Africa healthcare start-ups focus on sight and sound

Two of the companies in this year’s FT/Statista ranking, South Africa’s HearX Group (ranked 10) and Lapaire of the Ivory Coast (14), address the most fundamental needs: hearing and sight.

Several companies in the ranking are broadly defined as health related, an area that has received much attention since the Covid pandemic exposed Africa’s dependence on outside suppliers, particularly of vaccines.

The founders of HearX and Lapaire concluded that there were even more basic unaddressed needs. HearX’s chief executive Nic Klopper, one of four original founders, said the initial impetus came after discovering how many people were excluded from affordable hearing tests and hearing aid equipment. “The idea was to democratise access,” he says.

The original insight for Jérôme Lapaire, a Swiss lawyer living in Nairobi, and founder of the eponymous company, came after noticing that only people in fancy restaurants or at the airport seemed to be wearing glasses. Why, he wondered, did he never see supermarket cashiers, street hawkers or Uber drivers with spectacles? Not, surely, because their eyesight was better, but rather because they could not afford the devices to correct their vision.

Of the two companies, HearX took the more scientifically innovative approach, employing AI technology spun out of Pretoria University, beginning with the hearing test itself. These are usually conducted by doctors and ear nose and throat specialists who use an audiometer, costing upwards of $20,000, to measure hearing ability. HearX’s innovation was to put the functions of an audiometer on a smartphone.

Yet the market for hearing tests proved hard to crack and today makes up only 5 per cent of HearX’s revenue.

The real breakthrough came when the company developed over-the-counter hearing aids, taking advantage of a 2022 change of legislation in the US allowing patients with mild-to-moderate hearing loss to access devices without visiting a specialist. Connected to a smartphone via bluetooth, the user adjusts the hearing aids, which look like earpods, using an app. Real-time consultations can be conducted with HearX consultants — mostly based in South Africa — who adjust the devices remotely using client information stored on the cloud.

HearX’s aids retail for $999 a pair, about a fifth of the cost of a hearing aid, says Klopper. Though the market is still nascent, HearX logged some $58mn in sales in 2023. Now in its sixth funding round, the South African company has raised nearly $60mn, valuing it at $200mn or more.

Regulators in HearX’s home market of South Africa have been slow to approve the sale of a technology that disintermediates hearing specialists, a strong lobby group. The company hopes regulators in other markets, including the UK and some developing countries, will allow it to expand there.

It has conducted a pilot in Kenya and eventually hopes to roll out less expensive devices in Africa, including ones that can be paid for in small monthly instalments. Klopper estimates that only 2 per cent of Africans with hearing impairment have access to hearing aids.

The business model for spectacles that Lapaire came up with involved no new technology and was simple to a fault. He started out by buying 30 pairs of cheap glasses online and visited companies offering to test the eyesight of employees. For many, it was the first eye test they had ever had. His glasses, then priced at $25 a pair, were about four-fifths cheaper than those available in opticians catering to upper-middle-class Kenyans.

He pivoted towards retail and opened a store in Westlands, a well-to-do Nairobi district that he hoped would lend his business caché. By this time, he was figuring out where to source his frames and lenses — from factories in China, and eventually Tunisia and Japan.

But there were problems. Expenditure was in dollars while revenue was in a depreciating local currency. Few potential customers had insurance. Buyers had to pay out of their own pockets for an item that took weeks to arrive while lenses were fitted. Lapaire got threatening calls from rivals unhappy at the price competition. The advertising cost of acquiring customers from better-known brands was high.

The biggest stumbling block was unexpected. Kenyans thought his glasses — at $35 for a standard pair and up to $50 with special lenses — were too cheap. “People wanted something a bit more valuable that they could aspire to own,” he says. The store closed.

Thankfully, Lapaire had already been shifting the company’s focus to west Africa where, he says, “the UK Specsavers approach” was more accepted. Now headquartered in Abidjan, commercial capital of Ivory Coast, it has 70 retail outlets in six countries, the others being Burkina Faso, Mali, Benin, Togo and Uganda. Customers can order online, but only if they have a prescription.

Lapaire Glasses is still small — with each store shifting three-to-five pairs of glasses a day — but has been expanding. This year it raised $3mn in a round led by impact investment fund Investisseurs & Partenaires.

Lapaire says his business can grow even if per capita income growth is sluggish. “It’s really about population,” he says. “We are targeting uninsured people and serving a need.” If people possibly can, he says, they will pay $35 to improve their vision, with sometimes life-changing impact.

“For us, it is really like playing the mass market,” he adds. “We know that the population is growing like crazy. We know that people will have a bit of disposable income, and we want to capture this.”