Nigeria's Diagnostic Industry: Battling the Double Burden of Disease
While communicable diseases remain the primary cause of death in Nigeria, the country is facing an increase in the incidence of chronic diseases. Nigeria’s most recent WHO NCD profile shows that chronic diseases (e.g., cancer, heart disease, diabetes, etc.) account for an estimated 29% of all deaths in the country. And this number is expected to grow over the next 10 years, as the WHO predicts a 27% increase in NCDs in Africa - a faster growth rate than the projected 17% rise in global NCDs over the same period.
As a result of this double burden of disease, the demand for diagnostics services is increasing in the country on two fronts. The COVID-19 pandemic, coupled with recent yellow fever and Lassa fever outbreaks, have substantially increased the need for diagnostic microbiology to identify bacterial and viral infections; while the rising heart disease, cancer and other chronic disease cases in the country have increased the need for clinical chemistry testing (i.e., tests to measure levels of chemical components in body fluids and tissues).
Unsurprisingly, the clinical laboratory services market has expanded to accommodate this growing demand. In 2020, the Nigerian clinical laboratory services market was valued at USD 504 million and is expected to reach USD 665 million by 2026. The ongoing COVID-19 pandemic has no doubt positively impacted the diagnostic market given the high demand for COVID tests and mutation surveillance. Several new COVID testing laboratories have sprung up in the country since the pandemic ensued - there are currently 64 NCDC-accredited private COVID testing labs and 9 corporate labs in the country.
There has also been simultaneous growth in the advanced and precision diagnostics market in Nigeria. So how are the major players in the diagnostics industry adapting to this increasing demand? The recent developments in the space reveal some insightful data on the growing industry.
With such a promising growth trajectory, the Nigerian diagnostic market offers huge potential for investment for both domestic and foreign investors. Large European labs seeking growth opportunities have identified the Nigerian market as an opportunity for consolidation, resulting in acquisitions of local players.
In 2017 Synlab, Europe’s largest lab operator, bought a majority stake in PathCare Nigeria, one of the largest private labs in the country at the time. Synlab was seeking selective acquisitions in new markets, and with 6 labs, 21 blood collection points and an exclusive public private partnership with the Lagos University Teaching Hospital, PathCare was a prime candidate to tap into the Nigerian market.
Another notable acquisition was Clina-Lancet Laboratories, a long standing player in the Nigerian diagnostics sector, which was acquired by Cerba-Lancet Africa and Cerba Healthcare, France in 2019. Cerba Healthcare is a European leader in the clinical diagnostics space, with a network of over 500 laboratories in more than 450 countries in Europe, Africa and the Middle East. Cerba-Lancet Africa is a joint-venture between Cerba Healthcare of France and Lancet Laboratories of South Africa, which operates in 15 countries in sub-Saharan Africa, including Nigeria, Ghana, Kenya, Uganda, and Rwanda.
As a result of these acquisitions, these local labs in Nigeria can now leverage their access to high tech diagnostic services and cutting-edge technology by shipping samples from Nigerian lab collection centers to regional or global headquarters for processing and testing, particularly for advanced diagnostic procedures (e.g., non-invasive prenatal testing). Currently, most of the molecular diagnostic tests collected in the country are shipped outside the continent. This business model allows for rapid market penetration and operational efficiency, while saving millions of dollars on the development of country-level lab infrastructure. However, despite the access to a broader range of diagnostic tests for Nigerian patients, one drawback exists in that the cost of transporting, shipping and cold chain infrastructure for samples is inevitably transferred to the patient, along with potentially increased processing times for results.
Some companies are trying to fully localize their diagnostic capabilities in Nigeria and the African region. 54Gene, originally founded to create Africa’s largest genetic biobank, recently launched its diagnostic subsidiary, 7RiverLabs. With a total investment of over US$8-9m, 7RiverLabs offers a wide range of equipment from global suppliers including ThermoFisher, Illumina and Siemens, with up to 15 sample collection points spread across major cities such as Lagos, Abuja, Kano and Port Harcourt. A range of advanced genetic and precision diagnostic tests are available through 7RL, including cervical and breast cancer tests, non-invasive prenatal tests, and tests for rare diseases (such as Spinal Muscular Atrophy).
Undoubtedly this business model requires a significant upfront investment; however, by bypassing the need to ship samples to global or regional laboratory headquarters, this model allows for cost savings for the Nigerian patient by up to 15-30% on select tests vs. competitors. And with plans to expand into other African markets (US$2-5m per market) by scaling up their infrastructure on the continent, 7RL could provide African patients with access to advanced precision diagnostics at competitive prices.
Beyond commercial advantages, domesticating diagnostic technology also provides other health system-level benefits. With the breadth of population-level data collected, 7RL plans to support disease surveillance efforts and improve treatment outcomes within the Nigerian health system. Currently, 54Gene is conducting COVID-19 surveillance to identify new variants, but future plans involve identifying key population health insights that shape how Nigerian doctors will engage and plan for their patients, as well as informing government strategies to tackle major public health issues (e.g., maternal and infant mortality).
At the more local level, MDaas, a health tech startup, operates a network of tech-enabled diagnostic centers in Nigeria. With a total of $3.7 million in funding raised, MDaas is making primary care diagnostics available and accessible to low-and-middle income Nigerians through their BeaconHealth Diagnostics subsidiary. BeaconHealth currently operates in 5 states and provides imaging, cardiac, pathology, and health monitoring services to over 40,000 patients in underserved communities.
MDaas’ business model also involved capital-intensive investments in building and scaling the infrastructure available within the country. MDaas built 7 diagnostic centers in different cities across the country by identifying areas with inadequate clinical infrastructure to support the small and mid-sized hospitals serving those communities.
Key Takeaways from TC Health: As the diagnostic industry in Nigeria continues to grow and evolve, Nigerian patients and customers will have more access to advanced diagnostics services than ever before. Sustainable business models will be the key to success - diagnostic providers that are able to provide high tech services and tests at the lowest cost to the patient will have the greatest market share potential. While significant upfront investments to grow the diagnostics infrastructure and capabilities in the country will be required to achieve this; with a population of over 200 million and high out-of-pocket healthcare spending, competitive offerings are the name of the game.
