GE and Philips scan Africa medical market...

GE and Philips scan Africa medical market Katrina Manson, East Africa correspondent March 5, 2015 Judging by the long and determined-looking queue waiting to meet Samuel Were in London last week, executives from medical equipment companies fully grasp the near-$35bn value that the International Finance Corporation puts on Africa's healthcare market.

Dr Were is head of the public-private partnership unit at Kenya's ministry of health and the man every private sector participant needs to pitch to.

Across Africa, spending on healthcare is rising due to changing government priorities, private sector investment and the arrival of global names. Private sector companies deliver half of all healthcare provision in Africa, according to the IFC, and medical equipment companies such as GE Healthcare, Philips and Siemens are clamouring to win new contracts.

Although solutions to Africa's health crises have for years focused on basics, such as education and malaria nets, medical equipment suppliers are increasingly finding a market in supplying devices to private healthcare operators and investing through tie-ups with governments.

Their opportunity is in providing the kit needed to tackle Africa's changing disease burden.

Developed-world illnesses such as heart disease and cancer are growing fast in Africa. The World Health Organisation says they account for a third of African deaths, up from a quarter a decade ago.

But while the continent carries 24 per cent of the world's disease burden, it accounts for only one per cent of health expenditure, according to the International Finance Corporation, the private sector arm of the World Bank. The WHO says the continent's national health systems need a $140bn investment catch-up.

"We have double-digit [annual] growth in Africa," Peter van de Ven, general manager for Philips Health Systems Africa, says.

His business sells medical devices to both public and private sector buyers across Africa, including specially adapted ultra-portable ultrasound scanners for use in remote parts of Nigeria and Kenya.

Designed for rural areas where electricity supply is erratic or non-existent, these battery-operated tablet-sized devices -- ten times smaller than a traditional ultrasound scanner -- can be carried in a backpack by health workers visiting expectant mothers.

Other suppliers, such as Nordic group Elekta, sell cancer radiation therapy systems to a clutch of African countries, and last year started a new radiographer training programme in South Africa.

Siemens Healthcare also sells a range of diagnostic equipment into the continent.

Kenya's government is one of the continent's main buyers, following legislation that enables publicprivate partnerships. Last week, it agreed a flagship $250m deal with GE Healthcare to provide 585 pieces of diagnostic imaging equipment, such as X-ray and ultrasound machines for 98 hospitals nationwide.

Unlike most other medical equipment deals in Africa, which deliver a one-off upfront payment to the supplier following a procurement tender, GE Healthcare's Kenyan contract will provide it with a regular service fee. This covers the equipment lease, maintenance and training over seven years. GE has previously entered these old-school one-off tender deals with Algeria and Nigeria. Kenya is still negotiating with several commercial banks to finance its GE deal.

Farid Fezoua, president and chief executive of GE Healthcare Africa, says: "Countries like Nigeria, even South Africa to some extent, and Angola or Ghana are going to look at what Kenya did and say: 'If Kenya can do that, then we can do that.'"

He notes that GE Healthcare's business has doubled its revenues in Africa in the past three years.

The company plans to double its workforce in Kenya this year and invest $2bn across the continent by 2018.

However, many doctors express concern over the incorrect usage of expensive diagnostic machinery sold by private suppliers, and the risk of its breaking down with no prospect of repair.

Amanda Glassman, director of global health policy at the Centre for Global Development in the US, points to "huge maintenance problems" with lab equipment in some African countries.

She says: "There's a lot of bad purchasing on the public sector side in Africa. Governments can get stuck with investments that really don't improve health quickly."

Uganda's Margaret Mungherera, outgoing president of the World Medical Association, says 30 per cent of healthcare spending in Africa goes on "wastage", whether down to inefficiency or corruption.

Nevertheless, Dr Were says there is more spending to come. Kenya plans tenders for $600m worth of new contracts for the supply of everything from 300-bed hospitals to oxygen plants and IT systems.

But he acknowledges the difficulties.

"One of the key hurdles is the capacity of the public sector to be able to effectively manage publicprivate partnership, particularly of such magnitude," he says. "The public are a bit sceptical with regard to the private sector playing a bigger role."

He is not alone in voicing concerns about the private sector. World Bank support for private healthcare in Africa has been criticised as "elitist" by many.

As Joyce Wanderi at the Association of Social Franchising for Health points out, the biggest problem in Africa is still "unaffordability".