Remedial Health CEO on Nigeria's surging drug costs: A crucial moment for healthtech

The prices of drugs in Africa’s most populous country are going through the roof, with some rising tenfold in the past few months. The situation, created by inflation and currency devaluation, is quite worrisome, especially for a place where only 5 percent of over 200 million people have healthcare insurance. 

It is gradually morphing into a public health crisis. Many Nigerians, unable to afford basic over-the-counter medication, are either cutting down their dosages or turning to questionable herbal alternatives. With the government yet to intervene, industry players find themselves in a fix. 

In the last six months, two multinational pharmaceutical companies have deprioritized the market. Britain’s GlaxoSmithKline (GSK) terminated its half-a-century-old operations in August, transitioning to an import-only model. French drugmaker Sanofi discontinued this December, handing over its portfolio to a third party.

This adds more burden on an already strained local healthcare system, and there are ripple implications for healthtech upstarts that are pivotal to advancing healthcare accessibility.

“What happens next,” Samuel Okwuada, CEO of Remedial Health, says, “depends on the effectiveness of steps that are currently being taken to address wider macroeconomic challenges, as well as other follow-on actions that are taken to stem the flow of rising prices.”

Okwuada’s company Remedial Health is a YC-backed Nigerian healthtech startup making it easier for African healthcare providers to access affordable and genuine retail medicines.

In this exclusive with Bendada.com, Okwuada offers insights into the circumstances, the consequences for the burgeoning healthtech scene, and possible solutions to the crunch. 

How has increased drug prices impacted healthcare accessibility and affordability in Nigeria?

For context, common medicines such as Artemether and Lumefantrine (the most popular antimalarial) have more than doubled in price from an average of ₦1500 ($1.6) to over ₦4000 ($4.5) for a box of 10 packs. Ciprofloxacin (the most popular antibiotic) has also doubled in the last year from ₦900 ($1) to an average of ₦2000 ($2.2). 

According to research from SBM Intelligence, the price of antibiotics increased by nearly 500 percent across Nigeria between 2019 and 2023. The recent exit of some multinational pharmaceutical companies from the Nigerian market has also led to the scarcity of certain products, with some middlemen hiking their prices by more than 100 percent. 

For neighborhood pharmacies and Proprietary Patent Medicine Vendors (PPMVs) that represent more than 85 percent of medicines sold in the country, these price increases mean there is added pressure to balance the need to provide lifesaving medicines to their communities and the need to run their businesses effectively.

For consumers already squeezed by other macroeconomic pressures, these price increases often mean more people are choosing to go without essential medicines simply because they simply cannot afford them.

It looks grim at this point, it seems. Do you think it could get worse?

What happens next depends on the effectiveness of steps that are currently being taken to address wider macroeconomic challenges, as well as other follow-on actions that are taken to stem the flow of rising prices. 

For example, a big part of the situation with rising prices is the currency fluctuation. If the government’s efforts to stabilize the Naira are effective, we can expect some respite. 

Another major driver of rising prices is the fact that 80 percent of the medicines we consume in Africa are imported from outside the continent. Most components for the remaining 20 percent are also imported to be assembled locally. This means the price of medicines is constantly vulnerable to global macroeconomics.

Until we take some decisive steps as a country, prices of medicines will remain high. Until we are manufacturing the active pharmaceutical ingredients (APIs) rather than formulating these drugs from ingredients that were imported, we will continue to be reliant on the dollar-versus-naira price to determine how much medicine will cost. 

Realizing that imports are still a major part of our consumption and local production will take several years to build capacity, we can relax custom duties on essential medicines for some time to provide some quick respite to the population. 

How would you say the situation is affecting local healthtech startup operations?

For us, the aim is to make Africa’s pharmaceutical value chain more efficient, starting with Nigeria. 

This means we are constantly exploring opportunities to ease the burden of delivering healthcare services, particularly access to medicines, for our customers. Doing business in Nigeria has its challenges but we remain determined to deliver the best service to our customers. 

We aim to ensure that healthcare providers can access vetted, authentic medications at prices the same, or better, than open-air medicine market prices - with 24-hour delivery to their practice via our logistics network. 

So even when the removal of fuel subsidy led to our logistics costs tripling overnight, we still prioritized making sure that our customers were reasonably shielded from the impact.

Healthcare already has its troubles. Where does technology come into solving this?

Hospitals, pharmacies and proprietary patent medicine vendors (PPMVs) in Nigeria are increasingly turning to technology to enable them to more effectively navigate the challenges presented by the rising price of medicines. 

Some of the solutions that they have increasingly adopted include mobile apps for digital procurement, which makes buying medicines easier and cheaper. These apps also have a wide range of products, making it simpler to manage inventory and handle finances.

They are also leveraging e-commerce platforms like ours to access inventory finance and other financial services to access inventory on credit and pay for it after the medicines have been sold.

Over the last few months, we have seen more than a 50 percent increase in the adoption of our financing offering, as healthcare businesses explore how to navigate the various economic headwinds impacting the country.

What regulatory changes do you believe are necessary to ensure more reasonable and affordable drug prices in Nigeria, and how can tech possibly support these changes?

The most effective long-term solution would be to localise as much of medicine production as possible. But even if we get all the necessary resources and support needed to achieve that today, any new domestic capacity will take at least five years to bring onstream. 

In the short term, lowering import duties can be a quick fix. While the cost of everything else has increased, the cost of clearing medicines at the ports has also doubled (from roughly ₦8 million ($8,800) to ₦15 million ($16,600) for a 40ft container of antimalarial) and these costs end up being passed on to consumers. If duties are lowered, this can lead to up to 20 percent immediate reduction in prices

Another change that needs to happen is the transition to a more formalized distribution model for pharmaceuticals. The current model relies heavily on the three main wholesale medicine markets located in Kano, Lagos, and Onitsha, where medicines are sold in open-air markets that are generally not suitable for medicines and consumables. 

Healthcare providers across the country often have to travel to these markets to access the inventory they need for their stores, taking them away from their stores and limiting their ability to serve their customers.

Technology can play a vital role in the development of an effective distribution system that directly connects manufacturers to distributors, who then ensure the distribution of medicines to various pharmacies nationwide. 

This technology-enabled distribution model will not only make it easier for healthcare providers to access medicines, but it will also safeguard the supply chain from the scourge of counterfeit medicines that pose a significant threat to lives and livelihoods.