Drug Development Backed by Nonprofits

Physician's Money Digest, March 2007, Volume 14, Issue 3

Betting on biotechnology can be a tricky endeavor, and most investors prefer companies close to Food and Drug Administration approval rather than those with preliminary experiments. That bias often causes some experimental drugs in early stages to fall through the cracks because of lack of funding. However, these drugs and devices could offer potential treatment breakthroughs or better patient care. A recent US News & World Report article reveals that a surprising source of such funding is from nonprofit organizations and foundations like the Breast Cancer Foundation and the Bill and Melinda Gates Foundation. Nonprofit investors walk away with cheap research without the financial hit of university royalties. Because pharmaceutical research and development directly affect the variety and availability of drugs on the market, smaller drug companies in the beginning stages of drug development began seeking these foreign and nonprofit investors. The funding from these nonprofits is transforming struggling pharmaceutical companies into lucrative businesses, which can mean the expansion of available and new drugs and devices— helping physicians provide more treatment options for their patients.