pestel analysis in nigeria

PESTEL Analysis in Nigeria

Table of Contents

I. Project Scope and Objectives 3

II. Political Analysis 16

III. Political Effect 38

IV. Economic Analysis 40

V. Economic Effect 57

VI. Social Analysis 59

VII. Social Effect 82

VIII. Technological Analysis 87

IX. Technology Effect 93

X. Ecological Analysis 95

XI. Ecological Effect 103

XII. Legal Analysis 105

XIII. Legal Effect 108

XIV. About Harrison Hayes 110

2

Project Scope, Objectives, and Research Methodology

4

Project Scope

For this project, Harrison Hayes conducted a Political, Economic, Social, Technological, Ecological, and Legal (PESTEL) Analysis in Nigeria. This PESTEL Analysis seeks to provide direct insight into the future of the IVD space in Nigeria.

5

Project Objectives

Project objectives for this project were broken down into six (6) sections:

Political analysis

Economic analysis

Social analysis

Technological analysis

Ecological analysis

Legal analysis

6

Project Objectives - Political

Specific objectives for the political analysis include:

Political Trends:

Identification of the key political factors that may have implications for healthcare, specifically focusing on the IVD space.

Healthcare System:

Analysis of the general healthcare system in each identified country or region.

Analysis of Private v. Public healthcare cost and determination of how this process is evolving.

Trending analysis of health providers from a cost perspective.

Determination of how this evolving process affects the IVD space at the local level.

Political Subsidies / Investments

Identification of the investments being made in healthcare at a macro-level.

Identification of relevant policy agreements on a global level.

7

Project Objectives - Economic

Specific objectives for the economic analysis include:

Analysis of macro-trends on a country level to include the following:

10 year outlook of GDP growth

Debt as a percentage of GDP

Government spending on healthcare and implications for the IVD space.

Percentage of allocation to the IVD space.

Understanding of how healthcare spending on IVD is evolving.

Healthcare Reimbursement Trends:

Identification of how healthcare is reimbursed and identification of the payers.

Analysis of the reimbursement allocation and the trends in healthcare reimbursement.

Identification and analysis of how healthcare spending may or may not be related to employment.

Identification of the wealth distribution on a country level and how this may affect out of pocket spending.

8

Project Objectives – Economic Con’t.

Specific objectives for the economic analysis include:

Buying Trends:

Identification and assessment of the purchasing trends in the IVD space.

Identification of who / what drives purchase decisions.

Analysis of cross-border buying of hospital networks and large lab chains.

Analysis of purchasing per reportable v. test.

Understanding of the need for demand value added services or consulting services.

Implications:

Identification and understanding of the implications of various economic trends on healthcare and the IVD space.

9

Project Objectives – Social

Specific objectives for the social analysis include:

Population Dynamic:

Identification of population growth on a demographic level.

Identification of the projected migration flow.

Demographics:

Analysis of how demographics are changing by age group

Analysis of the projected need for healthcare in light of the age demographics.

Disease Prevalence:

Assessment of the prevalence of obesity, CVD, and the other top three (3) diseases in Nigeria.

Assessment of how these prevalence figures relate to IVD.

Service Providers:

Identification and assessment of the rising pressures on hospitals to provide medical services.

Analysis of trends specific to GPs and patient treatments.

10

Project Objectives – Technological

Specific objectives for the technological analysis include:

Innovation:

Identification of new investments in each region and analysis of future implications.

Analysis of technology innovation on a country level; analysis of how each country compares to the other.

Identification of the number of technology patents issued.

Understanding of the “ease of doing business” in each country.

New Technologies:

Analysis of how new technologies may affect IVD.

Identification of market drivers related to new technologies.

Identification of new market entrants from a company and technology perspective.

11

Project Objectives – Technological Con’t.

Specific objectives for the technological analysis include:

Network / Converging:

Analysis of how new technologies are converging.

Analysis of how networks are evolving, growing, and converging.

Testing Dynamics:

Understanding of the testing space, i.e., will the central lab still serve as the center of testing.

Identification of the prevalence of patient self-testing.

12

Project Objectives – Ecological

Specific objectives for the ecological analysis include:

Trends:

Identification of the driving ecological trends on a regional / country basis and understanding of how it may affect IVD.

Water: What is the level of water availability? What is the nature of climate change in these regions?

Energy: Identification of trends related to energy prices and consumption.

Waste: How much of an issue is waste? Identification of waste programs in place and how they may evolve.

Regulations:

Identification of key environmental trends, greening trends, and governmental regulations that might influence the healthcare and IVD space.

13

Project Objectives – Legal

Specific objectives for the legal analysis include:

Healthcare Regulations:

Identification of the key regulatory bodies in Nigeria.

Trend analysis of FDA like regulations.

Identification of trends related to registration and regulations within the healthcare industry.

