Rwanda: Co-founders see business opportunity in medical supplies industry
Tobias Reiter is the CEO and co-founder of VIEBEG, a health-tech company that provides medical supplies and equipment to the central and eastern African regions. Healthcare providers can purchase the products through VIEBEG’s online platform.
Starting the company
Reiter grew up in Vienna, Austria, and studied business administration. He wanted to do something impactful and while on a visit to Rwanda, he met Alex Musyoka, originally from Kenya.
At the time, Musyoka had been working in the medical supplies industry for more than 12 years and showed Reiter the problems healthcare providers (hospitals, clinics and dental care centres) in East Africa were experiencing. There was a shortage of the correct products and equipment as well as logistics challenges in getting the items to the healthcare providers.
“Everywhere we went – Burundi, Rwanda, Congo, Kenya, Uganda – we saw the same thing,” says Reiter of the initial research in the region. “People were dying because of diseases that could be treated if the right products were available.”
The co-founders identified the problem as poor inventory management and inconsistent procurement. Reiter realised that many healthcare providers in the region did their procurement by gut feel, recording lists in notebooks and not really understanding when they would need certain products.
VIEBEG officially started operations in October of 2018. The company quickly grew, building on Musyoka’s contacts in the medical industry in Rwanda.
“We are like the Amazon of medical supplies,” explains Reiter. “We take care of every step of the supply chain. From importing products to stocking them in our warehouse, listing them on our platform and doing the last-mile delivery. We even do after-sales services or maintenance and support of certain machines and equipment.”
The company takes the data it collects from the different healthcare providers when they interact with the platform and – using predictive analytics and AI – makes sure it stocks the correct equipment and products for its clients to effectively treat their patients.
“We are working with more than 500 healthcare providers and we take care of every step of the supply chain for them.”
While Musyoka had a customer base and connections with hospitals and healthcare providers in the region, the company had to work hard to secure its position with manufacturers and suppliers. “When you are a start-up in central Africa, the manufacturers want to establish trust before they send products on consignment and work with you,” reveals Reiter.
Products and equipment that it lists on the platform include disposable needles, surgical gloves, local anaesthetics as well as ultrasound and radiology machines. Presently, VIEBEG is the official and exclusive distributor of some medical suppliers like Vatech, a Korean dental imaging company, and Aura Air, air purification technology developed in America.
The business model
VIEBEG takes a margin on the products it lists and sells but in time, it wants to move towards a commission model.
“We make sure to optimise the payment terms available to us. For our customers, the healthcare providers, we have a buy-now, pay-later system. This allows hospitals to get the products upfront and to treat patients in order to generate income,” Reiter says.
Using the available data, the company can predict the best and most affordable payment plan for hospitals, for example. In this way, these hospitals can get machines, which they otherwise would have not been able to afford, via structured down-payments.
On the supplier side, VIEBEG has payment terms with some manufacturers that range from 45 days to six months after the product has been supplied on credit.
VIEBEG keeps substantial stock of products and equipment at its warehouse in Kigali as it can take up to three months to receive imports in the landlocked country.
Reiter admits holding the stock comes with some risk. “We are addressing this risk by building a huge logistics hub in East Africa that will serve Rwanda, Burundi, Kenya and Tanzania. In doing so, it will expand our target market and ensure we can rapidly sell the products.”
Getting the products to their final destination is challenging in many parts of the region. In Rwanda, the infrastructure is good, but in the DRC and Burundi, anything could happen. “There can be war, civil unrest, even recently the volcano in Goma (DRC). To ensure we are reliable partners to our healthcare providers and ensure we are always able to provide what they need, we manage our logistics in a data-driven way.”
VIEBEG collects data on optimal delivery routes, has a flexible delivery fleet and works with various local partners to suit the specifics of delivery in each market. “We use motorcycles in Kigali so that we can reach every hospital quickly. We are looking at adding sensors to the larger vehicles to collect data and record optimal routes for every healthcare provider, as well as the best time of day to deliver,” he says.
VIEBEG is currently establishing a second fulfilment centre in Kenya and intends to open a local warehouse at Rwanda’s borders with the DRC and Burundi from which to manage supply.
According to Reiter, VIEBEG’s current competition is still from the more traditional players such as brokers and companies that are buying medical equipment and selling it as middlemen.
“We have a huge advantage in that we are transparent and reliable. We also have much lower prices because we directly connect the provider with the manufacturer and provide a one-click solution.”
Healthcare professionals can use the platform as long as they have access to a computer or smartphone with an internet connection. The company is also looking at offline solutions when the internet is down.
There are other innovative international competitors. One example is Zipline, an American company that uses drones to deliver blood in Rwanda. “It delivers emergency products and we focus on inventory optimisation,” says Reiter, adding that delivery by drone for the size, type and volume of VIEBEG products won’t be scalable.
Looking to the future
Reiter believes Rwanda was the right market for VIEBEG to find its feet. While each country is different and models cannot be replicated for different geographies, starting in a structured market such as Rwanda has given the company time to establish proof points.
“Right now, we are expanding to Kenya, which is a huge market. We want to show that our business model works in other countries as well. We are on the verge of expanding into Uganda and looking at Kinshasa and even Ethiopia within the next two to five years.”