2019 in Nigerian Health tech and Trends to Watch for in 2020
It’s now becoming a tradition at the end of every year and the start of the next for me to look over the preceding year in African health tech and suggest some trends for the next year. You may review the last 2 editions here and here.
As this year is a particularly busy one personally, I’ve put together a brief note across broad themes that include a review of 2019 and trends to look out for in 2020 across health innovation in Africa. Here goes.
Pharmaceuticals
mpharma was huge in 2019. With a total of over $25m raised so far, they launched several new initiatives, expanded existing products and in a landmark deal, bought a chain of retail pharmacies in Kenya. Per a tweet from its founder, they’ve now served over 1 million patients. mPharma’s success is beginning to validate the massive opportunity in the African pharmaceutical market. To buttress this, Medsaf and drugstoc 2 drug procurement platforms also made significant progress. The former has $1.4 million in funding per Crunchbase, while the latter raised funds from cchub’s Growth capital.
I’m convinced that 2020 will see more pharma focused startups raise money and expand. From retail chains to inventory financing startups and others in between, more capital will pour into the retail and wholesale pharmaceutical market across Africa.
Genomics
Africa has been a slow starter in the genomics race. This is despite being the cradle of humanity and possessing enormous genetic diversity. This means there exists a lot of rich data yet to be unlocked. Enter 54 gene, a YC company that has raised $4.5m in this space and are attacking it ferociously. I count at least 2 other companies on the continent gaining more prominence in the space, CapeBio and 3x4 both from South Africa.
In the west, consumer genomics has gained reasonable traction. It’s yet to be seen if there’ll be similar progress here on the continent. To this point, it’s instructive that 3x4 is targeting a U.S market entry with it’s $2.4million Series A round. From my vantage point, I surmise that the successful business models in Africa will be more B2B in scope. This will be an exciting space to follow in 2020.
Electronic Health Records
In 2019, the fintech behemoth Interswitch, acquired eclat, an EHR company. They are already off to the races this year with the announcement of a deal with the Edo state government to manage and digitize several primary healthcare centres. Several other acquisitions have happened under the radar in the space. I imagine more consolidation will continue to happen as the serviceable EHR market, in my opinion, is currently quite limited. Helium health may be disproving this, however. As the only YC funded company in the space, they continue to grow and expand. Per their website, they are used by 5,000 physicians and have data from 500,000 patients. They also received recognition in CNBC’s list of companies that will become great.
Considering the generally slow growth of the space, companies may be compelled to seek growth elsewhere. I suspect some will branch out to non-core products and features. I thus won’t be surprised to see EHR companies branch out to either demand-side financing for patients or supply-side financing for providers. It will also be interesting to see how Interswitch’s entrance shakes up the market, especially around payments for healthcare.
Will 2020 finally be the year EHR’s go mainstream? Ermm, No!
Health fintech
A significant event this year was Carepay raising a $45 million Series A. They provide a health wallet in Kenya and are supporting the rollout of several state health insurance schemes in Nigeria. In East Africa, Turaco a health fintech startup announced a $1.2 million seed round. Several other startups are also launching in the space and creating innovative products to improve payments and insurance in healthcare. Not to forget Interswitch who are clearly big players in the fintech space with a reinvigorated interest in healthcare. This space will undoubtedly become more exciting this year as these companies grow, deploy more capital and become more prominent.
I nominate 2020 as the year of ‘health fintech’ (or is it ‘fin health tech’)
Hardware
Several hardware startups made apparent progress over the last year. Companies such as Neopenda, mscan, Crib a’glow, Matibabu, Rxall, and Gricd either won awards or raised significant funding. While hardware can be a difficult undertaking, there is a significant opportunity for low-cost medical devices built for unique African conditions. A major challenge these startups face is the required funding to get off the ground. I would love to see more investors back hardware startups with the patient capital they require to reap the rewards of a huge market opportunity.
