E-Health Pharma Distribution Startup, DrugStoc Gets $4.4 Million Series A Funding

The pharmaceutical industry on the African continent has been bedevilled with quality concerns arising from fake and substandard, with sourcing and distribution challenges leading to the fragmentation of the supply chain.

It is on the aegis of this that two entrepreneurs, Chibuzor Opara and Adham Yehia who had met at the Maastricht University, Holland, initially founded ‘Integra Health’ a hospital management company contracted to manage 20 hospitals, aligned together, having being availed of issues from poor pharmaceutical supply chains founded DrugStoc, a e-health drug procurement platform that seeks to mitigate the issues in the supply chain. They formed the DrugStoc platform in 2015 to help link drug companies with hospitals and pharmacies in Nigeria.

Having just closed a $4.4 million series A funding, the ISO certified supply chain firm has begun an aggressive expansion move to deliver quality drugs to 100 million people in the world most populous black nation, while it has concluded plans to expand to 16 states within Nigeria, in a bid to grow its tentacles beyond Lagos, where it is currently situated. The success of the expansion within Nigeria will propel its growth to other markets within Africa.

Having good quality drugs and pharmaceutical products available in the West African country would help to prevent avoidable thousands of avoidable deaths, especially those linked to loss of blood during delivery, and diarrheal disease causing death in children.

The company not oblivious of the peculiarity of the Nigerian situation and the mandate it has had posited;

“In Nigeria, we intend to expand beyond 14 million we currently serve to cover just around 100 million people. And this would be achieved by expanding to about 16 states. Once we are done with the heavy lifting from that expansion, we will be training our sights on other countries.”

The Africa HealthCare Master Fund (AAIC) led the funding round for DrugStoc, with other investors including Vested World, a Chicago-based venture firm, the German Development Bank (DEG) and a host of high-net worth individuals interested in tech-health.

An Ecstatic Nobuhiko Ichimiya, the AAIC director, had this to say on the funding round:

“We are very excited to be part of the DrugStoc journey. The pharmaceutical market in Africa has enormous growth potential, and we are glad to back a company that is well positioned to be a key player in the sector’s growth in sub-saharan Africa”.

The co-founders of DrugStoc, Opara and Yehia did not actually meet by accident.

Opera was pursuing his PhD studies while Yehia, who was having his masters on ‘health innovation management’ needed an advisor for his project and Opara fits the bill, as he had earlier practiced as a doctor for 6 years precluding his career in economics and finance. Opara’s relative experience in the Nigeria’s healthcare sector further convinced Yehia he would be fit for the role.

Yehia on the other hand, a geneticist had been part of the management team of his Dad’s hospital in Lagos and thus had first-hand knowledge of the Issues facing hospitals but for his master’s program, he sought to explore the possible solutions to the issues in the pharmaceutical industry.

“It was an immediate bond. So when we first met, we actually ended up spending around six hours together in my apartment, going over the problems in Nigeria’s healthcare system,” said Yehia.

“It was then, very early on, that we both decided that we’re going to start a company. We didn’t know what it was, but we were going to focus on trying to streamline Nigeria’s healthcare system in our lifetime – we understood that the system itself was the problem.”

The now two buddies founded DrugStoc then, piloting a tech-bases firm that directly linked manufacturers with distributors.

Even though their plan did not come to fruition immediately, they got to know that having a platform for that alone won’t solve things.

Opara and Yehia in the wake of DrugStoc official launch in 2017 rebranded their core objectives by changing tactics  to include distribution, after a year training at Stanford Institute of Innovation in Developing Economies.

“I think we came out of Stanford with a better understanding of business modelling and value chains than we understood it as a pilot phase,” said Yehia about the incubation program.

“We decided we need to get a distribution license, and to do this the pharmaceutical way. And to do this the proper way, we needed to buy directly from the manufacturers and create the value chains internally,” he said.

The DrugStoc firm at the moment links about 400 manufacturers to 3200 doctors, hospitals and pharmacies with Opara adding that the monthly revenues has skyrocketed to 1,500 percent in the last three years. He premised this rise in the demand brought by the quality assurance that comes with the company, adding that the startup earns a commission for every sale made.

“When we started, I don’t think we ever had a doubt about the demand because we understood the scope of the problem. And we understood that people were fed up with the status quo,” said Opara.

“It’s the fact that we are transforming not just convenience and access but also paying great attention to quality which every healthcare professional at the end of the day is bothered by, that is the underlying drive in a lot of healthcare facilities or pharmacies.”

In 2019, DrugStoc won a share ($65,000) of the of the inaugural $1million Africa Netpreneur Prize Initiative by the Jack Ma Foundation, a pitching competition that rewarded 10 enterprises providing solutions for the continent’s critical issues. They are also recipients of a grant from Bill and Melinda Gates, and also received seed funding from VestedWorld; an early stage investment fund with a focus on sub-Saharan market.

And now, with new funding, DrugStoc is expanding its coverage to more regions through more fulfilment centers and expanded transit points and routes, providing better logistic options for last mile deliveries. It is also building partnerships with financial institutions to increase access to sustainable supply chain financing. This is in addition to plans of more investments in cold chain infrastructure to enhance the safe distribution of perishable products.

DrugStoc had in 2019 won a share of the ($65,000) of the Jack Ma’s Foundation 1$ Million Africa  Netpreneur Prize initiative, a contest that seeks to reward 10 enterprises that provides solutions to Africa’s critical issues. DrugStoc also won a grant from the Bill and Melinda Gates foundation, while also receiving seed funding from VestedWorld, an early stage investment fund that has its spotlight on the Sub-Saharan market.

The new funding now offers DrugStoc the leverage to expand its coverage to more regions with more fulfilment centres, and expanded transit points and routes, that would better provide logistics options for last mile deliveries.

The Ikeja Lagos based brand is also building partnerships with financial institutions to have an continuous access to supply chain financing, in addition to having more investments in cold chain infrastructure in order bit enhance the safe distribution of products that are perishable.