aspects of social responsibility to its malaria control program in the form of the Novartis Malaria Initiative, operated by its generics and biosimilars division Sandoz. The project has been around for over a decade and aims to eradicate malaria through access, treatment, R&D and capacity building.

For biotechnology entrepreneur Robert Luo, social responsibility is literally woven into the fabric of the products of his company, Mi Terro. The US-based company seeks to tackle the 1.3 billion tonnes of food waste and 78 million tonnes of plastic packaging waste generated globally each year. Mi Terro recycles agricultural by-products and surplus food to create T-shirt textiles from excess or spoiled milk from dairy farms and compostable plant-based packaging films.

In my opinion, there will be no distinction between [a] social enterprise and normal enterprise,” he told me. “All companies must take on social and environmental responsibilities. “

SEDF CEO Sean Hinton acknowledged that Mologic’s transition was complex and required it to innovate in terms of funding, structure and governance.

We were fortunate to find a talented and visionary team, like-minded philanthropic investors and venture capital shareholders who understood that the true potential of this company could only be realized through this transaction.“Hinton told me.

But the situation could become more common, according to Janke Dittmer, a partner at European investment firm Gilde Healthcare, who was not involved in the deal.

The acquisition of diagnostic or biotechnology companies by a non-profit or impact investor is still relatively rare. However, given the amount of capital invested in social enterprises and impact investments, this will likely increase,“he predicted.

Dittmer said hybrid funds are being set up with both a financial and impact mandate, as well as philanthropic venture capital funds that today invest alongside traditional science-based venture capital firms. life and health.

As companies and investors in this area mature, I can imagine the emergence of dedicated buyout funds with a focus on impact investing in diagnostics.s and biotechnology. The coronavirus pandemic has highlighted the importance of the contribution of venture capital firms in diagnostics and biotechnology for public health. “

Cover image by Elena Resko.

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