Lifestores Healthcare, a Nigerian health technology firm, has raised $3 million in a pre-Series A round led by Health54, the healthcare-focused corporate venture capital arm of CFAO Group. Aruwa Capital Management was the supporting lead in the round, with participation from some existing investors like Lionbear Conduit Capital. According to Lifestores, the investment round was oversubscribed by 50%.
Founded in 2017 by Andrew Garza and Bryan Mezue, Lifestore was designed as a chain of about six retail pharmacies that gave Nigerians access to verified medications. Its solution was timely and important, especially in Nigeria, where about 20%–40% of medications are fake. They were able to ascertain drug authenticity by procuring at the top of the supply chain and passing supplies through routine traditional checks.
However, at this point in Lifestore’s business cycle, its business model hardly had a core software component. But as the business grew and its founders gained insights into the consumer market for medications, they began to deploy technology to solve some of the business’ in-house problems. One of these solutions was what they eventually decided to roll out to pharmacies nationwide, leading to the launch of OGAPharmacy, the company’s online marketplace for Nigerian pharmacies. To date, Lifestores’ retail outlets still serve as the experimental points where the general needs of pharmacies are evaluated for solutions to be built into the OGApharmacy product.
Lifestores is playing in Africa’s underexplored $45 billion pharmaceuticals market. Despite the huge potential of the market to double within the decade, several infrastructural roadblocks, including fragmented supply chains awash with fake medications, continue to stand in the way of a balanced healthcare system on the continent. In Nigeria, these problems are more pronounced in a population of over 217 million people, with a health insurance penetration of about three percent and a massively fragmented supply chain for medical supplies.
For pharmacies in the country, more tailored problems include inventory procurement, access to credit, and optimised pharmacy management systems. These specific pain points are what OGApharmacy has converted into its value propositions. The online marketplace aggregates demand for pharmaceutical supplies from pharmacies and hospitals, enabling them to access genuine medications at discounts of up to 15%, all on an efficient supply chain system.
As reported by Lifestores, OGApharmacy has grown 25% MoM since its inception and counts up to 10% of Nigerian pharmacies as customers. This impressive growth rate is what spurred the reinvestment by Aruwa Capital Management, whose CEO, Adesuwa Okunbo Rhodes, spoke effusively about OGApharmacy.
“Following an initial investment 18 months ago, we have been impressed with Lifestores’ stellar growth rate and are proud to continue to support this hardworking team providing market-relevant solutions,” she said in a statement seen by TechCabal.
“In line with Aruwa’s gender lens strategy, approximately 50% of the pharmacies on OGApharmacy, are owned or led by women. We look forward to Lifestores’ continued success and are excited about the new strategic partnership,” she added.
The round’s lead investor, Health54, was notably making its first investment in Nigeria with this round. Established as the health-dedicated corporate venture capital (CVC) vehicle of the CFAO group, Health54 is committed to high-growth startups servicing Africa’s healthcare sector. The healthcare funding group is on a mission to give business support and financially empower startups solving problems around medical supplies and services for Africans, leveraging its wide African healthcare network to boost the scale of its investees.
“We’re proud and happy to make our first investment with Health54 in Nigeria and in Lifestores. We were impressed with Bryan and Andrew’s on-the-ground experience of having run multiple retail pharmacies in Nigeria. In two years, they have built a first-rate distribution platform with OGApharmacy. As a strategic partner, we’re delighted to work together and bring the benefits of our vertically integrated pharmaceutical supply chain so we can support more patients in Nigeria and beyond with quality primary healthcare,” said Côme Vercken, managing director, Health54.
Lifestores will use the raised capital to fuel its nationwide reach and expand its suite of pharmacy clients from 750 to about 2000 out of the 7,000 registered pharmacies in Nigeria. This will enable them 4X their patient reach from 100,000 to 400,000 by 2023. They will also launch a new operations centre in Lagos, which will cater to the business’ sorting and logistics needs.
On the technology front, the company will improve its existing pharmacy management system, credit offerings, AI-driven predictive ordering, and patient management initiatives. Lifestores is also looking to pilot B2C and B2B2C services like patient savings, care management, and medication delivery.
Speaking on the raise, Bryan Mezue, co-founder and CEO of Lifestores, said: “We’re thrilled to have Health54 join our mission of democratising access to quality and affordable primary healthcare in sub-Saharan Africa, together with existing investors, such as Aruwa Capital and the Lionbear consortium.”
In a statement shared with TechCabal, Mezue maintained that the company’s motivation is to support the critical work that pharmacists across the country do.
“The vast majority of Africans will visit their local pharmacy for treatment. We aim to support pharmacists, the unsung heroes of African healthcare, with the critical services they need to procure and provide safe and affordable medications to their patients,” he said.
“Our scope goes beyond merely distributing medicines and stabilising prices. Essentially, pharma wholesalers are the ‘banks’ of the healthcare supply chain in Nigeria, and their impact on the overall economy is considerable. By optimising how we extend credit to our healthcare provider partners and modernising patient access to health financing, we are able to power the growth of our partners and increase patient access to quality care,” Garza, Lifestores co-founder, added.
Garza and Mezue, graduates of Stanford University Graduate School of Business and Harvard Business School, respectively, share a common work history as staff of global management consulting firm Bain & Company, and have both run businesses in Africa before founding Lifestores Healthcare. Though not pharmacists themselves, the duo have had practical experience in the pharma space. Garza’s previous role was in supply chain management for Nigeria’s Chi Pharmaceuticals, while Mezue has advised a mega pharmaceutical store owned by a relative.
An interesting perspective to Lifestores’ story is that despite its founders being non-technical, they’ve proven their ability to scale software products to almost a thousand businesses. This is a departure from the existing investment preference by global accelerators for startups to be headed by at least one technical co-founder. According to Garza and Mezue, technicality is only one side of the equation. Understanding the product and articulating solutions is the other side, and they’ve shown excellence in that while working with a strong technical team.