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Governments In Africa Are Collaborating With Innovators To Improve Local Health Supply Chains

Salient Advisory, a global healthcare consulting firm, surveyed over eighty companies in four African nations for a report highlighting the development of startups digitizing the continent’s health supply chain and distribution, as well as the regulatory frameworks governing e-pharmacy activities.

This time, the company delved deeper into the health supply chain segment in Africa, broadened the scope of its research, and made modifications. First, it searched for businesses in 54 countries (as opposed to four the previous year) and included firms with verticalized health supply chain offerings.

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Tracking nearly 350 innovators across 27 countries, Salient Advisory’s 2023 report establishes that public health supply chains across the continent are beleaguered and overburdened, leaving the majority of Africans with no alternative but to purchase products from private health innovators.

The problem, however, is that the private health supply is fragmented from manufacturing to distribution, which ultimately impacts price, availability, and quality (fake and substandard products are more readily available in open drug markets in Africa than global standard medication, for example).

As a result, the report by Salient Advisory, funded by the Bill & Melinda Gates Foundation, seeks to identify innovators utilizing technology to digitize supply chain processes and address these issues.

“Since the pandemic in Nigeria and, to a lesser extent, globally, there have been a number of shortages in supplies such as personal protective equipment (PPE). On a call with TechCrunch, Yomi Kazeem, senior consultant for West Africa at Salient Advisory, stated that these issues were caused by voids in the health supply chains.

In light of this, it is essential to examine how health startups are utilizing technology to improve supply chains on the continent so that individuals in urban and rural areas have access to health products in a safer manner.

The findings of Salient Advisory also demonstrate how African governments (approximately 11 according to the research) are collaborating with health supply chain innovators on nearly 50 partnerships, leveraging their tech-enabled solutions to address long-term issues related to the availability, accessibility, and quality of health products in public health supply chains.

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Roughly half of the identified partnerships are centered on enabling governments to digitize ordering and inventory management to increase efficiency and reduce waste, demonstrating the government’s strong desire to employ digital order and inventory management solutions.

In an interview with TechCrunch, Kazeem dissects Salient’s findings, discussing the significance of innovators collaborating with governments, gaps that need to be filled despite commendable efforts, disparities in funding across health supply chain innovation ecosystems, and an update on the Investing in Innovation (I3) initiative for female-led startups.

TechCrunch: Last year’s Salient report focused exclusively on innovators in the private health supply chain segment. The report for this year, however, incorporates B2B e-commerce platforms such as Copia Global. Why is this?

Yomi Kazeem: The primary method to approach this is to consider the segments of companies, and to classify them based on what they offer. Copia Global was included despite being an e-commerce company because it offers over-the-counter medications in Kenya, where it operates.

Large e-commerce operators, such as Copia, Glovo, Jumia, and Konga, are included as part of our effort to monitor startups and innovators that use technology to enhance access to medicines.

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Although health products are not the only thing they distribute and are likely one of their lesser verticals, it is essential to highlight them because these are significant channels and platforms that could play a pivotal role in expanding access.

What other new categories does this research introduce?

When considering supply chains, it is necessary to think extensively. It’s not just about who operates an online pharmacy that allows customers to place orders.

It includes platforms that enable pharmacies, clinics, and hospitals to order products directly from a manufacturer or distributor and have those products delivered, as well as financing and credit solutions for retailers.

Transport, warehousing, and reverse logistics are also essential to supply chain processes, and this is where drone delivery operators like Zipline, which collaborates with governments to deliver essential medical supplies to public health facilities, come in.

The selection also includes other solutions, such as those assuring product protection and visibility, which resolves the enormous problem of counterfeit and substandard medicines.

There are companies like Chekkit that provide solutions in this area. Another interesting subset that we observed, despite the fact that there aren’t many of them, is supply chain data analytics companies that are attempting to determine what products are being consumed and assisting government agencies in charge of distributing medicines to better plan their demand and comprehend consumption trends.

Doesn’t the funding raised by these larger companies, such as Zipline and Glovo, distort the research’s findings?

It is so. Large e-commerce companies in the United States and Europe, as well as medical drone delivery operators, accounted for approximately 77% of the funds raised by innovators in our study. Despite the fact that they slightly skew the data because their operations are not limited to health, we were extremely transparent about this in the study.

Other than the complexities of introducing new innovators to the research, what other intriguing trends from the report are worth highlighting?

Startups in the central health supply chain that are developing government-adopted solutions are the most intriguing. The fact that government agencies or governments at the national or subnational level are leveraging these solutions to enhance public health supply chains is a significant aspect of these ecosystems.

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In Kenya, Maisha Meds, a startup specializing in inventory management and digital marketplaces, has partnered with as many as three county governments, which use their inventory management solution in their public health facilities.

