Egyptian Health Tech Yodawy Raises $16M Backed by Delivery Hero Ventures • businessroundups.org

Without proper government-led public health initiatives, healthcare expenditures, including insurance and pharmaceuticals, can become a burden on individuals and households. In recent years, private institutions have played a huge role in the significant adoption of medical insurance and medicines and also in reducing the cost of getting them through Egypt, the largest producer of medicines in the MENA region whose pharmaceutical market has been defined 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 led this round alongside Delivery Hero Ventures, the venture arm of global food delivery platform Delivery Hero, which has now made its first check in Africa. Singapore-based AAIC Investment and Saudi-based Dallah Al-Baraka also participated in this round. Existing investors who participated in digital healthcare Series A round of $7.5 million in 2019, Middle East Venture Partners (MEVP), C Ventures and P1 Ventures, among others, also doubled.

Co-founder and CEO Karim Khashaba told businessroundups.org that the health technology startup plans to use the investment to expand into markets in the Middle East and Africa, where the pharmaceutical market represents a $60 billion market opportunity. Yodawy’s journey in Egypt began in 2018 when Khashaba co-founded the company with COO Yasser AbdelGawad and CTO Sherief El-Feky. They have built an infrastructure that hosts the services of its partners – insurance companies, medical service providers, pharmacies and pharmaceutical/FMCG companies – and connects them to corporate customers and individuals.

Here’s an example that highlights the problem every Yodawy stakeholder faces. More than 90% of Egypt prescriptions and insurance claims are recorded on paper. As trivial as that sounds, this affects every player in that value chain, from problems ranging from prescription errors to long processing times and queues at pharmacies and hospitals.

With Yodawy’s platform, insurance companies and hospitals can automate approvals, save costs and improve the customer experience. Also, pharmacies are gaining an online presence and driving sales through Yodawy’s e-commerce offering, which patients (through employer-led medical schemes) can take advantage of when they get their drugs and medications delivered to their homes. Pharmaceuticals, on the other hand, can use 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 plans. We pretty much manage the end-to-end prescription value chain, from how prescriptions are digitally generated on the physician side to how payers process prescriptions, all the way to sort of a complete fulfillment infrastructure that currently manages the delivery of nearly 200,000 prescriptions monthly in 30 cities in Egypt,” the CEO said during the phone call.

He claims that Yodawy is currently the main partner for most of the companies in the Egyptian market, about 300 in number, serving their patients (employees) who need chronic medication. The Giza-based health technology start-up, which uses a B2B2C model, partners with 20 health insurers and 500 physicians, and 3,000 pharmacies have processed more than 4 million prescriptions through individuals in these companies. Meanwhile, Yodawy recently launched a flagship e-prescription gateway that allows doctors to 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 400% since the last price round 18 months ago.

“The medication value chain is quite complex and in order to streamline the process, we had to build it [and] additional products for insurance companies and doctors. So we serve physicians through our e-prescription gateway and have created significant traction in converting handwritten prescriptions into e-prescriptions,” said the CEO.

“This brings us to the second product, our approval engine currently used by nearly 10 insurance companies in the market, which replaces the legacy, friction-inducing manual approval processes with a real-time approval engine that can automate 80% of decisions on behalf of the back office insurance.”

A handful of e-pharmacy providers in Egypt serve different types of businesses and individual customers, such as PharmacyMarts, Chefaa, and Vezeeta (one of the offerings); in sub-Saharan Africa, names such as mPharma, Lifestores and Drugstoc are mentioned. But Khashaba argues that Yodawy is the only full-fledged pharmacy approach, powered by technology, that manages the end-to-end prescription cycle — whether creating an e-prescription gateway for hospitals and physicians or an approval automation engine for insurance companies — and deals with fulfillment.

What Yodawy lacks, however, are last-mile capabilities. Delivery Hero Ventures’ investment is strategic because the digital healthcare startup could explore some form of partnership with Delivery Hero to handle that integral part of its business.

In addition to expanding in the Middle East and Africa, investment returns will drive the growth of its signature, according to Yodawy’s statement care program for chronic patients, which offers monthly medication refills to registered patients and processes daily deliveries in 38 cities in Egypt. The company also plans to continue to automate its operations, enable larger-scale prescription processing and strengthen existing technology-assisted fulfillment capabilities to serve a rapidly growing patient base.

“We remain fascinated by the ways they have gone [Yodawy] used technology to elevate the healthcare experience for insured and uninsured patients,” said Noor Sweid, managing partner at Global Ventures, on why her company co-led the startup round after doing so in Series A “This translates into their ability to serve over 50,000 recurring chronic patients each month and save them over 100,000 hours of waiting in line each month to get essential medication.”

Brendon Blacker, the managing partner at Delivery Hero Ventures who will join Yodawy’s board, adds that his company was attracted by the “clear vision of Egypt’s health technology to revolutionize the pharmacy industry in the MENA- region.” This latest financing brings the four-year-old company’s total capital raised to $24.5 million.