RxAll Secures $3.15M Funding for Drug Safety Tech in Africa

The Global Crisis of Counterfeit Medication

Studies indicate that approximately 1 million deaths occur annually due to counterfeit medication. A significant portion – one-tenth – of these fatalities are recorded in Africa. Detecting, investigating, quantifying, and ultimately preventing the proliferation of falsified drugs presents substantial challenges. This issue represents a worldwide concern, generating over $100 billion in revenue from substandard and compromised pharmaceuticals each year.

Technological Advancements and the Rise of RxAll

Various technologies have been implemented to combat this threat, including radio frequency identification, which assigns unique serial numbers to product containers. Contemporary solutions are also emerging, exemplified by RxAll, a startup leveraging advanced technology to ensure patients receive genuine medications.

The U.S. and Nigerian-based company recently announced a $3.15 million funding round to facilitate expansion into current markets and further refine its technological capabilities.

RxAll's Founding and Origins

RxAll was established in 2016 by Adebayo Alonge, Amy Kao, and Wei Lui. While students at Yale University, these individuals collaborated to address a problem they had experienced directly, either personally or through family members.

In 2006, Alonge narrowly avoided death after unknowingly consuming pharmaceuticals containing dangerously high levels of diazepam. This resulted in a three-week coma.

Personal Experiences Fueling Innovation

“Fifteen years ago, I endured a 21-day coma in Nigeria,” Alonge shared in an interview with TechCrunch. “My co-founder, Amy, required hospitalization in Thailand after taking counterfeit medicine, and Wei experienced the loss of a family member due to contaminated drugs.”

Stemming from a research and development project within the university’s chemistry department, Alonge, Kao, and Lui began exploring the application of machine learning and molecular spectroscopy for drug quality control and assurance.

Their core objective was to initially tackle the issue of limited access to high-quality medicine throughout Africa, with the eventual goal of extending this solution globally by creating a marketplace for verifying the authenticity of safe and reliable pharmaceuticals.

The Scale of the Problem

“Our personal experiences were confirmed by further research, revealing that this wasn’t an isolated incident,” Alonge explained. “It’s a persistent problem, resulting in 100,000 deaths annually in Africa and 1 million worldwide.”

RxScanner: A Handheld Authentication Tool

RxAll’s proprietary technology, RxScanner, is a portable device designed to allow patients to verify the authenticity of their medications. The company claims the RxScanner can determine the quality of prescription drugs within 20 seconds, displaying results in real-time on mobile applications.

The RxAll Marketplace and Business Model

RxAll carefully selects high-quality sellers for its marketplace and provides them with the RxScanner. The machine learning model analyzes spectral data and provides test results indicating the drug’s identity and quality compared to established standards.

Sellers can be located using filters, and once batch testing is completed, they can offer products for on-demand ordering, pick-up, and delivery.

The company generates revenue through commissions on marketplace transactions and a subscription model for both individual and business users of the RxScanner.

Challenges in Securing Funding

Despite its innovative approach, securing funding has proven difficult, a common challenge for deep tech companies focused on Africa. The extended timeframe from research to commercialization often discourages venture capitalists, who typically prefer to invest in later-stage ventures.

To date, RxAll has relied on grants, prize money from competitions, and equity financing from organizations like Africa-focused accelerator Founders Factory Africa to sustain its operations.

A Unique Position in the Market

Alonge believes RxAll is pioneering a new approach at the intersection of deep tech and health tech. He asserts that, currently, there is no direct competitor to the RxScanner’s functionality.

“While pharmaceutical e-commerce exists, it’s a separate domain,” the CEO stated. “Existing drug testing solutions are typically expensive laboratory equipment. In our specific application area, with our price point and use of deep learning and mobile phones, there’s no comparable solution.”

Affordability and Investor Understanding

However, technological superiority alone isn’t sufficient for success. Alonge emphasizes that making its products affordable for the target market, despite associated costs, is crucial for scaling RxAll’s technology. Furthermore, simplifying the technology for investors to comprehend is also a priority.

Current Reach and Future Expansion

RxAll operates in a global market, but currently derives the majority of its customers and revenue from Africa, particularly Nigeria. The company currently serves ten cities and is actively verifying the authenticity of drugs for 1 million patients, while also supporting over 2,000 hospitals and pharmacies in Nigeria.

Plans are in place to expand to an additional 14 cities before the end of the year, with a broader pan-African strategy planned for the following year.

Details of the Funding Round

This funding round comprises a recently completed $2 million seed round (oversubscribed at $2.25 million) and a $900,000 pre-seed round raised in late last year. SOSV’s HAX led the round, with participation from Launch Africa and Keisuke Honda’s KSK fund.

Investor Perspectives

Zachariah George, managing partner at Launch Africa Ventures, expressed enthusiasm for the investment, stating, “Launch Africa Ventures is excited to co-lead this financing round into a strong, experienced team at RxAll. We believe that RxAll is bridging a major gap in access to quality healthcare in Africa by pioneering a drug delivery platform to enable pharmacies and patients to buy authenticated medicines online. The ability to achieve favourable unit economics and multiple revenue streams by leveraging anti-counterfeiting mobile spectrometer technology, owning the entire drug delivery supply chain and their own payment wallet, provides a massive growth and scaling opportunity across Africa and beyond.”

Duncan Turner, general partner at SOSV and managing director of HAX, added, “We’ve been incredibly impressed by RxAll’s ability to scale and meet customer demand. In just the last year, the team has brought together world-class hard tech and operational excellence to solve pressing issues for over a million Nigerians, and we couldn’t be more excited by their vision for the broader pharmaceutical market.”

Future Plans and Partnerships

Alonge indicated that RxAll’s immediate focus is on establishing strategic partnerships. These partnerships will be essential for scaling the marketplace and the scanner across Nigeria, Africa, and globally.

“Beyond hospitals, pharmacies, and patients, we also sell to governments and country FDAs regarding the scanner. We’re seeking key partnerships globally, not just in Nigeria, but across Africa, Southeast Asia, North America, and South America. These are the key markets we aim to expand into.”