Two healthtech start-ups - Ilara Health and MDaas - are focused on improving diagnostics, one in West Africa and the other in East Africa. Both have very different business models but shed light on how healthcare might be improved for Africa's low and middle-income citizens outside of major cities. Russell Southwood spoke to the two different co-founders Emilian Popa, Ilara Health and Soga Oni, MDaaS.
Ilara Health's co-founder will be known to readers of Innovation in Africa from the interview he gave me about VC investment firm DiGAME: http://bit.ly/2FAgRVJ But he has a rich experience of creating start-ups in Africa including stints with Naspers, Groupon and Rocket Internet.
So why did he leave VC investing:"I'm an entrepreneur. When you're entrepreneur, you always go back to it. When I was thinking about the new business, my deal-flow (at DiGAME) had very few healthcare companies and lots of fintech." After many iterations of the idea, he started to take 40% of his time to research different health clinics in different markets.
He remembers talking to a woman at one of these clinics in Kenya who had lost her baby for want of an ultrasound scan. Out of this research period, the company was born in March 2019.
The cornerstone of the start-up was recognizing the importance of diagnosis:"70% of medical decisions require diagnosis. In Africa the level of healthcare is shockingly poor." So he started looking at companies that made low-cost diagnostic devices where possible, with AI to assist the operator.
Ilara Health buys these devices and sells them to doctors' offices and clinics in peri-urban and rural areas. It sells the devices as a bundle with a software platform to manage the process. The devices are significantly cheaper than their bigger version and medically approved: for example, an ultrasound machine that might cost US$30-40,000 can be supplied for between US$2-5,000.
It will either charge the doctor per test on the machine or on a subscription basis and will continue to help the doctor to grow revenue by providing new diagnostics. This diagnostic model exists in the USA and UK but it's usually selling high-cost devices on a lease basis. The aim is to get the delivery cost down to provide cheaper and more locally convenient diagnostic tests:"We want to provide accurate and affordable diagnostics to rural Africa."
The diagnostics cover a range of widely experienced health issues that do not always get the same level of attention as infectious diseases. For example, in Kenya 25% of people are either diabetic or pre-diabetic. Health problems with cardiac diseases are also widespread. Devices to identify these conditions cost as little as US$100-300. There is a blood test machine that uses AI that costs only US$1,500-2,000. It can test a condition in 8 minutes and help identify whether antibiotic treatments are relevant or not.
It has closed an agreement with a Dutch debt fund to finance the device sales and is closing a seed equity round for US$0.5 million. It plans to roll-out initially to 70 clinics outside of Kenya's main cities. It wants to have 250 clinics in eighteen months time.
The target is the 10,000 doctor's surgeries (half of which are privately run) and 3,500 small-scale clinics in peri-urban and rural areas. After Kenya, it wants to go into Nigeria and Egypt, followed by Ghana and Tanzania.
MDaaS's Soga Oni got to diagnostics and his approach through a completely different route:"One of my classes at MIT was called Development Ventures. The challenge was to create an idea that would scale to impact 1 million lives. My Dad is a medical doctor and had told me about the problems of sourcing and maintaining equipment."
(It was incubated at MIT's Legatum Center for Development and Entrepreneurship and was part of the inaugural Techstars Impact class of 2018. It has also partnered with Harvard Innovation Club, Miller Centre for Social Entrepreneurship, MIT Ideas Global Challenge and Coast 2 Coast Medical).
He describes his first run at solving the problem as "a rabbit hole." The patients were unable to pay for high-quality equipment:"We provided a leasing programme at really low price points and gave top-notch maintenance." But hospitals dealing with those on low-incomes still struggled to pay for the equipment.
So he decided to pivot to running his own diagnostic centre close to multiple healthcare facilities. So where one facility might see 5-6 patients who need an x-ray in given period and what they would charge (US$5-10) would not pay for the X-ray machine. But with referrals from 60 primary and secondary healthcare facilities (including those doing maternity care) in an area, they had a sufficient flow of users to make financial sense. On this basis, basic procedures cost as little as US$4. Among other things, the diagnostic clinic (branded Beacon Health) has digital x-ray machines, ultrasound, EEC, ECG and a full suite lab for blood testing.
It currently has one diagnostic facility in a peri-urban neighbourhood in Ibadan (Nigeria) and plans a further two in Lorin and Oshogo:"We've seen over 10,000 patients since the clinic opened in November 2017 and broke even in month 5. We're now getting 750 patients a month. We want each centre to be sustainable and scale to as many places as possible". It has recently closed a US$1 million seed round led by Consonance Investment Manager designed to provide the financing for this expansion:"We want to be at 5 clinics by next year" and the plan is also to expand across West Africa over the next five years.
Based in the USA (but relocating to Nigeria), he has worked hard at "getting the best types of deals for this kind of equipment. So now it costs US$90,000 to set up one of our facilities rather than US$300,000.