A Defining Funding Moment for African Health Tech — newsletter excerpt
This post is culled from the digital health Nigeria newsletter published back in November of 2017. Subscribe to the newsletter to get up-to-date commentary and news on health tech and innovation across Africa.
mPharma recently announced a $6.6 million series A round.
‘mPharma manages prescription drug inventory for pharmacies and their suppliers in four African countries. It provides inventory financing to clients and is using its growing purchasing power to help lower the cost of prescription drugs for patients’.
mPharma are essentially doubling down to become a pharmacy benefit manager. Read about pharmacy benefit management here. In essence it entails aggregating drug demand to increase bargaining power when negotiating drug prices. This is a proven business model in other markets and is more tech-enabled than it is tech. The central skills here are around formulary management, inventory, negotiation, finance and supplier relationships etc. This has informed their practice of hiring experienced professionals.
What’s instructive is how mPharma began and grew to this level. Read an early interview here
Getting in with the Zambian government early on paved the way to more inroads. This highlights the important role governments play in health. It’s also clear from that interview that their current strategy unfurled over time. The ability to raise significant funding from experienced investors certainly helped their evolution. Social capital (run by the same guy who owns the NBA’s golden state warriors 😮) leading their $5 million seed round will ultimately become the defining moment for Health tech in Africa. We need more significant patient capital like this.
‘To date, mPharma employs over 40 people and has operations in Ghana, Nigeria, Zambia, and Zimbabwe. It currently has over 70 outlets serving more than 20,000 patients each month, largely via pharmacies in private hospitals’.
This traction and the money raised show the phenomenal work they’ve done and kudos to them. The road ahead is very long and hard when you consider how fragmented and entrenched in habit the industry is. They now have the money to last the distance and create tremendous long term value.
P.S. An interesting comparison are 2 startups medsaf and drugstoc who are essentially in the same space albeit with somewhat different strategies and much less funding.
PPS. The bias around funding for start-ups in Africa is becoming more topical. Expatriate founders raise more money than local counterparts. For further commentary on the topic read here and here
Update Feb 2019: Mpharma has gone on to raise even more funding announcing a $9 million series B in january of 2019 to bring it’s total funding amount to over $21 million.
