Potential challenges and opportunities for Nigerian healthtech in 2023

This article 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 realized loads about resilience in the final a number of years. With buying energy dropping throughout the continent and VCs operating in need of ‘cheap money’, this yr will little question maintain extra classes. In 2023, healthtech service suppliers should acknowledge the dwindling numbers of healthcare professionals in Nigeria and throughout Africa in the nation and thus optimize their enterprise operations. New and thrilling opportunities can even emerge on the intersection of healthtech and fintech, whereas the potential for unique and costly options like telemedicine may not look as enticing as earlier than.

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

The majority of Nigerian households have already felt the impression of inflation, which reached a 17-year excessive of 21% in September 2022. If a median family was already spending 80% of its month-to-month funds on requirements similar to hire, meals, and transport, disposable revenue will turn out to be an excellent scarcer useful resource in 2023. As out-of-pocket bills account for near 70% of the nation’s healthcare market, the destructive impression is more likely to be rapid. This could possibly 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 therapy on the group degree has by no means been as acute as it’s at the moment.

According to the Nigerian Medical Association (NMA), round 50 physicians depart Nigeria each week, ensuing in a lack of roughly 2,500 of those professionals yearly. The UK alone has seen over 6,000 docs arrive from Nigeria since 2015. The same development is seen amongst pharmacists, who’re additionally leaving Nigeria in massive numbers. While Nigerian medical professionals earn a better revenue in the UK and different international locations, there have been a number of studies of them being coerced into working beneath circumstances that may solely be described as exploitative. Still, the weakening naira and incomes opportunities overseas will almost certainly proceed to drive the mind drain of medical professionals. This may result in a big share of pharmacies and hospitals, predominantly in already underserved areas, closing down in 2023.

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

The outlook for B2B healthtech purposes appears comparatively shiny. As a results of the challenges each sufferers and healthcare suppliers are going through, B2B healthcare startups may be of a lot assist to hospitals and pharmacies with their unit economics, boosting income and slicing prices. The capability to resolve these essential points, in flip, helps B2B healthcare gamers – already the fastest-growing healthtech phase – scale shortly.

For instance, Lifestores Healthcare’s OGApharmacy market has grown 25% month-to-month, with a gentle stream of healthcare suppliers wanting to economize. Using {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 lots of of healthcare suppliers (HCPs), utilizing these economies of scale to barter with main importers and producers for the bottom potential value. HCPs may also enhance revenues by healthtech-provided ERP techniques that provide point-of-sale, stock administration, and procurement functionalities.

Generally talking, healthcare suppliers throughout the nation will likely be hungry for options that reduce the executive burden on docs and pharmacists. Many suppliers might want to run smaller groups because of the 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. After all, that is what drives revenue. Healthtech firms that provide options in this area usually tend to thrive than those that are perceived as offering non-essential providers.

While the healthtech sector has quite a few sturdy gamers working in the B2C house, as a result of tightening purse strings, any choices not focused at serving to sufferers lower your expenses will battle to develop in 2023. Similarly, merchandise concentrating on the higher center class in phrases of options and pricing will face a low ceiling for progress and obstacles to broader market adoption. Unfortunately, whereas promising, the sector of (unbundled) telemedicine appears more likely to endure.

A Fintech injection will likely be wanted

There is nothing new about wholesalers serving as banks for hospitals and pharmacies, financing buy orders and extending credit score phrases, and typically even offering a further grace interval for suppliers that battle to pay again in time. This will probably nonetheless be the case in the closest future, as financial institution credit score, with double-digit yearly rates of interest, is accessible solely to few. It is probably going that healthtech startups with a powerful basis in distribution will likely be including embedded finance as a value-added service to offer an answer to the dearth of working capital in the HCP sphere.

While the follow is useful for each events, it comes with a good quantity of danger. Fintech options will help wholesalers calculate the credit score rating and danger profile of healthcare suppliers to allow them to value credit score accordingly, however that’s simply the fundamentals. More refined options may also 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 variety of dry powder, buyers’ requirements have elevated and their phrases have tightened. Thus, there will likely be a rising divide between firms which are in a position to entry funding and these that may’t, with the previous shopping for out a number of the latter. This development will echo in the normal healthcare sector, with, for instance, rising hospital chains shopping for smaller outpatient facilities. This consolidation will in the end profit the sector and the sufferers, with better-funded and extra customer-focused leaders rising from the recession.

One of the areas ripe for disruption is the distribution of over-the-counter medication. Moves by some B2B ecommerce firms in Nigeria, together with Sabi and OmniBiz, recommend they may begin distributing OTC meds to casual retailers. The step appears logical, because the margins on medicines are increased than these on FMCGs, which nonetheless kind the core of their enterprise. Easy entry to real medicines will likely be extremely useful to the complete sector and will probably encourage incumbent gamers to step up their sport as effectively.

In 2023, healthcare providers suppliers will face extra challenges than earlier than but in addition hopefully have extra technological options at their disposal. While it’s probably that the healthtech sector can have an uneven growth, we will hope that the altering circumstances will present new opportunities to gamers in each B2B and B2C verticals. Will this result in new unicorns in the marketplace? Time will inform.