Getting medicine to MENA doorsteps

👩‍⚕️ The problem is personal

In 2016, Doaa Aref was diagnosed with cancer.

She needed immediate surgery and Radioiodine therapy.

During the week’s isolation required after treatment, Doaa was struck by something.

She could order everything online, except the medicine her life depended on.

While spending long hours in hospital waiting rooms, Doaa met other patients who shared her struggle.

Chronically ill patients in Egypt fill 2 million prescriptions each month, yet only 5,000 out of 75,000 pharmacies use digital marketplaces to sell medicine.

Thankfully, Doaa beat cancer.

Her next challenge?

Taking it upon herself to ensure that others don’t have to suffer like she did.

Doaa was determined to find a way to enable patients to order and refill their medicine online from their nearest pharmacy.

She first created a WhatsApp group with nearby pharmacies, but it proved inefficient due to unavailable medicines or incorrect dosages.

Doaa and her best friend, pediatrician Dr. Rasha Rady, began to mull the problem over.

They envisioned a GPS-enabled app for ordering and refilling medicine from the nearest pharmacy.

Doaa made it her mission to turn this idea into reality.

Although similar platforms existed in the US, Egyptian pharmaceutical laws were outdated, dating back to the 1950s and 1960s.

Despite this, Doaa pushed to digitalise the process.

In July 2017, Doaa and Rasha decided to join their first startup accelerator competition and introduce their business idea.

They were eliminated very early in the competition.

Doaa and Rasha considered packing it in.

But they kept going.

And now, with their startup Chefaa, they help over 1.5 million people gain access to over 1,500 pharmacies across every city in Egypt every month.

Chefaa, which translates in English to “cure”, is an AI-powered, GPS-enabled platform helps chronic patients order, schedule, and refill prescriptions.

It provides 24/7 support from licensed pharmacists, dosage reminders, and educational posts in Arabic.

Users can upload prescriptions, which are directed to the nearest pharmacy until accepted, prepared, and delivered, eliminating the need to search multiple pharmacies. Non-prescription items can also be ordered and tracked through Chefaa’s nationwide network.

Pharmacies, on the other hand, benefit from automated processes, increased sales, and market insights provided by the Chefaa Intelligence Business Hub through data analytics.

With over 800,000 app downloads, it’s fair to say the platform has taken off.

Last year, Chefaa began its expansion into Saudi Arabia, and is now established in 8 cities across the Kingdom, and has also raised over $8.9 million in funding.

Their most recent $5.25 million round was co-led by Newtown Partners and Global Brain, with other investors including GMS Capital Partners LLC, Verod-Kepple Africa Ventures, and M3, Inc. This funding aims to expand their patient-centric platform and digitize the supply chain.

Doaa and Rasha are among many founders in Egypt committed to improving access to medication through healthtech.

The opportunity is considerable, with the sector's revenue expected to reach $498 million this year and rise to $677.6 million in 2024 and $885.7 million in 2025.

💊 State of play

The ground zero moment for e-pharma was arguably back in 2018, when Amazon acquired US-based PillPack in a deal valued at $753 million.

If Amazon was willing to front up that much cash, consumer habits were clearly shifting towards purchasing their medication online.

The move was also a validation for several e-pharmacy startups across Egypt, who went on to experience significant growth during the pandemic.

A handful of e-pharma providers in Egypt serve various businesses and individual customers.

Chefaa, Yodawy, and Vezeeta connect patients with pharmacies, while startups like i’SUPPLY and Pharmacy Marts link pharmacists to medication suppliers.

🚧 Roadblocks and challenges

Despite these efforts, online medicine orders are still under 1% of the market.

There are, of course, countless challenges:

1. 📉 Egyptian pharmacies are under strain due to a foreign currency shortage, preventing the import of essential medicines.

2. ⚖️ Egypt's outdated pharma laws create regulatory uncertainty, making small pharmacies hesitant to adopt digital.

3. 🛵 Unlike food delivery, medicine delivery requires timely and accurate delivery, making competitive pricing difficult.

4. 🧩 The landscape is super fragmented, with a glaring gap in the market between pharmacies and insurance companies, as well as a lack of automation and digitalisation in the sector.

But the opportunity for startups to disrupt and make real, meaningful change is consequently enormous.

Especially for those like Chefaa, who can serve the needs of multiple stakeholders within the pharma value chain in Egypt and MENA.

Another such startup doing just that is Yodawy.

🏥 Bridging the gap

Yodawy, meaning “to heal” in Arabic, started as a side business to bridge the gap between pharmacies and insurance companies in Egypt.

Now, it serves 200,000 patients per month through a network of 2,000 pharmacies.

Yodawy is a pharmacy benefits manager that accommodates the services of its partners — insurance companies, medical providers, pharmacies, and pharmaceutical/FMCG companies — and connects them with business clients and individuals.

A year after its launch, Yodawy raised $1 million from Egyptian VCs Algebra Ventures and C-Ventures.

This allowed founders Karim Khashaba, Yasser Abdel Gawad, and Sherief El-Feky to commit full-time.

But it wasn’t all smooth sailing.

It took them two years to secure its first insurance partner.

Now, Yodawy works with over 35 providers.

Its platform automates approvals, saves costs, and improves customer experience for insurance companies and hospitals.

Pharmacies benefit from an online presence and increased sales, while over 50,000 chronic patients monthly, enjoy convenient medicine delivery, saving them 100,000 hours of queuing.

Pharma companies, on the other hand, can tap into Yodawy’s network of pharmacies to put products in the hands of consumers.

Earlier this year, Egypt-based PE firm Ezdehar invested $10 million for a minority stake, following Yodawy's $16 million Series B funding co-led by Delivery Hero Ventures and Global Ventures in February 2023.

With only last-mile capabilities missing, Delivery Hero’s backing might be the final piece of the puzzle.

Needless to say, Yodawy is coming for the rest of MENA, and quick.

🦅 What’s next?

Egyptian e-pharma start-ups are spreading their wings, and expanding across MENA.

Chefaa continues to bolster its presence in Saudi, whilst Yodawy has eyes set firmly on the GCC.

Karim Khashaba doesn’t foresee a problem with Yodawy being in 10 to 15 markets in three to five years.

These are challenging, but exciting times.

👋Message from the team

Thanks for reading this week’s edition!

If you’re enjoying the newsletter, don’t forget to share it with a friend!

Have a question or any feedback? Just hit reply, or provide a rating below - we want to hear from you!!

Was this forwarded to you? Sign up here.