By utilizing this technology solution, for instance, public health facilities can better manage their stock or reduce waste because they have a keen understanding of which products are available and when the next restocking is likely to occur.

Without such an instrument to provide them with this information in advance, they may have expired products in their inventory without realizing it. This is just one example of how these solutions solve governments’ actual problems. The solutions provided by the category of order and inventory management are the most widely adopted by administrations across the continent.

Now, we have identified close to fifty partnerships in which governments have or are collaborating with innovators, essentially utilizing their solutions to improve public health and the supply chain. This is remarkable because, in the context of health in Africa, working with large public purchasers is crucial for these companies to attain scale.

Therefore, if governments order services from these entrepreneurs, this is a path to expansion. In addition to scalability, the government or the people will benefit from the public health impact of utilizing this technology solution.

According to the report, these partnerships necessitate support. This assistance is provided by the government or a third party. What is the background to this?

Speaking with government officials and entrepreneurs, the actuality of executing partnerships can be difficult, particularly in terms of funding. For instance, a state government placed a $250,000 order with a startup to procure a specific form of the product. Because the government did not pay in advance, the startup was unable to obtain the credit financing necessary to fulfill the order.

Consequently, the state government was forced to reduce the quantity of the order by up to 80 percent. In doing so, essential products, including surgical supplies and consumables, were shut off.

In this context, we recommend that donors and global health agencies play a role in devising trade financing solutions and mechanisms and providing them directly to innovators collaborating with large corporations and governments.

These early-stage innovators can access the funding necessary to fulfill large orders and demonstrate the service’s validity or use case, and can then build the long-term possibility of collaborating with the government at a level where there is a better rapport and flow regarding providing the service and getting paid.

In addition to continuing to comprehend the function of grants, we recommend that global health actors continue to understand the importance of grants. So, one of the findings of our investigation was that equity is the most common source of funding when examining the funding section. However, when segregating companies founded by men and women, it becomes apparent that women have less access to equity than males.

In comparison to their male counterparts, startups founded by women rely significantly on grants and debt. To put this into perspective, of all the capital raised by male-founded businesses, 96% is equity, 3% is grants, and 1% is debt. 50% equity, 35% grants, and 15% debt for women.

We spoke with women founders and stakeholders and included an agenda-focused case study in the report in which we explored some of the systemic factors that contribute to the barriers women founders face in health supply chain ecosystems.

Several reasons leaped out, including unequal access to funding, gender bias in selection committees, and the perception that women-led businesses are riskier investments than those led by men, despite operating at comparable levels.

Fundamentally, grants are still essential for creating more equitable innovation ecosystems because, ultimately, women-founded companies play a crucial role.

Last year, the $7 million pan-African health technology initiative Investing in Innovation (I3) was launched for this purpose, correct? What progress has been made on that front?

The first year has just concluded, and 31 firms were selected and awarded grants. We are now in the second year of the program, during which another 30 African companies will be selected. When examining the funding sources for these innovators, the Investing Innovation Program, which was inaugurated only a year ago, ranks first. It is the most prevalent source of funding for health supply chains on the continent, as they have participated in 31 deals and provided grants essentially.

Other notable grant programs include the Bill & Melinda Gates Foundation (which invests directly) and a few equity investors. Plug and Play Ventures and Launch Africa are at the top of the list of equity funding sources.

However, it emphasizes the importance of grants and the program’s intention to prioritize African founders and, of course, give special attention to female-founded startups. In the first cohort, approximately 48% of the selected companies were founded by women founders, and I believe that the same intentional thinking is in place for this year; perhaps it will be taken even further.

What lessons does the research impart about early-stage enterprises and government partnerships?

Companies that are young and nascent typically focus on serving consumers; however, as they mature and develop, they have a bit more flexibility. And as they mature, their clientele becomes more diverse, which is why there are so many partnerships with the government.

Additionally, the I3 program aims to introduce entrepreneurs to governments and, in some cases, other industry stakeholders, such as manufacturers.

All of this is essential to ensuring that entrepreneurs can transition from their current early or early growth stage to establishing themselves and their businesses.

The benefits are reciprocal, particularly when engaging with governments. We have frequently pondered and examined the government’s attitude toward innovation. It is frequently perceived as antagonistic. This is the reasoning. In contrast, we observe governments independently pursuing and implementing solutions.

When we interact with government actors, there is a great deal of interest in how governments view partnerships. Still in the early stages. In the following months and years, it is hoped and anticipated that there will be many more partnerships.

In addition to scaling startups, it is essential to emphasize the real-world benefits and effects of governments using technology in public health systems to ensure safer access to quality medicines. In this ecosystem, this translates to improved health outcomes for individuals and employment, which is fantastic.

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