Lifestores Healthcare raises $3 million to expand its pharmaceutical market across Nigeria • TechCrunch

Africa’s $45 billion pharmaceutical market is expected to grow 10% to $100 billion by 2030. Yet the sector struggles with highly fragmented and undercapitalized supply chains full of fake drugs, which cause the death of thousands of patients each year; in Nigeria, 20 to 40% of medicines are counterfeit.

A handful of health tech companies are bringing efficiencies to Nigeria’s pharma supply chain issues; Lifestores Healthcare is one. In 2020, it raised a $1 million seed round, followed by its recently announced $3 million pre-Series A funding; this last round, oversubscribed, was led by Health54with Aruwa Capital Management as lead manager and participation of other existing investors.

Pharmacies in Nigeria play a vital role in how people access medicines in the country. Although some pharmacies allow self-diagnosis transactions between patients, they are still one of the cheapest options for obtaining health care. However, given the fragmentation and underdevelopment of health resources, pharmacies cannot operate to the best of their abilities. These shortcomings lead to a high prevalence of fake medicines, as quality ones also become expensive and difficult to obtain.

Having taken on pharmacy and supply chain projects in their previous jobs, co-founders Bryan Mezue and Andrew Garza knew that whatever they were building should democratize access to quality primary healthcare and affordable. They started Lifestores Healthcare in 2017 as a retail pharmacy chain before branching out into B2B services for pharmacies and digital patient services.

Lifestores offers two B2B products. The first is the B2B marketplace called OGApharmacy. Launched during the pandemic in 2020, it allows pharmacies and hospitals to aggregate their purchasing needs, with which Lifestores negotiates with suppliers for the lowest possible price on high-quality drugs, getting them 10-20% of discount. The other is an ERP system that pharmacies and dispensaries can use to manage their operations.

Picture credits: Health

Lifestores Healthcare provides its services through a network of over 750 points of sale. The healthtech outfit reported experiencing monthly market growth of 25% and has more than 10% of Nigerian pharmacies among its registered customers; it plans to expand its market share to 25%, which will increase the number of patients affected by 4 times from 100,000 to 400,000 by 2023.

“The number of patients who have loyalty accounts with us is growing by double digits every month. And then we also think a lot about how much impact we have through pharmacies that we don’t own but support through our software,” said CEO Mezue. “And then we indirectly reach more than 200,000 patients through our software and the services we provide to these pharmacies. To this day, this is how we think about our impact on patients. We are also about to launch several B2C initiatives and exciting features that are more direct to the patient. »

To drive this growth, Lifestores will open a new fulfillment center in Lagos and launch new technology features as part of its B2B offerings, including pharmacy management software, AI-powered predictive ordering, advanced credit offerings and patient management initiatives, he said in a statement. . Lifestores will also expand its B2C services, with patient savings, managed care and drug delivery pilots.

While telemedicine remains the standout healthcare offering that has seen mass adoption around the world since the pandemic, startups digitizing the supply chain and distribution to vendors like Lifestores have reached scale faster. and have seen the most impressive growth in healthcare space in Africa in the last 12 months, according to this report. Other companies in this space that work with community pharmacies and low-end vendors such as pharmacies to help stock products include Mutti by mPharma, HealthPlus, Shelf Life by Field Intelligence, and Maisha Meds.

“In many cases, the actors work on several geographical areas, and possibly on several segments. But we’ve taken a bit of a different angle, where we’re going quite far,” the CEO said describing how Lifestores differs in expanding operations. “Because the market is fragmented, we saturate some regions before moving on to others.”

The founders also shared some learnings from the past five years of running their startup: the importance of building partnerships at all levels, including pharmacies, dispensaries, hospitals, and regulators; the fact that pharmacists are embracing technology more than people realize; and how healthcare providers are concerned about transparency about drug quality and pricing.

“We’ve also seen how health care wholesalers serve as banks and give pharmacies and hospitals drugs on credit, which allows these health care providers to do their jobs on credit efficiently at much less cost ‘they would get banks,’ Garza added of some of the company’s learnings. “This reality has existed for a long time in the field of health. We’ve started to see the huge benefit of this in terms of flexibility as we work on more advanced features like AI-based predictive control. It’s become a lot easier to do things like that since we have all the technology for ERP and the marketplace in-house, which we can layer new advanced stuff on.

The Lifestores funding round marks Health54’s first investment on the continent. The recently launched company is the healthcare-dedicated corporate venture capital vehicle (CVC) of CFAO Group (part of Toyota Tsusho), which has the largest healthcare distribution channel in sub-Saharan Africa.

“We are proud and happy to make our first investment with Health54 in Nigeria and in Lifestores. We have been impressed with the hands-on experience of Bryan and Andrew who have run several retail pharmacies in Nigeria,” Como Vercken, Managing Director of Health54, said of the investment. “In two years, they have built a leading distribution platform with OGApharmacy. As a strategic partner, we are excited to work together and bring the benefits of our vertically integrated pharmaceutical supply chain so that we can support more patients in Nigeria and beyond with quality primary healthcare.

This investment will allow Lifestores to leverage Health54’s growing network of healthcare service providers and CFAO Healthcare’s existing wholesale distribution capabilities in Nigeria and across Africa should it consider regional expansion. But for now, the health tech wants to fuel growth in Nigeria, improve its software capabilities, reach new customer segments and accelerate recruitment into sales and engineering teams and senior management.

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