Potential challenges and alternatives for Nigerian healthtech in 2023

Potential challenges and alternatives for Nigerian healthtech in 2023

This text was contributed to TechCabal by Andrew Garza. Garza is the COO/co-founder of Lifestores, a Nigerian healthtech firm democratizing entry to high quality and reasonably priced major healthcare in Africa.

Nigerian and African healthtech has discovered loads about resilience within the final a number of years. With buying energy dropping throughout the continent and VCs operating wanting ‘low-cost cash’, this 12 months will little doubt maintain extra classes. In 2023, healthtech service suppliers must acknowledge the dwindling numbers of healthcare professionals in Nigeria and throughout Africa within the nation and thus optimize their enterprise operations. New and thrilling alternatives can even emerge on the intersection of healthtech and fintech, whereas the potential for unique and costly options like telemedicine won’t look as engaging as earlier than.

Affected person budgets will get even tighter and mind drain is just not going to cease

The vast majority of Nigerian households have already felt the affect of inflation, which reached a 17-year excessive of 21% in September 2022. If a mean family was already spending 80% of its month-to-month price range on requirements corresponding to lease, meals, and transport, disposable earnings will grow to be a fair scarcer useful resource in 2023. As out-of-pocket bills account for near 70% of the country’s healthcare market, the unfavorable affect is prone to be rapid. This might be alleviated or aggravated by the brand new administration’s financial insurance policies after the presidential elections. In different phrases, the necessity for reasonably priced and secure remedy on the group degree has by no means been as acute as it’s right now.

In line with the Nigerian Medical Affiliation (NMA), round 50 physicians depart Nigeria each week, leading to a lack of roughly 2,500 of those professionals yearly. The UK alone has seen over 6,000 docs arrive from Nigeria since 2015. An identical development is seen amongst pharmacists, who’re additionally leaving Nigeria in giant numbers. Whereas Nigerian medical professionals earn the next earnings within the UK and different international locations, there have been a number of experiences of them being coerced into working beneath circumstances that may solely be described as exploitative. Nonetheless, the weakening naira and incomes alternatives overseas will most probably proceed to drive the mind drain of medical professionals. This would possibly result in a big share of pharmacies and hospitals, predominantly in already underserved areas, closing down in 2023.

B2B healthtech corporations can alleviate most of the sector’s pains

The outlook for B2B healthtech functions appears comparatively brilliant. Because of the challenges each sufferers and healthcare suppliers are dealing with, B2B healthcare startups will be of a lot assist to hospitals and pharmacies with their unit economics, boosting income and slicing prices. The power to resolve these essential points, in flip, helps B2B healthcare gamers – already the fastest-growing healthtech phase – scale rapidly.

For instance, Lifestores Healthcare’s OGApharmacy market has grown 25% month-to-month, with a gradual stream of healthcare suppliers trying to economize. Utilizing {the marketplace}, hospitals and pharmacies can save 10-15% on the procurement of medicine, together with the most well-liked medicines like paracetamol, anti-bacterials, antimalarials, and antihypertensives.

To assist save prices, options like OGApharmacy can mix the procurement wants of a whole bunch of healthcare suppliers (HCPs), utilizing these economies of scale to barter with main importers and producers for the bottom potential value. HCPs also can enhance revenues by healthtech-provided ERP techniques that supply point-of-sale, stock administration, and procurement functionalities.

Typically talking, healthcare suppliers throughout the nation might be hungry for options that decrease the executive burden on docs and pharmacists. Many suppliers might want to run smaller groups as a result of exodus of medical professionals from the nation, so the specialists onboard might want to dedicate most of their time to what they do finest: treating sufferers. In any case, that is what drives earnings. Healthtech corporations that supply options on this area usually tend to thrive than those that are perceived as offering non-essential companies.

Whereas the healthtech sector has plenty of robust gamers working within the B2C area, on account of tightening purse strings, any choices not focused at serving to sufferers get monetary savings will wrestle to develop in 2023. Equally, merchandise concentrating on the higher center class when it comes to options and pricing will face a low ceiling for progress and boundaries to broader market adoption. Sadly, whereas promising, the sphere of (unbundled) telemedicine appears prone to undergo.

A Fintech injection might be wanted

There’s nothing new about wholesalers serving as banks for hospitals and pharmacies, financing buy orders and lengthening credit score phrases, and typically even offering a further grace interval for suppliers that wrestle to pay again in time. This may possible nonetheless be the case within the nearest future, as financial institution credit score, with double-digit yearly rates of interest, is accessible solely to few. It’s possible that healthtech startups with a robust basis in distribution might be including embedded finance as a value-added service to supply an answer to the shortage of working capital within the HCP sphere.

Whereas the follow is useful for each events, it comes with a good quantity of threat. Fintech options can assist wholesalers calculate the credit score rating and threat profile of healthcare suppliers to allow them to value credit score accordingly, however that’s simply the fundamentals. Extra subtle options also can present healthcare suppliers with recommendation on how credit score can be utilized to drive income.

Consolidation in healthtech, potential disruption in OTC medicine distribution

Over the previous two years, healthtech startups in Nigeria and elsewhere on the continent have had plentiful entry to VC funding. And whereas Africa-focused VCs nonetheless have a number of dry powder, traders’ requirements have elevated and their phrases have tightened. Thus, there might be a rising divide between corporations which might be in a position to entry funding and people that may’t, with the previous shopping for out among the latter. This development will echo within the conventional healthcare sector, with, for instance, rising hospital chains shopping for smaller outpatient facilities. This consolidation will finally profit the sector and the sufferers, with better-funded and extra customer-focused leaders rising from the recession.

One of many areas ripe for disruption is the distribution of over-the-counter medication. Strikes by some B2B ecommerce corporations in Nigeria, together with Sabi and OmniBiz, recommend they could begin distributing OTC meds to casual retailers. The step seems logical, because the margins on medicines are larger than these on FMCGs, which nonetheless type the core of their enterprise. Easy accessibility to real medicines might be extremely useful to the complete sector and can possible encourage incumbent gamers to step up their recreation as effectively.

In 2023, healthcare companies suppliers will face extra challenges than earlier than but additionally hopefully have extra technological options at their disposal. Whereas it’s possible that the healthtech sector could have an uneven growth, we are able to hope that the altering circumstances will present new alternatives to gamers in each B2B and B2C verticals. Will this result in new unicorns available on the market? Time will inform.

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