Business Models - Case - DFA

Not For Profit - Diagnostics For All

This is a guest post from Alok S. Tayi, PhD, Postdoctoral Fellow, G.M. Whitesides Group, Harvard University. Alok has been working to respond to the request to look at Not For Profit examples of how to apply the Startup Secrets series. Special thanks to Carmichael Roberts (North Bridge Venture Partners; Diagnostics For All) and Patrick Beattie (Diagnostics For All) for their contributions to this case study.

Diagnostics For All (DFA) is a Cambridge, MA-based not-for-profit enterprise that aims “to save lives and improve health in the developing world through pioneering technological innovation.”  DFA was started with simple, paper-based diagnostic technology originally developed in George Whitesides’ Lab at Harvard.

Like their for-profit counterparts, DFA works to be financially self-sufficient; however, DFA has the added goal of ameliorating illness in the developing world.  Conventional medical diagnostic firms are for-profit and focus their resources on the most profitable customers: high cost, high volume markets in the developed world.  Diagnostic technology produced by these for-profit firms rarely makes an impact beyond the first world – their technology is expensive and requires extensive training to use.  On occasion, medical technology firms will donate products or resources; however, the impact of this charity is limited.

DFA is disrupting this model by selling products simultaneously to the first and third world.  This mixed approach is unique; diagnosis sold to the first world (high margin) produce profits that are re-invested in the third world (low margin) by providing diagnostics and training at minimal cost.  The two-pronged approach enables the DFA to focus on developing one diagnostic technology that can be used in multiple markets.

Currently, DFA is investing 100% of its resources in technology development.  With grants from the Bill & Melinda Gates Foundation, UK Government, Defense Advanced Projects Research Projects Agency, and other sources, DFA’s low cost, paper based diagnostics are a critical part of their value proposition.  Unlike traditional medical diagnostics that require expensive machines and extensive training to perform, DFA’s platform is inexpensive and colorimetric (changes color).  A color-based readout enables diagnosis via cellphone: the patient can take a picture of the test with their cellphone and a doctor elsewhere can analyze it.  Initially, this technology is being developed for five areas: liver function, at-risk pregnancy, small farmer support, child nutrition, and nucleic acid detection.

Looking to the future – partnerships with governments, NGOs, and larger companies, could be a boon for DFA.  For example, a partnership with a larger company, such as a drug manufacturer in the third world, would provide established distribution networks.  Through a partnership, DFA could theoretically distribute their diagnostic with an existing treatment; this combination would enable greater access for the patient to the diagnosis and treatment.  Such creative packaging solutions could serve as a win-win for the for-profit drug manufacturer and not-for-profit DFA.

DFA represents a new breed of not-for-profit enterprises: a company tackling illnesses in the developing world by inventing disruptive technologies that can be sold profitably in the developed world.  When successful, DFA will be an excellent model for future social enterprises that need to balance financial sustainability and social good.

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