" ITREALMS: AUDA-NEPAd, JICA launch strides in healthcare innovation - ITREALMS

Wednesday, May 15, 2024

AUDA-NEPAd, JICA launch strides in healthcare innovation - ITREALMS

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The AUDA-NEPAD, supported by Japan International Cooperation Agency (JICA) has launched a report that provides lessons learned and the strides made over the last three years in accelerating healthcare innovation across the continent.
The AUDA-NEPAD Home-Grown Solutions Accelerator (HGS) aims to accelerate home-grown solutions to strengthen Africa's pandemic resilience, in line with the African Union's Agenda 2063 aspirations.

The pilot cohort that supported five East African ventures was launched in 2021 and has since grown to support 28 early and growth stage healthcare companies. By the end of 2023, businesses that had received acceleration support from the HGS accelerator raised over $46 million and impacted over 13 million patients in more than 30 countries across the continent.

“The attainment of development goals in Africa is not merely a continental imperative but a global necessity. A thriving Africa contributes to a more equitable global economy, fostering trade, innovation, and partnerships. Addressing challenges such as poverty, education, and healthcare is integral to achieving a more resilient continent” says H.E Ms Nardos Bekele-Thomas, CEO of AUDA-NEPAD.

The CEO also highlighted that the Agency’s accelerator is a testament to what can be achieved when innovation meets determination.

“It is our collective ambition to build resilient healthcare systems that can endure and thrive despite the challenges,” she said.

The report provides insights around pioneering business models and achieving operational excellence to navigating the investment landscapes and fostering an enabling regulatory environment. Some of the insights are listed below:

Building impactful and sustainable healthcare businesses
“Currently, many of these promising African companies face challenges in scaling operations and impact, particularly cross-border and into adjacent business lines. Our joint report highlights some key lessons for ventures to build impactful businesses and increase their chances of success,” says Mathieu Lamiaux, Managing Director and Senior Partner, and Africa Lead for Healthcare at BCG, Nairobi.
Creatively design business models to meet accessibility and affordability needs in a sustainable way. The accessibility and affordability of high-quality healthcare remain pivotal challenges in Africa, particularly in regions grappling with disparities in wealth, limited infrastructure, and uneven resource allocation. The implication for healthcare businesses, therefore, is to achieve a balance between maintaining affordability and generating sufficient revenue to enable growth and sustainability. A notable example is the tiered product offering by AfyaCare in Nigeria, which aims to provide accessible healthcare by segmenting its services through the establishment of two hospital brands: one catering to lower-middle income bracket provides basic and urgent treatments at costs low enough to accommodate social health insurance schemes and the second targeting middle to upper-middle-income earners providing additional specialised healthcare concierge services.

Understanding the complexities of market expansion even if operating a scalable technology-based healthcare business. The ability to scale quickly has become synonymous with innovation and market dominance, however healthcare ventures should consider reaching critical scale in their home market before launching an expansion campaign. They can then consider adapting their business and/or product/service to the local context and needs.Rology, a teleradiology player from Egypt and Home-Grown Solutions Accelerator alumnus cemented its position as one of the leaders in its home market, launching an expansion strategy for entry and growth into Kenya and Saudi Arabia, targeting markets that are ready by assessing the radiology landscape, for example, the number of available radiologists in the market in addition to institutions that aggregated these radiologists, enabling easier reach.

Operational excellence can serve as a key differentiator especially when in a saturated space. The healthcare market is becoming increasingly saturated, with ventures duplicating one another’s delivery models, leading to increased competition and limited differentiation. As such, a strategic focus on operational excellence is paramount to navigate market complexities and guide success under challenging competitive conditions.

Innovative ways to de-risk investments
“Persistent funding gaps remain for many healthcare ventures across the continent, limiting their ability to scale and achieve impact,” says George Murumba, Project Manager at AUDA-NEPAD.

The report highlights that funding remains concentrated in the big four countries Nigeria, South Africa, Kenya, and Egypt, and a significant portion of funding (60% in 2022) goes to five of the largest HealthTech companies (out of the 101 companies that received funding).

Despite these challenges, substantial opportunities remain for investors to further support healthcare ventures across Africa to drive resilience against global disruptions within the sector. To effectively provide this support, investors should consider the following recommendations:Investors should increase access to early stage and blended financing. The report highlights the potential of early stage and blended financing to address funding gaps, as well as Development Impact Bonds (DIBs) that can be used to fund development programmes.
Investors should adjust the definition of returns. Investors can consider a broader spectrum of returns, including the positive social and health outcomes generated by the ventures they support.
Investors can also adjust investment time horizons, providing sufficient time for high potential healthcare ventures to unlock success. Data from the World Health Organization highlights that the average timeline for the development and approval of a new pharmaceutical product ranges from 10-15 years.

Creating an enabling regulatory environment
“By formulating and implementing policies that prioritise healthcare infrastructure development, financial incentives, and regulatory frameworks conducive to entrepreneurship, policy makers provide the essential foundations for ventures to thrive,” says Tolu Oyekan, Managing Director and Partner at BCG, Lagos.
Policy makers are key in shaping the venture landscape. They need to speed up regulatory harmonization to avoid complexity, especially in sectors like healthcare. African governments should collaborate with each other and with ventures and developed nations to improve local policies and regulations. Regulators should simplify approval processes to help life-saving products and services reach the market faster.

The symbiotic relationship among government officials, policy makers, investors, and healthcare ventures stands as a cornerstone for fostering resilience and propelling Africa towards the realisation of its development goals.

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