Environmental Regulations:

Identification of key environmental regulatory bodies in each region.

Identification of water, waste, and energy restrictions.

Implications:

Identification of key developments and the implications on the healthcare industry, specifically the IVD space.

14

Research Methodology

Market research for this project consisted of Primary and Secondary market research. Primary research included the conduction of fifty-three (53). Key Opinion Leader interviews within the Nigerian healthcare arena.

To supplement these Key Opinion Leader interviews, Harrison Hayes also conducted secondary research from publicly available information and syndicated sources.

15

Examples of Key Opinion Leaders

Below are examples of the Key Opinion Leaders interviewed for this assignment:

Dr. Joseph Odumodu: renowned pharmacist in Nigeria and Director-General of Standards Organization of Nigeria.

Dr. Peju Adenusi: Chief Executive Officer of the Hygeia Community Health Plan. Hygeia is one of Nigeria’s largest HMOs. Contains a network of 250 clinics and hospitals.

Dr. Dogo Mohammed: Executive Secretary of the National Health Insurance Scheme.

Taiwo Otiti: Nigeria country manager for IBM.

Dr. Raphael Oruamabo: President of the Nigerian Society of Neonatal Medicine.

Political Analysis

17

Political Analysis - Trends

Goodluck Jonathan became acting political leader of Nigeria in February of 2010; he was sworn in as President in May upon the death of President Umaru Yar'Adua.

Jonathan is a member of the People’s Democratic Party. Jonathan has defied his party’s traditional practice of alternating presidential power between the north and south after two terms of office.

Jonathan was elected President in the 2011 elections, receiving nearly 80% of the vote.

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Political Analysis – Trends Con’t.

People’s Democratic Party of Nigeria

The President of Nigeria has been a member of the People’s Democratic Party in every election since 1999.

Party Platform: Justice, Unity, and Progress.

The PDP has grown to become the largest political party in Nigeria, controlling all aspects of the national government.

Under PDP leadership, Nigeria has one of the fastest growing economies in the world.

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Political Analysis – Trends Con’t.

People’s Democratic Party of Nigeria

The most recent controversial mandate by the PDP is the removal of the fuel subsidy in December of 2011. Over 80% of the Nigerian population wanted to keep the subsidy.

It is believed that this fuel subsidy removal will inhibit economic growth.

The PDP has placed a great deal of emphasis on improving the Nigerian infrastructure, specifically as it relates to technology.

Other areas of focus include building roads, railroads, and dredging of rivers.

The PDP strongly supports a free market economy and private enterprise.

20

Political Analysis – Strengths

Strengths of the Political System (Healthcare Perspective)

There are few strengths to the Nigerian healthcare system. WHO ranks the Nigerian healthcare system as 187 out of 191 countries.

Health policy development in Nigeria is extremely complex; this complex and in-depth structure ensures the adoption of due process for the implementation of new policies.

Renewed interest in vaccines and malaria.

Imported drugs and devices provide the most adequate level of care.

21

Political Analysis –Weaknesses

Weaknesses of the Political System (Healthcare Perspective)

It can be opined that the entire Nigerian healthcare system is weak and inadequate.

Counterfeit drugs and other products is common-place.

Healthcare is underfunded, lack of medical professionals, inadequately used, and no full demand from patients.

Medical professionals typically leave the Nigeria to practice in other African nations, India, Europe, and the United States.

The healthcare system in Nigeria grossly underserves its citizens.

22

Political Analysis –Opportunities

Opportunities of the Political System (Healthcare Perspective)

There are numerous preventable diseases that are still prevalent in Nigeria.

Based on Key Opinion Leader feedback, it was unanimous that one of the greatest methods to improve healthcare in Nigeria is to focus on diagnosis.

Out of necessity, Nigeria relies heavily on imported medical devices and pharmaceuticals.

The Nigerian government has pledged to increase healthcare funding, but this has yet to fully take place.

23

Political Analysis – Threats

Threats of the Political System (Healthcare Perspective)

Due to the existing inefficiencies of the Nigerian healthcare system, threats are numerous.

The primary threat is medical tourism. Wealthy Nigerians will leave for other African, European, and/or Asian nations to receive medical care.

Practicing physicians and other medical professionals are leaving Nigeria for more lucrative opportunities all over the world.

24

Political Analysis – Healthcare System Overview

Overview of the Nigerian Healthcare System

The Nigerian healthcare system is overseen by the Federal Ministry of Health; the Federal Ministry of Health provides feedback to the National Advisory Council on Health, which is in the Presidential Cabinet.

Each Nigerian state also has its own State Ministry of Health.

There are also Local Government Departments Health beneath the State Ministry of Health.

Note: See figure on slide 25 for the Structure of the Nigerian Healthcare System.

Specific agencies and divisions are identified in the Legal Section of this analysis.

