A Catastrophe Is Serving Up The Perfect Storm To African Health-Tech Startups

May 8, 2020

The ongoing global pandemic is undoubtedly a nightmare. It has already caused over 270,000 deaths worldwide and the number of recorded cases is well over 3.9 million at the moment.

The novel coronavirus has basically put the entire world on hold. Across the globe, industries have been crippled, businesses have ground to a halt, and the inescapable recession is already forcing layoffs, salary cuts, furloughs, and other “painful but necessary” measures that can help enterprises outlast the pandemic.

However, for all the curve balls that COVID-19 has thrown, there seems to be a noticeable glare on the brighter side. Well, it turns out that the pandemic is also proving a blessing in disguise. Especially for health-tech startups in Africa, which seem to now be coming to the fore, having been provided with the perfect storm, in a manner of speaking.

“Healthcare has historically been neglected on the continent. But increasingly COVID-19 has forced African governments to see how public health and economic growth are linked,” Dr. Ola Brown, Founder of Flying Doctors Healthcare Investment Group, told WeeTracker.

“As their view of healthcare as an investment, not a cost, continues to evolve, it creates a more enabling environment for healthcare startups and their investors across Africa,” she further emphasized.

African health-tech is the “pale cousin” of the core sectors

Compared to segments like fintech, e-commerce, transport-tech, and even edtech, African health-tech has seen relatively much less action in the years past.

For starters, of the USD 1.34 Bn raised by African startups in 427 deals last year, there were only 49 health-tech deals which amounted to USD 74.96 Mn; a miserly 5 percent of the total sum. Fintech alone, which registered growth for the fifth year in a row, accounted for over 50 percent.

In the year before last, health-tech deals were even smaller. Looking at data from The Base, only 2 percent of the USD 725.6 Mn raised by African startups in 2018 involved companies offering digital health solutions. Although the number of deals has grown year-on-year for the last three years, the amounts are still quite small.

As per data from The Base, in 2017, health-tech startups in Africa raised a combined USD 3.52 Mn in 12 deals.

All these points to the fact that health-focused startups have generally been low-profile players in Africa’s booming tech ecosystem over the past decade. 

There may be a silver lining on the horizon

But it looks like the lukewarm trend is about to change. One case in point is the fact that African health-tech funding is well on course to eclipse its highest ever tally. Less than five months into 2020 and health-tech startups in Africa have raised just over USD 69 Mn in funding, per data gathered from The Base. In the whole of 2019, that figure was USD 74.96 Mn.

But it goes deeper than the coins. Digital health startups appear to be stepping up in the face of the pandemic and proving their worth. It’s as though health-tech startups are auditioning across the continent and killing it too. 

It appears the pandemic has inadvertently provided the perfect platform for healthcare startups to finally make a strong case for their relevance and importance on the continent, even after the pandemic is long gone.

But the chasm is huge

There are now over 54,000 confirmed COVID-19 cases in Africa and more than 2,000 fatalities have been recorded so far. More than other parts of the globe, the pandemic has, among other things, laid Africa’s healthcare deficiencies bare.

Africa’s healthcare financing gap is currently USD 66 Bn wide. In the best-case scenario for fighting COVID-19, Africa’s health care systems will need to collectively increase their spending by an estimated USD 44 Bn, which would imply an increase of 32 percent.

Access is still the greatest challenge to health care delivery in Africa. Per a study, fewer than 50 percent of Africans have access to modern health facilities. Many African countries spend less than 10 percent of their GDP on healthcare.

Also, there is a shortage of trained health care professionals from Africa because many of them prefer to live and work in places like the U.S. and Europe.

According to another study, the already inadequate health systems of Africa, especially sub-Saharan Africa, have been badly damaged by the migration of health professionals.

There are 57 countries with a critical shortage of healthcare workers; a deficit of 2.4 million doctors and nurses. Africa has 2.3 healthcare workers per 1000 people, compared with the Americas, which have 24.8 healthcare workers per 1000 people.

