Medsaf, a Nigerian end to end pharmaceutical supply chain optimization platform, for hospitals, clinics, and diagnostic centers, has shut down operations.
The closure was confirmed in an email to investors from CEO Vivian Nwakah, who cited a failed acquisition attempt, mounting debts, and significant unpaid receivables from hospitals as key reasons for the decision. “We have made the decision to close Medsaf effective immediately,” Nwakah wrote.
Launched to address the fake and substandard medication issues across emerging markets, the company had raised over $2 million from prominent investors, including Y combinator and Techstars, with a mission to streamline the procurement of safe, quality-assured medication for hospitals and pharmacies via a digital platform.
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In 2023, the company had run out of funds following an unsuccessful Series A funding round. Internal communications revealed several critical financial setbacks: outstanding invoices, supplier credit constraints, and the loss of a major government contract.
In March 2023, the healthtech startup, laid off all its full-time employees. The company’s chief operating officer (COO), Rotimi Lawal, revealed that the company had to reduce its workforce following “challenges ranging from funding gaps to account receivables due to different the macroeconomic policies and dismal payment behavior of hospitals in our industry.
Medsaf’s CEO, Nwakah, blamed the situation on investors reneging on funding commitments. “The funds we were expecting would have been enough to extend our run rate for 1.5 years and allow us to close on a $2m loan that would push our company into profitability”, she said.
As financial pressure intensified, employees complained of delayed wages and unremitted pension and tax deductions. A former senior executive alleged that Medsaf’s CEO withdrew company funds for personal use and alleged that the company could not account for monies ostensibly paid to them by a medical partner. Medsaf stringently denied these claims and, in later engagements with TechCabal, stating that the funds were used to buy medication stocks.
Despite efforts to secure an acquisition in late 2023, no buyer emerged. In her investor email, CEO Nwakah requested discretion regarding the shutdown, warning that a public announcement could jeopardise efforts to recover outstanding debts. “They definitely won’t pay if I announce a close,” she noted.
As of March 2024, a small volunteer team was overseeing the sale of remaining inventory while attempting to collect unpaid debts. Winding down the US operations had begun, but closing the Nigerian arm remained a legal and logistical challenge.
Nigeria’s pharmaceutical sector relies heavily on imports (70% of drugs), faces regulatory hurdles, and suffers from poor payment practices by healthcare facilities, all of which strained Medsaf’s business model.
Launched in 2017, Medsaf curated a plethora of products to solve ease of movement and access to quality medications across Nigeria. The company leverages technology to provide direct access to quality medication manufacturers for hospitals and pharmacies.
It had a mission to help African hospitals and pharmacies access credit, inventory management and logistics with ease. Notably, Medsaf built strategic partnerships with the most trusted manufacturer, to provide facilities with quality and affordable medication.
Medsaf’s failure highlights the difficulty of digitizing Nigeria’s fragmented drug supply chain, potentially discouraging investors from funding similar ventures.
Its closure provides insights for other healthtech startups (e.g., Remedial Health, Drugstoc) on the need for robust financial management, diversified revenue streams, and stronger partnerships to navigate market challenges.