Without proper government-led public health initiatives, healthcare expenditures, including insurance and pharmaceutical drugs, can burden individuals and households. In recent years, private institutions have played a massive part in the considerable uptake of medical insurance and medicines and also in lowering the costs of getting them across Egypt, the largest producer of pharmaceuticals across the MENA region whose pharma market is set to reach $6 billion in value this year. The Global Ventures–backed Yodawy is one such private player, and the pharmacy benefits manager has raised a $16 million Series B round.
The UAE-based and MEA-focused venture capital firm co-led this round alongside Delivery Hero Ventures, the venture arm of the global food delivery platform Delivery Hero, which has now made its first check in Africa. Singapore-based AAIC Investment and Saudi’s Dallah Al-Baraka also participated in this round. Existing investors who participated in the digital healthcare’s $7.5 million Series A round in 2019 include Middle East Venture Partners (MEVP), C Ventures, and P1 Ventures also doubled down.
Co-founder and CEO Karim Khashaba told TechCrunch that the health tech startup plans to use the investment to expand across markets in the Middle East and Africa, where the pharma market is a $60 billion market opportunity. Yodawy’s journey in Egypt started in 2018 when Khashaba founded the company with COO Yasser AbdelGawad and CTO Sherief El-Feky. They built an infrastructure that accommodates the services of its partners — insurance companies, medical providers, pharmacies, and pharmaceutical/FMCG companies — and connects them with business clients and individuals.
Here’s one instance that highlights the problem every Yodawy stakeholder faces. More than 90% of Egypt’s prescriptions and insurance claims are recorded with paper. As trivial as that might sound, this affects every player in that value chain, from issues ranging from prescription errors to long processing times and queues at pharmacies and hospitals.
Yodawy’s platform allows insurance companies and hospitals to automate approvals, save costs and improve customer experience. Also, pharmacies get an online presence and boost sales via Yodawy’s e-commerce offering, which patients (via employer-led medical schemes) can benefit from as they get their medicines and drugs delivered to their doorsteps. Pharmaceuticals, on the other hand, can tap into Yodawy’s network of pharmacies to put products in the hands of consumers.
“We have built a strong network of insurance partners and employer-led medical schemes. We pretty much manage the end-to-end value chain of prescriptions, from how prescriptions are generated digitally on the doctor’s side to how payers process prescriptions, all the way to kind of a complete fulfillment infrastructure that currently manages the delivery of almost 200,000 prescriptions monthly across 30 cities in Egypt,” the chief executive said on the call.
He claims that Yodawy is currently the primary partner for most corporates in the Egyptian market, about 300 in number, and serves their patients (employees) needing chronic medication. The Giza-based health tech upstart, which employs a B2B2C model, has partnered with 20 health insurance companies and 500 doctors, and 3,000 pharmacies have processed over 4 million prescriptions via individuals in these corporates. Meanwhile, Yodawy recently launched a flagship e-prescription gateway that lets physicians go paperless, with seven insurance companies and health management organizations participating in the program, resulting in more than 2,000 e-prescriptions generated daily. The company’s revenue has grown by 400% since its last priced round 18 months ago.
“The medication value chain is quite complex, and being able to streamline the process required us to build it [and] additional products for insurance companies and doctors. So we serve doctors through our e-prescription gateway and created significant traction in converting handwritten prescriptions to e-prescriptions,” said the CEO.
“This takes us to the second product, which is our approvals engine that is currently being used by almost 10 insurance companies in the market, which replace the legacy manual approval processes that create lots of friction with a real-time approval engine that can automate 80% of the decisions on behalf of the insurance back office.”
A handful of e-pharmacy providers in Egypt serve different types of businesses and individual customers, such as PharmacyMarts, Chefaa, and Vezeeta (one of its offerings); across sub-Saharan Africa, the likes of mPharma, Lifestores and Drugstoc come up in the conversation. But Khashaba argues that Yodawy is the only full-fledged pharmacy benefit manager powered by tech that manages the end-to-end prescription cycle — whether creating an e-prescription gateway for hospitals and doctors or an approval automation engine for insurance companies — and handles fulfillment.
What Yodawy lacks, however, is last-mile capabilities. Its investment from Delivery Hero Ventures is strategic because the digital healthcare startup could explore some form of partnership with Delivery Hero to handle that integral bit of its business.
In addition to its expansion across the Middle East and Africa, the investment proceeds, per Yodawy’s statement, will fuel the growth of its signature Care Program for chronic patients, which offers monthly medication refills to enrolled patients and processes daily deliveries across 38 cities in Egypt. The company also intends to continue to automate its operations, enable prescription processing at a larger scale, and bolster existing tech-enabled fulfillment capabilities to serve a rapidly growing base of patients.
“We continue to be fascinated by the ways they’ve [Yodawy] used technology to elevate the healthcare experience for insured and non-insured patients,” Noor Sweid, managing partner at Global Ventures, said on why her firm co-led the startup’s round after doing so in its Series A. “This is translated in their ability to serve more than 50,000 recurring chronic patients every month and save them more than 100,000 monthly hours of queuing to receive essential medication.”
Brendon Blacker, the managing partner at Delivery Hero Ventures who joins Yodawy’s board, adds that his firm was drawn to the Egyptian health tech’s “clear vision to revolutionize the pharmacy industry across the MENA region.” This latest funding brings the four-year-old company’s total capital raised to $24.5 million.
Comment