Nigeria lagged Kenya as leading African healthtech innovators earned $194 million in total annual revenue in 2023, a new market intelligence report by Salient Advisory shows.
Kenya raked in over $50 million, with Kasha, an inventory management company, being the highest earner by an African health supply chain innovator.
The report did not specify the earnings of Nigerian firms. However, seven of the Nigerian firms mentioned earned an average of $3 million, meaning their revenues were not more than $21 million.
Kasha, which has raised about $46 million so far, dominates in enabling healthcare providers to restock, track, or finance inventory through digital technologies.
Nigerian firms mentioned in the report include: DrugStoc, LifeBank, Remedial Health, Field and RxAll, HealthPlus and Figorr.
DrugStoc, LifeBank, Remedial Health, and RxAll are increasingly innovating around systems that store and aggregate routine supply chain data and facilitate analysis for improving supply chain management.
Remedial Health has raised $14 million in equity investment over the past four years and has enabled the digital procurement for 4,500 pharmacies and hospitals and five state governments across Nigeria, curbing the proliferation of counterfeit medical products in the country.
Yomi Kazeem, engagement manager at Salient Advisory, said the findings underpin African supply chain innovators’ resilience and growing impact, urging that “local and global public health communities must increasingly recognize and leverage the innovators in developing reliable and resilient health supply chains.”
Of 24 leading health-tech innovators profiled across Africa, companies generated an average annual revenue of $3.5 million overall.
Nine of these innovators (38 percent) generated over $5 million in revenue in 2023, with 50 percent generating between $1 million and $5 million.
A third of innovators, the majority of whom operate in order and inventory management, reported over 50 percent year-over-year revenue growth in 2023.
As part of its modelling, the report funded by the Gates Foundation identified Moniepoint, GIG Logistics, Quickbooks, and Glovo as four key companies operating inventory management with growing operations in health.
However, these companies were not featured in the overall analysis due to limited participation in data collection.
Salient Advisory also found that the reported revenues were on par with trends seen in Africa’s broader pharmaceutical retail and distribution market, where annual revenues for health businesses reportedly range between $300,000 and $15 million.
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It further highlighted significant gaps in revenues earned among the innovators in the online pharmacies category where innovators reported an average revenue of $8.9 million in 2023, with half reporting over $10 million.
It, however, noted that despite generating strong revenues, profitability remains limited among the leading innovators, with only seven reporting being profitable.
Two achieved profitability within the first five years of operation, which conforms with global profitability timelines for technology companies. Others achieved profitability within eight to 13 years of beginning operation, suggesting more patience from investors would be required to see a return on investments.
Innovators are also concerned that contracts with donors and global health agencies are generally low-margin and are only profitable when high volumes are involved.
But innovators are not at the scale to handle sufficiently large volumes to serve donors or agencies profitably, according to the advisory.
The report further notes that engaging with global health systems often requires high upfront costs to hire public health experts with experience in donor systems, some of whose salaries can outstrip standard local rates, affecting budgeting and reporting requirements.
Due to this challenge, the advisory firm said three leading companies that were founded to improve public health supply chains are now stepping away from serving public health partners because of economic pressures.
Ann Allen, senior program officer at Gates Foundation, said technology-enabled innovations have the potential to help reverse long-running challenges in African health systems while creating local jobs and strengthening local health markets.
But more effort needs to pour in to deliver on this promise.
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“There is more to be done as leveraging these innovations to truly transform cost-effective access for millions of unserved Africans will require concerted efforts from governments, industry, and global health agencies alike,” Allen said.
The advisory suggests that building more sustainable, local markets for healthcare provision could require contracting and payment approaches that can profitably onboard small businesses until sufficient volumes can be reached.
Kasha stands out as a leading example of an innovator diversifying its business model beyond its initial service offering, evolving from serving consumers through an online pharmacy model to enabling inventory procurement and financing for hospitals, pharmacies, clinics, and drug shops.
According to the advisory firm, this business model expansion has fueled rapid growth culminating in its reported annual revenues of over $50 million in 2023.