All these have made the task of tackling COVID-19 a huge challenge. Across the continent, the fragile healthcare systems are under strain, with some almost buckling altogether under the weight of the current challenge. Equipment shortages, personnel remuneration, and the unavailability of protective gear are among the commonest shortcomings these days.

E-health startups have picked up the baton

Despite the shortcomings, digital health startups are doing quite a job of filling the gaps. These companies are using technology (databases, applications, mobiles, wearables) to improve the delivery, payment, and/or consumption of care.

One of such startups, Helium Health, which confirmed a funding round of USD 10 Mn only yesterday, launched a telemedicine platform in Nigeria some three weeks ago in response to the spike in COVID-19 cases and the ensuing lockdowns. The startup currently employs 104 people and is operational in Nigeria, Liberia, and Ghana.

As Helium Health’s co-founder and CEO, Adegoke Olubusi, confirmed to WeeTracker, the newly-launched telemedicine platform has already had “hundreds of hospitals” sign up and there have been thousands of visits already.

Although Olubusi maintains that while Helium Health’s recent fundraise hardly had anything to do with the global health crisis, it is undeniable that the current situation is finally shifting the dynamic in favour of companies that offer digital health solutions.

“What this pandemic does is that it forces everybody to realise that they have to live with the resources they have. Since people just can’t get on a plane and get treatment abroad, it’s given governments something to think about,” Olubusi said over a call.

“The importance of homegrown digital health tools is really coming to fore during this pandemic and I believe that there will be more attention, more adoption, and more investments in health-tech going forward.”

How African health-tech startups are rising to the challenge

Startups identifying gaps in the healthcare delivery value chain across Africa are not only increasingly winning investor attention and dollars but also proving essential in these times.

For example, 54gene, the Pan-African genomics research company which announced a USD 15 Mn Series A just over 3 weeks ago, is one of many African tech startups on the frontlines of the fight against COVID-19.

In March, the startup launched a fund to scale COVID-19 testing in Nigeria and raised up to USD 500 K in 24 hours. 54gene has three laboratories in three Nigerian cities worst-hit by the virus.

The startup has since rolled out mobile testing laboratories and most recently, it partnered with Dangote Foundation to set up a lab in Kano; a State in Northern Nigeria where a COVID-19 catastrophe is brewing. At full capacity, the lab will conduct 1,000 tests per day.

Furthermore, the earlier mentioned Dr. Ola Brown of Flying Doctors Healthcare Investment Group has masterminded the development of special PPE-saving testing booths that have, so far, been deployed to three states. A PPE-saving testing vehicle was also recently demoed.

Another health-tech startup, LifeBank, is helping on the frontlines, launching a “drive-thru COVID-19 testing site” in Lagos. Both LifeBank and DrugStoc are also helping frontline health workers procure personal protective equipment. 

Meanwhile, Ghanaian startup, mPharma, a prescription drug manager for providers and payers in Africa, is developing software that will enable doctors to schedule tests and receive results once completed.

Also, Zipline, a medical drone company currently operating in Rwanda and Ghana, is currently holding emergency stocks of masks and gloves so that they can be delivered to hospitals and clinics within minutes.

Companies like Goodlife and Field Intelligence sit at the junction between the health and economic impacts of the pandemic. Both are working to ensure that consumers continue to have access to prescriptions and other types of care while movement and routines are disrupted.

Nigeria’s mDaaS, Ghana’s Redbird, Kenya’s Ilara Health, Cameroon’s OuiCare, and South Africa’s Recomed are other examples of the many healthcare startups that are rising to the COVID-19 challenge in Africa. And it bodes well for the industry.

In the long-term, health tech startups are likely to replicate a growth path similar to that taken by fintech startups, due to their crucial similarities in solving critical problems.

Given the several opportunities — ranging from drug distribution and insurance to medical records, telemedicine, and data — to make up for the deficiencies across the healthcare sector, African health-tech startups seem on track to do a fintech. Especially as the pandemic now appears to be highlighting their importance.

In the coming years, e-health startups can be expected to command larger investment amounts as they prove product-market-fit and become a vital cog in the value chain.

Featured Image Courtesy: Open Health News


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