A spate of acquisition deals in the last five years has helped hospitals and pharmaceuticals in Nigeria boost operations and ramp up their market share.
Multimillion-dollar acquisitions such as Iwosan Investments’ purchase of Lagoon Hospital in 2022 and AfyA Care Nigeria’s purchase of majority stakes in R-Jolad Hospital in 2021 signalled growing investors’ confidence in the prospects of healthcare businesses.
It also marked a shift towards the creation of a network of health specialties by local investors at a scale often led by foreign direct investments in health-tech companies.
“We should have more mergers and acquisitions in the future judging by how the economy has fared. Hospitals are looking for entities to buy them out. Some mergers should have happened this year but didn’t sail through,” Oluwafemi Olaleye, head of health banking at FSDH Merchant Bank, told BusinessDay.
Iwosan Investments, for instance, targets a ready market of Nigerians with strong purchasing power and a penchant for high-quality care. The scale of such demand is projected to hit over $18 billion by the end of 2023, according to a report by Healthcare Resource Guide.
Iwosan Lagoon Hospitals, the entity created from the acquisition, plans to open a 27-bed wellness centre in Victoria Island, Lagos, catering to specialties including advanced heart care.
Olugbenga Agboola, the founder of Flutterwave, joined the board of the hospital earlier this year as a director, working with Fola Laoye, cofounder and CEO of Iwosan Investment; and Fola Adeola, co-founder of Guaranty Trust Bank, among others.
Laoye, while making a business case for financing Nigeria’s healthcare, said the investment group aims to provide long-term capital for healthcare growth, in addition to the growing interest of impact investors.
Although the value of these deals was not disclosed, AfyA Care’s acquisition of majority stakes in R-Jolad brought the total bed capacity of the hospital to over 215 across four additional facilities in Lagos this year.
AfyA Care, led by Tosin Runsewe, who also chairs the board of Evercare Hospital, Lekki, plays a major role in investing in promising assets, including insurance and health tech companies.
It holds stakes in 140-bed development under Oakwood Medical Centre and manages EROM Diagnostics; Octosoft, a health tech; and Bastion HMO, a health insurance company.
In other hospital deals, St Nicholas Hospital has in the last three years acquired smaller hospitals to spread its market presence in Lagos.
Ifeoma Okafor, its head of marketing and communications, said the former Robertson Medical Centre was acquired to create its new facility in Surulere, as well as the former Maryland Specialist Hospital for its new operations in Maryland.
Also, the first acquisition in 2023 saw Nigerian telemedicine start-up Doctoora Health acquired by Evercare Hospital, one of the largest, private health facilities in the country.
The acquisition adapted Doctoora’s services into EverCare’s growing suite of digital health solutions as Debo Odulana, co-founder of Doctoora Health, joined Evercare as its chief innovation officer. Doctoora enabled patients to book virtual consultations, and lab tests and purchase medicines remotely.
In pharmaceuticals, Verod Capital Limited completed the acquisition of a minority equity stake in Medplus, a major Nigerian pharmaceutical retail business.
The investment provides the growth capital needed to accelerate Medplus’ expansion plans, which brought its total outlets across the country to 108.
Ife Bakare, Medplus’ head of strategy, told BusinessDay that the multimillion-dollar deal has emboldened the company to consider expansion into other key African markets.
Medplus is the pioneer and largest Nigerian pharmaceutical retail business, with about three decades of operations. Medplus’ product portfolio covers retailing a variety of essential drugs, beauty products, and everyday household items, through its e-commerce platform.
Meanwhile, the health insurance segment saw Axa Mansard acquire Ikeja Medical Centre to create a new hospital called One Health.
“For Axa Mansard, they are integrating forward by setting up hospitals to provide care for as many clients as possible,” Olaleye.
According to a 2023 report on trends in Healthcare and Life Sciences in Africa by Bowmans, a South African law firm focusing on private equity, the pharmaceutical, hospitals, and biotech industry had the most transactions on the mergers and acquisitions front in recent years.
David Etido, an associate at Udo Udoma & Belo-Osagie, identified Ohara Pharmaceutical’s acquisition of 21.75 percent of Fidson Healthcare as one of the transactions that stood out.
“More recently, Nigerian health tech start-up Reliance Health’s series B capital raised $40 million and Mpharma’s acquired the majority stake in Healthplus, a leading pharmacy chain in Nigeria,” he said.
These all demonstrate the increased investor appetite for the Nigerian healthcare sector and interest in exploring the opportunities in the lags that plagued the healthcare system for years.
Years of under-investment in health systems have resulted in poor infrastructure, inadequate modern equipment and technology, and a shortage of healthcare workers.
The COVID-19 pandemic and the national lockdown also highlighted the urgent and pressing need for the overhaul of the Nigerian health system.
Data from the World Health Organization shows that Nigeria had an average life expectancy of approximately 63 years as of 2019, lower than peers such as South Africa (65), Egypt (72), India (71), Indonesia (71), China (77), Argentina (76), and Brazil (76).
The prevalence of infectious diseases remains high, while lifestyle diseases such as heart disease, diabetes, and cancer are on the rise.