African well being tech startups within the provide chain phase present speedy progress, spurring a $7M funding initiative


Whereas Africa’s well being programs are nonetheless reeling from the results of the COVID pandemic, the adoption of digital well being companies has been revved up in some international locations. Telemedicine, the standout providing, witnessed huge adoption in the course of the pandemic, and within the final 5 years, no different service has been launched more by well being tech startups.

Nonetheless, a specific phase has achieved scale sooner throughout the previous yr. These startups digitize the provision chain and distribution to suppliers. And based on a new report from Salient Advisory, a world healthcare consulting agency, that is the phase the place probably the most spectacular progress has occurred for Africa’s healthcare within the final 12 months.

Corporations on this phase work with neighborhood pharmacies and lower-end suppliers similar to drug retailers to assist inventory merchandise. Some embrace mPharma, Lifestores, Shelf Life and Maisha Meds.

“The quickest traction we’re seeing are these serving to the suppliers — those that interface with the shopper, like pharmacies, clinics and hospitals — to digitize distribution to the buyer. That’s the place the best traction has occurred,” stated Remi Adeseun, director, Africa at Salient Advisory, to TechCrunch in an interview.

Salient surveyed over 80 firms throughout Ghana, Kenya, Nigeria and Uganda — 25% greater than the quantity it tracked in its final report in 2021.

The fashions of those B2B firms mirror their retail e-commerce counterparts similar to Wasoko and TradeDepot, as they use tech-enabled options to digitize medication distribution to underserved pharmacies, drug retailers, clinics and hospitals.

As such, their progress has been speedy, Salient says. Lifestores, as an example, elevated its shops from 85 to 600 in Nigeria; Maisha Meds grew from 400 to 900 shops throughout Kenya and Nigeria; Shelf Life has over 1,630 shops in Kenya and Nigeria, up from 400 the yr earlier than.

The report says 36% of all-time funding reported by the well being provide chain startups it profiled was raised within the final 12 months. Nonetheless, the phase is but to report the kind of investments which have poured into B2B retail e-commerce within the earlier two years.

As an illustration, medium-to-large scale gamers like MarketForce and Wasoko have raised between $40 million-$130 million in single rounds (some together with debt). And save from mPharma, which has a network of Mutti pharmacies and just lately raised $35 million to construct out its telehealth and e-commerce choices, funding has been few and much between for B2B distribution well being tech startups.

“Corporations like Wasoko and different firms in B2B e-commerce concerned in FMCG are elevating bigger sums. However the level we’re making throughout the context of well being tech and throughout the smaller context of our analysis is that these B2B firms are rising the quickest. During the last 4 months, in addition they raised the bigger sums of cash,” says Yomi Kazeem, senior advisor for West Africa at Salient Advisory. “And naturally, funding in well being tech is usually low. So we wouldn’t anticipate them to be elevating massive sums simply but. However there’s each chance that as they develop, which may change.”

A method Adeseun reckons which may occur is that if B2B e-commerce platforms in retail take an curiosity in pharmaceutical and health-based merchandise. However he contends that since most of those startups haven’t scratched the floor of an enormous FMCG house, it’ll take a protracted whereas earlier than they put money into B2B medication distribution.

Adeseun additionally cited two occasions that would push extra funding into this phase. “We predict one of many issues that can even drive investor curiosity is when the dimensions matches the sort of urge for food they’ve. Many startups function in [one] or two international locations, so increasing geographic footprints will likely be an enabler to attract in higher funding.” The second is clearer and forward-thinking rules.

However Salient notes in its report that regulatory frameworks governing this house, particularly e-pharmacy actions, have advanced since final yr. On-line pharmacy rules have been launched in Nigeria and Ghana and are in improvement in Kenya and Uganda. The report says all rules at the moment require on-line pharmacies to have a licensed bodily location beneath the management of a licensed pharmacist.

“Uniquely, Ghana goes past enacting on-line pharmacy rules to embark on broader digital transformation of pharmaceutical care, by means of a government-run, centralized e-pharmacy platform to accommodate all on-line pharmacy transactions throughout the nation,” its authors wrote.

“This might rework the supply of product knowledge and confer end-to-end visibility for product motion within the on-line pharmacy house. As soon as absolutely established, the platform’s scope could possibly be expanded to incorporate well being merchandise at the moment being distributed by means of offline fashions and function a mannequin for comparable initiatives past Ghana.”

The analysis discovered that whereas many startups, retail pharmacies and e-commerce gamers similar to Jumia and Copia stay energetic in digitizing distribution, clients ordering over-the-counter merchandise from their on-line channels appeared small.

On competitors between these platforms, Adeseun stated just a few of those chain pharmacy incumbents, similar to MedPlus and HealthPlus, are taking over a digital technique by including telemedicine capabilities, thus responding to the innovation that startups launched. Nonetheless, a direct path to multinational telemedicine scale by means of these chains will not be clear, the report contended.

Relating to how they affect their market, 94% of firms surveyed claimed to have an effect on medication provide. 60% stated theirs was on high quality, whereas 43% of innovators claimed an impact in decreasing pharmaceutical and drug costs.

Final yr, two speaking factors from Salient’s report have been the necessity for elevated capital from Africa-based buyers and extra money to circulation into women-led startups. There’s been an enchancment on the previous: 58% of innovators that raised funding within the final 12 months cited Africa-led buyers as a supply of financing. However nothing has modified for the latter class as women-led startups should not nonetheless receiving the funding they want. In keeping with the report, female-led startups with Black CEOs accounted for two% of the entire funding raised by well being tech startups featured on this report. In 2021, they acquired simply $1.6 million.

Spurred by the findings, a consortium of world and continental organizations, with funding from the Invoice and Melinda Gates Basis, is about to launch a $7 million pan-African well being tech initiative. Adeseun stated the initiative, dubbed “Investing in Innovation (I3),” will give attention to ladies’s entry to funding: supporting and funding 60 early and growth-stage African well being provide chain startups over two years — and offering entry to expertise improvement.

“Ladies founders are deprived,” the director stated. “And that’s one of many issues the funding in innovation will attempt to handle: to take that gender and deprived African founder lens and prioritize them when deciding on the potential beneficiaries who will take part in this system.”

The pan-African initiative can have 4 hubs in east, north, south and west Africa. It can give these startups entry to market alternatives and showcase them to affect buyers and enterprise capitalists. The expectation for the initiative is that after the 2 years elapses, extra funding will come from improvement companions who’ve already indicated curiosity however need proof of success earlier than committing, Adeseun stated.



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