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Nigeria’s Medsaf quietly shuts down after raising over $7 million to digitise drug supply

After raising $7M and working with 1,000+ hospitals, Nigerian health startup Medsaf has shut down due to FX shocks, investor pullouts and a failed acquisition attempt.
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Nigeria’s Medsaf quietly shuts down after raising  over $7 million to digitise drug supply
Photo: Vivian Nwakah, CEO, Medsaf

Medsaf, once seen as a trailblazer in digitising Nigeria’s pharmaceutical supply chain, shut down operations in March 2024. Launched in 2016, the startup had raised over $7 million from investors, including Y Combinator, Techstars, NGOs, and DFIs. Its goal was ambitious: to help hospitals and pharmacies procure safe, quality-assured medication through a digital platform, reducing the circulation of fake or substandard drugs in Nigeria’s healthcare system.

At its peak, Medsaf worked with more than 1,000 private and government-owned hospitals and clinics across the country. The company pioneered the digitisation of medicine procurement in Nigeria before many of today’s competitors even existed.

The closure was confirmed in an email to investors from CEO Vivian Nwakah, who cited a failed acquisition process, outstanding debts, and large sums owed by hospitals that the company had been unable to recover. “We have made the decision to close Medsaf effective immediately,” she wrote.

By January 2023, the startup had reportedly run out of money following an unsuccessful attempt to raise a Series A funding round. In internal messages reviewed by Condia, Nwakah identified unpaid invoices, supplier credit issues, and the loss of a key government contract as the primary financial triggers. She also claimed that a former investor had “stolen” a major government deal that might have helped stabilise the business.

But the broader economic climate played a major role too. Medsaf’s business was deeply affected by Nigeria’s worsening foreign exchange crisis, particularly the naira’s decline over the course of its operations. Nwakah said the company was scaling to meet government-level demands when the economy, hit by political unrest and monetary instability in 2023, became impossible to navigate. Investor and lender confidence cratered just as Medsaf needed it most.

TechCabal reported in mid-2023 that the company had laid off its full-time team after months of salary delays. Employees alleged that they hadn’t received pay in several months and that deductions for pensions and taxes hadn’t been remitted. At the time, COO Rotimi Lawal acknowledged the financial strain, blaming it on funding gaps and the poor payment practices of hospital clients.

Despite efforts to sell the company in late 2023, no acquisition deal materialised. In her email, Nwakah asked investors to keep the shutdown under wraps to avoid worsening the company’s ability to recover unpaid receivables. “They definitely won’t pay if I announce a close,” she noted.

As of March 2024, Medsaf was still attempting to collect debts, with a small volunteer team handling the inventory sell-off. Efforts were also underway to wind down the company’s US operations, although closing the Nigerian entity was described as “almost impossible” under current legal frameworks.

Reflecting on the journey, Nwakah said the company was built on a weak foundation. “The team is the most important part, and most of the problems that plagued the company came from me trying to compensate for not having the right team in the very first place,” she wrote. She also added that she had run Medsaf full-time for seven years without any other source of income or work.

“I did all that I physically and mentally could with the cards I was dealt,” she wrote to investors. “I can rest knowing that.” In a recent LinkedIn post, she added: “I made a ton of mistakes, especially with people, but I did the best I could. I built a drug company in Nigeria from scratch, going up against open drug markets, criminal syndicates, a treacherous business climate, and multimillion-dollar corporations; and I made it work, even if for a little while.”

Health sector is still growing despite exit

Medsaf may be out of the race, but its early push to digitise Nigeria’s pharmaceutical supply chain has helped pave the way for newer entrants now gaining traction.

Remedial Health, for instance, has raised over $17 million and now serves more than 5,000 pharmacies and hospitals across 34 states. Its platform offers digital procurement, stock tracking, and credit facilities to small medical businesses.

Field Intelligence’s Shelf Life platform operates in 11 cities across Nigeria and Kenya, working with over 700 pharmacies to digitise procurement and inventory processes. And Lifestores Healthcare, which launched the same year as Medsaf, has grown to serve over 10% of pharmacies in Nigeria, offering performance tools and access to verified medication through its OGApharmacy platform.

Others are also carving out space. Drugstoc, a YC-backed startup, offers an end-to-end distribution network for vetted pharmaceuticals, currently serving over 3,000 hospitals and clinics in Nigeria. Ghanaian-founded mPharma also has a growing footprint in Nigeria through its pharmacy transformation model and drug distribution services.

While Medsaf ultimately couldn’t sustain itself, these newer players are proving there’s still demand and room for innovation in a sector long plagued by inefficiencies and counterfeit products.


* This article was updated to reflect clarifications from Medsaf founder Vivian Nwakah, including additional context on the company’s funding, achievements, and the macroeconomic challenges that contributed to its shutdown.