Finance for pharmacies shouldn’t come at a cost to patients

Community pharmacies are a critical part of our healthcare infrastructure, providing over 80% of frontline care to Nigeria’s 211 million people.

These are the businesses that we rely on for health and household goods, guidance when we’re sick, or when one of our family members needs essential medicine.

They are such an important pillar of society – just imagine for a second, your local pharmacy disappearing tomorrow – yet face serious challenges in accessing finance.

To buy authentic drugs, reduce the volume of expired products, plan for fluctuating demand, add new medicines, expand shop space: all of these require free-flowing capital. If you ask anyone in retail about cash flow, they’ll quickly tell you how stock ties up liquidity.

With local bank rates for the sector in the region of 18-23%, international lenders inaccessible and microfinance institutions seeking 15%, keeping local healthcare delivery affordable is a tough task. Even the process of borrowing is time-consuming, requires collateral and can be overly complex.

So, what’s the impact? These sorts of rates have a significant effect on the customer. The result leads pharmacies to shrink their offerings and raise their prices: patients lose access and community health suffers. Given that 97% of Nigerians don’t have health insurance, costlier products are not a good outcome, nor is restricted access to life-saving drugs as a result of supply chain finance constraints.

Nigeria has 4,500 registered pharmacies and over 15,000 drugstores, many of which are facing these issues, ones that I’ve seen time and again over the last 13 years working in the industry. Whether that’s in Lagos, Enugu or Kano, the same hurdles apply up and down the country.

Read also: Aligs Pharmacy Stores introduces online drugstore, consultation

On a more day-to-day level, pharmacy owners and employees are accustomed to pen and paper as a way to record sales, organise fulfilment and plan inventory. This leads to inefficiencies and causes wastage and stockouts. The impact is lower revenues, which, compounded with expensive finance, prevent the businesses from flourishing. Fortunately, we’re a tech-savvy nation and most of us know how to use smartphones, apps and basic software. With this in mind, it’s not unrealistic to plan for a more digitised retail pharmacy operation. Digital health in Nigeria is set to reach a revenue volume of over US$1.3bn by 2025, with a 22.31% annual growth rate, unachievable without innovation in frontline healthcare.

We need to use live, practical data to build out sustainable and efficient supply chains. That means embedding smartphones, apps and basic software into daily activity. For pharmacies, not only is live data a solution to shed light on their present-day inventory management, but it can also act as an alternative form of finance.

Our solution at Field Intelligence is called Shelf Life, which converts a pharmacy’s assets (i.e. the pharmaceutical products) into a financial mechanism, allowing them to pay only when they sell via a Pay-as-you-Sell model. Using this service, we’ve calculated that the cost of finance is anywhere between 45-80% cheaper than traditional lenders when you factor in the price of running such a system.

More often than not, loan rejections and high borrowing costs come down to a lack of credit worthiness under the traditional definitions. By turning this on its head, providing full visibility through smart technology and data, we can transform the supply chain and turn it into the alternative finance that Nigeria’s pharmacies really need.

Suleman Sule is the Director of Pharmacy Services at Field Intelligence and has been with the company for just over three years. In addition, Suleman has been the General Manager of Operations for the brand’s supply chain service, Shelf Life, since 2018