African healthtech startups show rapid growth in supply chain segment, boost $7M investment initiative – Meczyki.Net

While Africa’s health systems are still grappling with the effects of the COVID pandemic, there has been a revival in the adoption of digital health services in some countries. Telemedicine, an exceptional offering, was widely adopted during the pandemic, and in the last five years, no other service has seen More have been launched by Healthtech Startups.

However, one particular segment has rapidly gained scale in the last one year. These startups digitize the supply chain and distribution to the providers. and according to a new report From Salient Advisory, a global healthcare consulting firm, this is the segment that has seen the most impressive growth for Africa’s healthcare over the past 12 months.

Companies in this segment work with bottom-line providers such as community pharmacies and drugstores to help stock products. Some include AmPharma, Lifestores, Shelf Life and MaishaMed.

“The fastest traction we’re seeing is helping providers — those that interface with customers like pharmacies, clinics and hospitals — to digitize distribution to consumers. That’s where the biggest traction has happened,” Told remi adesunDirector, Africa at Salient Advisory to Meczyki.Net in an interview.

Celient surveyed more than 80 companies in Ghana, Kenya, Nigeria and Uganda, up 25% from the numbers tracked in its previous report in 2021.

The models of these B2B companies mirror those of their retail e-commerce counterparts such as Vasco and TradeDepot, as they use tech-enabled solutions to digitize drug delivery, which is drug delivery in drug stores, clinics and hospitals. Digitize.

As such, their growth has been rapid, Salient says. For example, Lifestores has grown its outlets in Nigeria from 85 to 600; Maisha Maids grew from 400 to 900 outlets in Kenya and Nigeria; Shelf Life has over 1,630 outlets in Kenya and Nigeria, up from 400 a year ago.

The report said that 36 percent of all-time funding reported by health supply chain startups was raised in the past 12 months. However, this segment is yet to record the kind of investments made in B2B retail e-commerce in the last two years.

For example, medium-to-large-scale players such as Marketforce and Vasco have raised between $40-$130 million in single rounds (including some debt). And save from mPharma, which has a network of muti pharmacies and recently raised $35 million to build out its telehealth and e-commerce offerings, funding for the B2B distribution healthtech startup is few and far between.

“Companies like Vasco and other B2B e-commerce companies involved in FMCG are raising huge sums of money. But what we are saying in the context of healthtech and in the small context of our research is that these are the fastest growing B2B companies. In the last four months, they also raised huge sums of money,” says Yomi Kazim, Senior Adviser in Chief Adviser to West Africa. “And of course, funding is generally low in health tech. So we wouldn’t expect them to raise huge sums just yet. But there’s every possibility that as they grow, that could change.” “

Adeseun believes that this could happen if B2B e-commerce platforms in the retail sector take interest in pharmaceutical and health-based products. But he argues that since most of these startups have not scratched the surface of a vast FMCG space, it will take them a long time to invest in B2B drug delivery.

Adeseun also cited two developments that could drive more funding to the segment. “We think one thing that will also pique investor interest is when the scale matches their appetite. Many startups operate in a single country or two, so expanding geographic footprints will be able to attract better funding. The second is clear and forward-thinking rules.

But Salient said in its report that the regulatory framework governing the sector, particularly e-pharmacy activities, has evolved since last year. Online Pharmacy Rules have been launched in Nigeria and Ghana and are in development in Kenya and Uganda. All regulations currently require online pharmacies to have a licensed physical location under the control of a licensed pharmacist, the report said.

“Uniquely, Ghana has gone beyond implementing online pharmacy regulations to launch a comprehensive digital transformation of pharmaceutical care through a government-run, centralized e-pharmacy platform to fulfill all online pharmacy transactions across the country. has been,” its authors wrote.

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

The research found that many startups, retail pharmacies and e-commerce players such as Jumia and Copia are active in digitizing distribution, but customers ordering over-the-counter products from their online channels appeared to be smaller.

On the competition between these platforms, Edison said that some chain pharmacy functionaries, such as MedPlus and HealthPlus, are taking a digital strategy by adding telemedicine capabilities, thus responding to the innovation offered by startups. However, the direct path to multi-national telemedicine scale through these chains is not clear, the report said.

Regarding how they affect their market, 94% of the companies surveyed claimed to have affected the supply of the drug. 60% said theirs was on quality, while 43% of innovators claimed an effect in reducing drug and drug prices.

Last year, two key points from the Salient report were the increased capital from Africa-based investors and the need for more money to flow into women-led startups. The former has improved: 58% of innovators who raised funds in the past 12 months cited Africa-led investors as a source of funding. But nothing has changed for the latter category as women-led startups are still not getting the funding they need. According to the report, female-led startups with Black CEOs accounted for 2% of the total funding raised by the healthtech startups featured in this report. In 2021, he received just $1.6 million.

Inspired by the findings, a consortium of global and continental organizations is set to launch a $7 million Pan-African healthtech initiative, with funding from the Bill and Melinda Gates Foundation. Adeseun said the initiative, called Investing in Innovation (I3), will focus on women’s access to funding: supporting 60 early- and growth-stage African health supply chain startups over two years and providing access to funding and skills development.

“Women founders are disadvantaged,” said the director. “And that is one of the things that Investing in Innovation will try to address: taking that gender and disadvantaged African founding lens and prioritizing them when selecting potential beneficiaries who will participate in the program.”

The Pan-African Initiative will have four centers in East, North, South and West Africa. This will give these startups access to market opportunities and showcase them to impress investors and venture capitalists. The initiative’s hope is that after two years have passed, additional funding will come from development partners who have already shown interest but want proof of success before committing, Edison said.