Companies in the health and biomedicine sector generate return that goes beyond just economics, as their goal is to benefit the patients their drugs and therapeutic solutions are intended for, but they can emphasise whether social return on investment (SROI) is part of their mission.
Both in Europe and the United States, SROI is a growing trend that is aligned with society’s growing demand for a more sustainable, socially responsible world.
CataloniaBio & HealthTech put this up for debate at the latest Lessons Learned forum on 9 May at the Barcelona Science Park (PCB), with investors, accelerators and entrepreneurs from Catalonia who are committed to this concept, such as Invivo Ventures, Ship2B and MJN Neuroserveis, as well as organisations that guide and accredit companies, such as Cliclab and B Corp Spain.
The session was kicked off by Judit Anido, general manager of Mosaic Biomedicals and CataloniaBioHT board member.
Then, Maite Fibla, co-founder of Ship2B, explained that a social business is a company that creates value for both shareholders and society. For example, “Setting pricesfor a drug or technology is very important. How do we balance return on investment against the drug being available to all sorts of patients? Like this one, there are various strategic elements behind the decision,” she commented. Ship2B promotes entrepreneurship and invests in start-ups with a social impact through a community of investors and its own vehicle.
The case of MJN Neuroserveis and epilepsy
MJN Neuroserveis has received funding from investors that value the fact that the start-up has social impact in its blood. The Blanes-based company has developed the first non-invasive medical device to detect the risk of epileptic seizures.
“We don’t agree with maximising financial return when it comes at the expense of social return” explained co-founder and CEO Salva Gutiérrez. To optimise the impact, “It has worked for us to understand really well how our solution can resolve a clinical need first in patients, then in their immediate surroundings, such as their family members, and finally in the healthcare system.” One of the actions the company implemented is writing into its charter that 5% of EBIDTA must be reinvested in social return. MJN Neuroserveis has also developed a suitability test to determine whether a patient would benefit from the product before selling it to them.
Elisabet del Valle, co-founder of Cliclab, a company that provides guidance in implementing SROI, gave another example to illustrate how the European Commission is promoting projects and companies that strive to maximise social impact from the very beginning: “Companies that apply for European funding from the H2020 programme and include an SROI analysis of their project get extra points.”
Based on B Corp Spain’s experience, Executive Director Pablo Sánchez explained that we are looking at a new business model: “Companies that decide to integrate processes to structure their social return through, for example, B Corp certification, build a positive internal culture, get longer term distribution contracts and lower interest rates from financial institutions.” B Corp is an international non-profit organisation that has certified more than 2,500 to date after assessing their social and environmental commitment, ranging from multinational corporations like Danone to start-ups like Catalan firm Manremyc (founded by Dr Pere-Joan Cardona). In Spain there are 50 Certified B Corporations©.
Investors’ interest in SROI
What do investors think? The debate also clearly showed that investors are increasingly including social return in their analysis of projects, but financial return still plays a more important role in decision-making. “If we want innovation, the system has to be sustainable,” said Lluís Pareras, founding partner at Invivo Ventures and moderator of this Lessons Learned session.
Pareras also said that “intentions are key but not enough on their own. If you want to have an impact, start off by asking why. As an investor I want to see three things: an extraordinary team, top-notch science, and a solution to an important medical need.” Apart from the why, the who and the how were also up for debate, as they are essential in going further and analysing the social impact biomedical companies have on the whole value chain.
Guide and certification to measure social impact
All of the speakers agreed that certification for companies that incorporate SROI is necessary to ensure its application and continuity. The challenge isn’t at the beginning when the entrepreneur founds the start-up, it’s when the company starts to grow and has several investment funds behind it. “B Corp recommends safeguarding the mission in the governance model to ensure long-term continuity,” explained Pablo Sánchez.
With both B Corp and SROI analysis, the methodology and indicators can be implemented to discover the monetary value of the social impact per euro invested in the company.
There is no doubt that investment in social impact is gradually changing innovation and
differentiation strategies in companies around the world in many sectors. In the healthcare sector, it makes even more sense and, as such, it is important to continue working to get more stakeholders from the ecosystem involved in order to make Catalonia a benchmark in this business and investment model.
We look forward to seeing you at the next Lessons Learned session!
What are Lessons Learned?
The Lessons Learned sessions, which kicked off in 2014 promoted by CataloniaBio & HealthTech, are a knowledge forum for professionals in the health, biomedicine and innovative medical technology arena to share experiences and reflections with experts on various strategic areas to boost the competitiveness of companies. The Lessons Learned sessions are also a great opportunity for networking.
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