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Healthcare investor discusses alternatives in Nigeria and remainder of Africa


Côme Vercken, managing director of Health54.

CFAO group, one of the largest players in healthcare across Africa, recently established the Health54 fund to invest in innovative healthcare start-ups. In October 2022, it made its first investment into Nigerian B2B pharmaceutical start-up Lifestores.

Managing director of Health54, Côme Vercken, spoke to James Torvaney about the fund and why it decided to back Lifestores.

Briefly explain what CFAO does.

CFAO is the largest distribution network in Africa, with operations in mobility, healthcare, consumer goods and infrastructure. The group has been present on the continent for over 170 years, and has an on-the-ground presence in 40 African countries, with access to 47 countries across Africa. The group as a whole generates €6.9 billion in annual revenues.

Our core healthcare business is drug and medicine wholesale and distribution, although we also have factories producing medicines in Morocco and Algeria. The healthcare business of CFAO generates €1.7 billion revenues annually in Africa and French overseas territories, with the bulk of those revenues in Francophone Africa.

What is CFAO hoping to achieve with the Health54 fund?

Health54 is a US$10 million permanent investment vehicle set up by CFAO and designed to invest into innovative health tech and services start-ups in Africa. CFAO is the sole investor in the fund.

We have three primary objectives for the fund – firstly, to make profitable investments in sustainable businesses. Secondly, to invest in businesses that create synergies for CFAO and its portfolio companies. And thirdly, to help CFAO better understand what is happening in the healthcare space across Africa.

Which kind of healthcare companies are Health54 looking to invest in?

There are four domains which we have identified as key to tackle the healthcare value chain challenges:

Firstly, healthcare management systems, such as patient booking systems and enterprise resource planning systems (ERPs). Efficiency is key when operating in a low resource environment and these companies bring the tools to enhance operations.

Secondly, businesses that help make supply chains more efficient and transparent. This is the most active space in Anglophone Africa, and Lifestores is an example of this. They are playing a key role in ensuring healthcare products and services availability, quality and affordability.

Thirdly, telemedicine platforms. There are some very interesting start-ups such as Tibu in Kenya, and Waspito in Cameroon. They are focusing on taking up key challenges of primary care, ensuring care professionals availability and affordability, both in major cities and rural areas.

Finally, we are looking at healthcare financing and insurance. For example, there is a start-up called Susu, in Cameroon, which helps people in the diaspora to pay for relatives’ healthcare.

How much are you looking to invest in each company? And what is your exit strategy?

We are looking to invest in minority positions in companies between late seed to series A stage. The sweet spot for us is €500,000, but our investments can range from between €100,000 to €1 million.

We are very open in terms of exit strategy, as we are a permanent investment vehicle with no fixed term. CFAO group may eventually be the natural acquirer should the cooperation be fruitful. However, the companies could also be sold or we may choose to retain our stake for the long-term.

How do CFAO and Health54’s healthcare strategies differ between Anglophone and Francophone Africa?

The regulatory environments in Francophone and Anglophone Africa are very different, which drives the size of our businesses in the respective markets.

Francophone Africa follows a very similar system to that in France, with very tight regulation. Wholesalers of drugs must ensure they offer every product registered with the ministry of health for distribution in their respective country. This creates very high barriers to entry and when, like CFAO, you have been present for a long time, you can enjoy a very large market share for the distribution of drugs.

In Francophone Africa, wholesalers are not allowed to also be retailers, and each pharmacy needs to be owned by a qualified pharmacist. As a result, there are no large pharmacy chains in Francophone Africa, and the retail market is made up of lots of small, pharmacist-owned outlets. Wholesale medicine prices are regulated, so drug distribution becomes a game of logistics and quality of service.

In Anglophone Africa, wholesalers are distributing more to chains (such as Goodlife in Kenya, and MedPlus and Health Plus in Nigeria), as well as smaller retailers. The regulations around importation and distribution are much more liberal, which leads to stories about broken supply chains. Because the market is so fragmented, it allows intermediaries to import fake medicines in much bigger quantities than you see in more regulated markets.

Health54 recently made its first investment in Lifestores, a Nigerian pharmaceutical platform. What exactly do they do?

Lifestores is a B2B pharmaceutical marketplace targeting pharmacies and other healthcare providers, such as clinics and hospitals, in Nigeria. They have two products: OGAPharmacy, which is an online B2B platform for approved pharmacies and healthcare providers to purchase reliable medicines; and PharmIQ, an ERP which is interlinked to their marketplace and helps pharmacies manage their operations (sales, stock levels, etc.).

One thing we like about the company is that they have also built a network of five of their own retail pharmacies in Lagos, in order to be close to their clients’ needs, test their products and provide the best service to other pharmacies. This digital-offline hybrid approach really sets them apart from their competition.

What is the problem Lifestores is trying to solve?

The weaker legislation in Nigeria and other Anglophone markets leads to broken and fragmented supply chains, which are particularly susceptible to the supply of fake medicines, high price volatility and shortages.

Because of this, pharmacies are looking for a trusted one-stop-shop – they don’t want to go to the open market to buy medicines. But to have access to trusted suppliers, who can supply the products they need at scale, is very difficult. This is the problem that Lifestores is trying to solve.

Why would pharmacies choose to use Lifestores, and their OGAPharmacy platform, compared to alternative options for purchasing medicines in bulk?

The key success factors for the pharmacies are the availability of goods and efficiency of delivery – these businesses want a just-in-time supply chain so they are not holding lots of inventory at one time. They want to get the bulk of their order from a single distributor, and they want to pass an order on Monday, and have that order fulfiled later that day or on Tuesday morning.

What customers like about Lifestores is that they can supply their full order and deliver the next day. The alternative is the pharmacies having to shop around with many different suppliers to fulfil their full order. Typically, these suppliers would be PPMVs (patent and proprietary medicine vendors – retailers without formal pharmaceutical training) or open markets, which are a catastrophe in terms of traceability and trust in the source of the medicines.

Finally, Lifestores offers its clients tools to manage their inventories and anticipate their needs. The data collected by the start-up enable a more customised approach with dedicated conditions and credit terms for each client.

Tell us about the company’s growth to date.

Their growth so far has been really impressive. The number of B2B customers has grown on average 25% per month over the last 12 months, and there are now 600 pharmacies using the platform, mainly in South West Nigeria. The company’s sales effort has been focused around a lot of face-to-face interactions – their sales team has been going out to pharmacies and convincing them individually.

How will the investment help Lifestores expand?

We see a lot of synergies between Lifestores and CFAO. In the immediate term, we are working to interlink their OGAPharmacy platform with drug importers, to increase the number of products they are able to distribute via their platform, and connect them with our local partners to support with logistical issues such as storage space.

Longer term, we are thinking about synergies across CFAO’s other geographies. A lot of the issues they are solving for in Nigeria are present across all of Anglophone Africa.



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