Having worked with some of the biggest medical equipment and supplies distributors in East Africa, Alex Musyoka knew firsthand the challenges clinics and hospitals in rural areas go through when sourcing for the much-needed medical supplies.
“I worked in the medical industry for 15 years and one of the biggest problems is not having sufficient medical supplies when needed,” says Alex co-founder and Chief Commercial Officer of Viebeg Medical Supplies says.
Procurement and supply is often a long and tedious process for most organisations, and as such stock-outs are common.
However, health centres, which often handle life-and-death situations do not have the luxury of running out of stock.
Alex decided to tackle the problem with data analytics to ensure that his customers did not run out of crucial supplies.
When he and his co-founder mooted the idea of launching Viebeg Medical Supplies, people questioned if they would make it and whether the whole concept was feasible.
“This pushed me even harder to achieve what people thought was impossible,” he stresses.
Alex says he was lucky to meet his co-founder Tobias Reiter with whom they raised $50,000 for initial stock and other running costs but when they realised the business was not moving as planned, Tobias got a $250,000 loan to get the start-up off the ground.
“After incorporating technology, we started approaching impact investors because being a start-up and the impact we were creating, we wanted investors that would suit our business model,” recalls Alex.
However, this fundraising took a lot of time because, at times, investors felt Viebeg Medical Supplies didn’t fit their model.
“We made over 50 investment calls and only one came through. Raising funds was not an easy task but that is when things started going for us,” he adds.
Alex clarifies that as per their model, they classified capital into three aspects.
“There's the financial bit, customers/clients and suppliers.
“Capital is only mentioned in terms of money but we have some clients who supported us at the very beginning by giving us payments in advance because they lacked supplies and didn’t know where to get them. We had our margins and we were good to go,” Alex explains.
The medic says he also had a collection of suppliers he had built trust with who gave him the opportunity to take their products on credit, enabling them to sell upfront and pay after a period of time.
The business model
Viebeg Medical Supplies is a health data-driven procurement company that de-risks and optimises the procurement of medical equipment through supplies using a health demand simulation model.
“We collect demographic and geographical data, analyse to determine which equipment or drugs are needed at a certain location.”
Using the gathered data, the firm has built models that predict demand within a given period of time, giving them an edge over other suppliers who procure on gut feeling.
“We ensure that at whatever given time a customer requests for a certain product, we are able to deliver right before the previous shipment is out of stock,” explains Alex.
To endear them to their customers, Viebeg Medical Supplies offers financing arrangements by linking them to financiers such as impact investors.
“Many clinics would want to have certain equipment so we connect them to financial institutions, we supply and guarantee the equipment.”
Alex says that Viebeg grew exponentially from their first to the second year with a 200 percent increase in revenue.
“We have had an average growth of about 80 percent in revenue annually,” reveals Alex.
In terms of client acquisitions, Viebeg has grown at a rate of 60 percent every year and currently serves 650 hospitals, clinics and pharmacies in Rwanda, Kenya, and eastern DRC.
“We currently have 34 employees, 30 casuals, 600 plus on delivery on demand deliveries met and supplied over 620,000 products up to now.”
Coping with challenges
Apart from the Covid-19 disruptions, the biggest challenge Alex and his business partner had to contend with was building a team because according to him, the biggest part and chunk of building a successful business is having a good team.
“Funding was also a challenge and not to forget having clients to accept you and also growing the new markets because when spreading to new markets considering that this is Africa, what is theory is not what is practical.”
Alex decries that taxation is still too high leading to medical supplies being costly.
He explains that Viebeg sees potential partnerships with companies for drone delivery of drugs and optimises to see which routes best fit certain deliveries.
“We are getting to understand and figure out how to handle distribution of medical supplies but at the moment, we are managing it through third parties,” he adds.
Learnings and plans to conquer East Africa
Alex says that the first lesson he learned, even when he was employed, is the value of discipline and work.
“As an entrepreneur, at a certain time point in time, we tend to relax thinking all is well but for me, there's much more than that. I do not stick on playing small as there is no fun in playing small, push yourself to higher limits,” he advises.
Alex says when they recently fund-raised, they were already planning to strengthen their existing branches.
“In the next three years, we aim to take over the East African market. What we are doing is cash intensive, but with data analytics models we are building and partnerships with governments, we want to ensure we have the right statistics to help us predict demand,” he concludes.
For now, they are looking at Uganda, Tanzania and Burundi before even thinking of heading to the West Africa market.