The Four Characteristics of a Successful Social Enterprise

After more than 28 years in Big Pharma working for the likes of Abbott and Bristol-Myers Squibb, Scott Boyer felt God leading him to launch a new kind of business - a Pharmaceutical Social Enterprise®. Scott is the founder and president of OWP Pharmaceuticals and the board chair of ROW Global Health, which together form a hybrid social enterprise that is transforming the lives of people with epilepsy and associated psychiatric disorders in over 35 under-resourced countries. The blueprint for this unique business model is outlined in the new book, “Powering Social Enterprise with Profit and Purpose: The Tandem Hybrid” (Routledge Publishing). I had been hearing the “whisper” for years but hadn’t yet responded. It was 2014, and after a long career in the pharmaceutical industry, I found myself at the Halftime Institute in Dallas, trying to discern God’s calling for the “latter half.” I had a clear vision of what I should do but hadn’t had the courage to walk in faith that God would provide what was needed to make it happen. With the encouragement of like-minded peers and mentors at Halftime, I decided to take the leap and start a new enterprise, one God had been nudging me toward for years.

Later in 2014, I launched OWP Pharmaceuticals and the ROW Foundation to address the lack of access to life-changing treatments in under-resourced countries. It’s a model that has now produced over $22 million for medication, diagnosis, and training in low- and middle-income countries, including grants for over 170,000 prescription-months of medication for the poorest of the poor. I’ve learned a lot through both failure and success over the last decade. For a mission-driven venture like this to thrive, I think there are four essential characteristics. It needs to be:

• Driven by a compelling social mission
• Financed by commercial success
• Structured to retain control
• Scalable and sustainable for the long haul

A Successful Social Enterprise is Driven by a Compelling Social Mission

Later in my Big Pharma career, I noticed something that piqued my interest while doing market analysis. On the pie charts, the most common markets were the U.S., Japan, the wealthier countries in Europe, and sometimes China and India. The other 180 countries would be lumped together in the last column, always the smallest, titled ROW—“Rest of World.” Companies would focus on the major markets where profits were the greatest, and the rest of the under-resourced world would be neglected. It made business sense, but it became harder for me to rationalize that most disorders and diseases that could be easily treated by available and even inexpensive generic medications went untreated. The cost to human life and human potential in these situations seemed staggering and inexcusable.

I wanted to find a way to do something about “ROW”; to find a way to equalize the graph when it came to medical care. This stirred my sense of justice from a medical and pharmaceutical perspective. It says a lot about us as humans if we’ve developed cures and treatments for diseases but consciously or unconsciously choose not to deliver them to all those in need. Futures could be radically changed by a pill that costs a nickel or a dime. My background uniquely prepared me to start two social enterprises: OWP Pharmaceuticals and the ROW Foundation. We envision a world where all people receive the best level of medical and pharmaceutical care regardless of who they are or where they live – this is our mission.

A Successful Social Enterprise is Financed by Commercial Success

The old axiom is still true: If there’s no money, there’s no mission. I knew that to accomplish our mission at the scale of the problem, we needed to harness the financial muscle of business. Without the business “flywheel,” we wouldn’t be able to close the global treatment gap. But where to begin?

We determined our target would be epilepsy and (later) associated psychiatric disorders. Over 65 million people in the world suffer from epilepsy, a neurological condition known for causing seizures. In many low- and middle-income countries (LMICs), a lack of understanding of seizures – the belief that they are contagious, or worse, caused by demon-possession – keep people from education, employment, and even marriage. Eighty percent of people with epilepsy live in LMICs, and the vast majority go untreated. Seventy percent of people with epilepsy can have their lives completely transformed with proper diagnosis and medication. The potential for life change was huge.

From a business perspective, one report estimated the U.S. market for epilepsy drugs at $1.3 billion in 2020, with the worldwide market reaching $5.8 billion by 2027. We entered the market with our antiseizure drugs Roweepra® (levetiracetam) and Subvenite® (lamotrigine), with the goal of running a profitable business in the U.S. and funneling profit to ROW to fuel our mission around the world. We continue to innovate our social enterprise to compete in the U.S. market, and our development pipeline has six oral liquid drugs widely used in neuroscience, several with patents already issued. The success of the business means success for the mission.

A Successful Social Enterprise is Structured to Retain Control

If you want to keep control of your mission, you need to think about structure from the beginning. Your angel investors will push you to venture capitalists (VCs), and your VCs will push you to private equity, who will push you to venture debt, who will push you to structured debt. At each step, you give up more control to people who are likely not driven by the same goal. These are normal business transitions when it comes to capital, but they're not necessarily positive for mission-driven enterprises.

To retain control in a private company, a founder must retain at least 51% of the equity or voting stock, either personally or in an organization. You need a plan to protect the mission (and founder) from being forced out or bought out. Our tandem hybrid model – which utilizes both for-profit and non-profit entities - guards against these outcomes. My co-founder Bruce Duncan worked with our attorneys to (eventually) come up with an elegant solution that allows ROW guaranteed funding while OWP controls the business assets. To achieve this outcome, we formed an IP Holding Company (LLC) – owned jointly by OWP and ROW - which contains all OWP patents and other intellectual property. OWP pays licensing fees and royalties on product sales to the Holding Company, which automatically funds ROW at its percentage of ownership. We’ve structured this model so that approximately 50% of OWP’s profits can go to ROW – an unheard-of percentage of corporate giving. While there are other structural options that can produce similar outcomes (see Patagonia’s recent restructuring as an example), the goal is to find a way that locks in your mission for perpetuity.

A Successful Social Enterprise is Scalable and Sustainable for the Long Haul In his TED talk, “The Case for Letting Business Solve Social Problems,” Michael Porter from Harvard says:

“What's the fundamental problem we have in dealing with these social problems? If we cut all the complexity away, we have the problem of scale…Why is that? Because we don't have the resources…So, if it's fundamentally a resource problem, where are the resources in society? I think the answer is very clear: They're in business.”

Our tandem hybrid model leverages business; as OWP’s profits increase, ROW’s global impact increases. While many non-profits struggle with inconsistent revenue streams and difficult decisions about investing in “overhead,” our model bypasses those challenges. We’ve already built the pharmaceutical infrastructure that will allow continued growth. And as OWP grows, so grows ROW. While ROW Foundation (a private foundation) benefits from the profits of OWP, we don’t want to limit the scope or scale of resources we can put toward the mission. So in 2021, we launched ROW Global Health, a public charity, to attract philanthropic dollars from individuals, donor-advised funds, and foundations to diversify our funding sources and add more fuel to the engine.

Sustainability and scalability are especially important to the work we’re doing globally in epilepsy. We can’t start a treatment plan and then tell patients we’ve run out of money and therefore run out of medication. We need a sustainable way to help educate, diagnose, and treat people for the long run. A consistent revenue stream provides a sustainable solution, and the future growth potential of the business allows for a scalable solution. Yet the impact is measured by each individual life transformed; each child of God whose human potential is unleashed.

While we’ve come a long way in the last nine years, in some ways, we’re just getting started. We’re developing new products, building new partnerships, and structuring our model so that we continue to serve “the least of these” long after I’m gone.

What “whisper” have you been hearing? How might God be leading you to respond? It could be that the rest of the world is waiting for you to take the first step. This article includes excerpts from the new book “Powering Social Enterprise with Profit and Purpose: The Tandem Hybrid” (Routledge).

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*Image used with permission. *