A $7M financing program is motivated by the rapid expansion of African health tech businesses in the supply chain area.

african healthcare

African Health Tech : While the COVID pandemic’s repercussions on Africa’s health systems are still being felt, the adoption of digital health services has accelerated in several nations. The standout service, telemedicine, was widely adopted during the epidemic, and during the past five years, more health tech entrepreneurs have introduced no other service.

However, during the past year, a specific segment has grown more quickly. These startups digitalize provider distribution and the supplier chain. And this is the area where Africa’s healthcare has seen the most significant increase in the previous 12 months, according to new research from Salient Advisory, a global healthcare consulting organization.

Companies in this market collaborate with neighborhood pharmacies and less expensive suppliers like pharmacy stores to help stock products. Some include mPharma, Lifestores, Shelf Life, and Maisha Meds.

“Those assisting providers—those that interact with customers, like pharmacies, clinics, and hospitals—in digitizing distribution to the consumer—are gaining traction the quickest. The most growth has occurred there, claimed Remi Adeseun, director of Africa at Salient Advisory, in an interview with TechCrunch.

Over 80 businesses were surveyed by Salient in Ghana, Kenya, Nigeria, and Uganda, which is a 25% increase over the number it tracked in its previous study from 2021.

These B2B companies deploy tech-enabled solutions to automate pharmaceutical distribution to underserved pharmacies, drug stores, clinics, and hospitals. As a result, their business models resemble those of their retail e-commerce competitors like Wasoko and TradeDepot.

Salient claims that as a result, their growth has been quick. For instance, Lifestores raised the number of its stores from 85 to 600 in Nigeria; Maisha Meds boosted the number of its locations from 400 to 900 in Kenya and Nigeria; and Shelf Life now has more than 1,630 locations there, up from 400 the year before.

According to the survey, the health supply chain firms it profiled raised 36% of their total capital in the previous year. The sector has not yet recorded the level of investments that have come into B2B retail e-commerce during the last two years, though.

For instance, medium-to-large firms like Wasoko and MarketForce have raised $40 to $130 million in single rounds (some including debt). And funding for B2B distribution health tech businesses has been scarce, with the exception of mPharma, which has a network of Mutti pharmacies and just raised $35 million to expand its telehealth and e-commerce operations.

Companies like Wasoko and other FMCG-related B2B e-commerce businesses are raising more money. However, the point we are trying to make is that these B2B companies are expanding the quickest in the context of health tech and the more limited context of our research. They also raised the bigger sums of money over the past four months, according to Yomi Kazeem, senior consultant for West Africa at Salient Advisory. “Of course, funding for health technology is typically meager. So, we wouldn’t anticipate them to start raising a lot of money just yet. However, there is a good chance that will alter as they mature.

If B2B e-commerce platforms for the retail show increased interest in pharmaceutical and health-related products, according to Adeseun, that could be one way that occurs. However, he argues that it’ll be a while before these companies invest in B2B drug delivery because most of them haven’t even begun to explore the massive FMCG market.

Adeseun also mentioned two things that would encourage additional financing for this area. “We believe that one factor that will stimulate investor interest is when the scale corresponds to the level of hunger they have. Expanding geographically would help firms attract better funding because many of them only operate in one or two countries. The second is more transparent and progressive regulations.

However, Salient points out in its research that since the previous year, the regulatory frameworks controlling this area, particularly e-pharmacy activities, have changed. In Nigeria and Ghana, online pharmacy regulations are now in effect, and Kenya and Uganda are working on similar legislation. According to the report, all laws now demand that online pharmacies have a physical presence that is authorized and run by a registered pharmacist.

By creating a government-run, centralized e-pharmacy platform to store all online pharmacy transactions throughout the nation, Ghana is, according to its authors, “uniquely going beyond establishing online pharmacy rules to begin on broader digital transformation of pharmaceutical treatment.”

“This could transform the availability of product data and confer end-to-end visibility for product movement in the online pharmacy space. Once fully established, the platform’s scope could be expanded to include health products currently being distributed through offline models and serve as a model for similar initiatives beyond Ghana.”

While several startups, retail pharmacies, and e-commerce players like Jumia and Copia continue to be active in digitizing distribution, the research indicated that the number of people acquiring over-the-counter medications via their online channels looked to be rather low.

Regarding the rivalry between these platforms, Adeseun claimed that a few of the established chain pharmacies, such MedPlus and HealthPlus, are adopting a digital strategy by incorporating telemedicine capabilities, in response to the innovation made by startups. The research argued that there was no clear straight route to a multi-national telemedicine scale through these chains.

94 percent of the businesses questioned stated that they have an effect on the supply of medications when asked how they influence their market. 60% of inventors claimed their impact was on quality, while 43% claimed it was on bringing down the cost of pharmaceuticals and other medications.

The need for greater funding for women-led companies and financing from investors headquartered in Africa were two talking themes from Salient’s report from the previous year. An improvement over the earlier situation can be seen in the fact that 58 percent of innovators who raised money in the last 12 months named investors with a focus on Africa as their source of finance. For the latter group, however, little has changed because female-led firms continue to lack access to necessary finance. According to the report, 2 percent of the total money raised by the healthtech businesses covered in this analysis went to female-led startups with black CEOs. They only received $1.6 million in 2021.

In response to the findings, a group of international and regional organizations will establish a $7 million pan-African healthtech program with support from the Bill and Melinda Gates Foundation. The Investing in Innovation (I3) program, according to Adeseun, will prioritize women’s access to funding by supporting and funding 60 early- and growth-stage African health supply chain businesses over the course of two years–and by facilitating access to skill-development opportunities.

The director claimed that female founders face disadvantages. “And that’s one of the things the investment in innovation will strive to address: to take that gender and disadvantaged African founder lens and prioritize them when choosing the prospective beneficiaries who will participate in the program,” the author continued.

There will be four centres for the pan-African effort, located in east, north, south, and west Africa. It will allow these firms to take advantage of market possibilities and present them to venture capitalists and impact investors. According to Adeseun, it is anticipated that after the two years are over, further cash will come from development partners who have previously expressed interest but are waiting for results to commit.


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