More hardware in 2020, please.
Telemedicine
Several new telemedicine startups launched in 2019 to join the legions of other zombie telemedicine startups. I’ve never hidden my bias against standalone telemedicine. There simply is not a realistic business model that makes it self sustainable. The only options that exist for telemedicine startups in Africa are to either die, be acquired or pivot into a bigger opportunity with telemedicine as a feature. Case in point is Conectmed, the Kenyan startup whose technology was acquired by Merck and rolled up into a primary care offering ‘Curafa’.
If you’re thinking of launching a telemedicine startup in 2020. Stop for a minute and picture me screaming into your ears,
DON’T DO IT!
Here are 10 other ideas to consider instead.
Tech-enabled clinics
One medical, a tech-enabled clinic leader in the U.S is set to IPO. This is a culmination of the increased activity this space has seen over the last few years. Several similar startups exist around the world who are re-imagining primary care with tech-enabled clinics that focus on the patient experience. Nigeria hasn’t been left behind with Reliance HMO launching their own clinic in Lagos. eHealth for Africa also have their own offering in Kano and Abuja branded as EHA clinics. Doctoora also plays in this space but with a twist, a sort of Airbnb for clinics with the added benefit of access to experts from the diaspora. Also includable is mdaas who raised $1.2 million in 2019 for their affordable diagnostic centres and are making progress launching them in lower-tier cities and towns.
Being a capital heavy venture, this space will continue to be led by only a few companies who will learn a lot from their initial experiments and hopefully invest in more clinics that are more sustainable and improve care for people.
Logistics
Lifebank continues to own this across Nigeria. They won the Jack ma prize of $250,000 and announced drone delivery. This foray into drones is somewhat under the shadow of zipline who’ve made significant headway with commercial govt contracts in Rwanda and Ghana. They also signed an MOU with Lagos state and have been building a Nigerian team if job postings earlier in the year are anything to go by. Eliot Pence, an African tech investor and commentator, predicts a potential bid for of Lifebank by Zipline.
I personally don’t see an acquisition of this nature happening but you never know, stranger things have been known to happen.
Other logistics startups exist but none have really come to prominence. Last-mile delivery for healthcare is still a problem that needs solving. I would like to see more people make an attempt in 2020.
Economy, Govt and Regulation
Can’t complete a review without reviewing the state of the economy, govt and regulation. Over half of Nigerians are now living in poverty. The country’s economy continues to grow slowly and there’s no immediate hope of this changing soon. To improve access to basic healthcare, the Fed govt launched HUWE, it’s basic health care fund to cover care for a limited number of conditions for the most vulnerable. This is the first rung on the long ladder to UHC for all. While laudable, the pot to be shared is less than adequate and a lot of inefficiencies still exist that may see these funds never reach the impact that it can.
State health insurances continue to grow albeit somewhat slowly from anecdotal information. While government facilities continue to be death traps. Bright sparks have however appeared in spots with news that Nigeria is approaching polio-free status and seeming excellent progress in hospital administration by some medical directors, especially Dr Dada of FMC Ebutte Metta.
On regulations, New Data protection regulations have come into being and Nigeria’s digital health strategy continues to take shape.
The bottom line here is we cannot wait for the govt and we need to innovate for a market filled with poor people who have very little disposable income.
Pipeline
On a final note. I’ve been following the health tech scene across Nigeria over the last 5 years. I‘m beginning to notice that we’ve largely been talking about the same people and startups for the last 2–3 years. Where are the upstarts? where are the bright new founders? Where is the next generation of health innovators and entrepreneurs?
People, I think we may have a pipeline problem. I don’t have objective data to support this yet but I can feel it. I also know that we need to do something about it urgently. We will soon be starting a ‘how to build a health startup’ program that will include a series of webinars, workshops, physical meetups and mentoring. To sign up, enter your email at this landing page
Here’s to a prosperous and entrepreneurial 2020 for all of us.