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Political Analysis – Nigerian Healthcare Structure

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Healthcare Tiers

Healthcare in Nigeria is administered through three (3) tiers.

1. Primary level – operated by local government

2. Secondary level – operated by the state government

3. Tertiary level – operated by the federal government

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Private Healthcare v. Public Healthcare

Roughly 70% of healthcare services in Nigeria are provided through private means.

The remaining 30% of services are provided through public means.

Nearly all healthcare services are paid out of pocket. Payment for healthcare services is based on consumption rather than ability to pay.

Healthcare facilities and overall care are inadequate in urban areas and even worse in rural areas.

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Political Analysis – Healthcare Scheme

The primary healthcare scheme in Nigeria is the Nigerian National Health Insurance:

The National Health Insurance scheme (NHI), launched in 1999, is a single scheme with different categories.

The NHI utilizes services of HMOs as health mangers for collecting revenues and distributing services.

Contributions are made in the form of premiums through HMOs according to the patient member category.

Members throughout the country are entitled to health benefits from any health provider irrespective of location once adequate identification is provided.

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Political Analysis – Healthcare Scheme Con’t.

There are eight (8) primary programs associated with NHIS:

1. Formal Sector Social Health Insurance Program*

2. Urban Self-Employed Social Health Insurance Program*

3. Rural Community Social Health Insurance Program*

4. Children Under-Five Social Health Insurance Program

5. Permanently Disabled Persons Social Health Insurance Program

6. Prison Inmates Social Health Insurance Program

7. Tertiary Institutions and Voluntary Participants Social Health Insurance Program

8. Armed Forces, Police, and other Uniformed Services

*Denotes Largest Programs

30


Top Sectors Defined:

Formal Sector: Consists of public sector employees and organized private sector employees (organizations with at least 10 employees).

Self Employed: Non-profit health insurance program covering groups of individuals with common economic activities. Individuals who are members of socially cohesive groups that are occupation based are free to join the program.

Rural Community: Non-profit health insurance program for a cohesive group of households run by its members. Membership comprises community individuals.

31


NHIS – Formal Sector Benefits:

Out-patient care (including consumables)

Prescribed drugs as contained in the NHIS Essential Drugs List

Diagnostic tests as contained in the NHIS Diagnostic Tests List

Antenatal care

Maternity care for up to four (4) live births for every insured person

Post natal care

Routine immunization as contained in the National Program on Immunization

Family planning

Consultations with a defined range of specialists e.g. physicians, surgeons, etc

Hospital care in a public or private hospital in a standard ward during a stated duration of stay, for physical or mental disorders;

Eye examination and care excluding prescription glasses/spectacles and contact lenses

Dental care, i.e., pain relief and treatment

Prostheses, i.e., Nigerian-made simple artificial limbs.

32


NHIS – Formal Sector Contribution:

Contributions are earnings-related and currently represent 15% of basic salary.

The employer will pay 10% while the employee will only contribute 5% of basic salary to enjoy health benefits.

Contributions made by/for an insured person entitles himself or herself, a spouse and four (4) children under 18 years of age, to full health benefits.

Extra contributions will be required for additional dependents.

The contributions of two working spouses cover the spouses and four (4) children for each of them.

33


NHIS – Self Employed Program:

Healthcare Benefits:

Participants choose their own healthcare benefits.

Contributions:

Participants pay a flat monthly rate.

Contribution rate depends on the health package that is selected by the user.

34


NHIS – Rural Community:

Healthcare Benefits:

Members of the community, based on health needs, choose the most appropriate healthcare benefits.

Contributions:

Participants pay a flat monthly rate or in installments by participants.

This contribution rate will depend on the health package chosen by members of the User Group.

35

Political Analysis – Healthcare System

On the existing healthcare system in RURAL Nigeria:

“Nigeria has never succeeded in establishing community medical and health services for very many reasons … some limited levels [have] been practiced in Nigeria, even during the colonial days, but never fully.”

Dr. Michael Asuzu Professor of Public Health and Community Medicine at the University of Ibadan

36

Political Analysis – Healthcare System

On the existing healthcare system in Nigeria:

“To awaken the Nigerian health system from its deep comatose state, we need a functional PHC system that has capable hands managing it on the field, and is adequately funded. The NHIS need to be strengthened and extend its coverage to the local communities. Good health and safe environment are interrelated. Provision of basic amenities including safe and clean water in the cities towns and villages, good durable road networks, stable electricity etc, are necessary to achieve improved health status in any society.”

Dr. Femi Akinwumi University College Hospital, Ibadan

“Generally, healthcare services are fragmented skewed in distribution, limited in coverage and of poor quality.”

Dr. Joseph Odumodu Director General of Standards Organization

37

Political Analysis – Private v. Public Cost

The Table below represents the Private v. Public cost from the year 2007 to 2016

2008 2009 2010 2011 2012* 2013* 2014* 2015* 2016*

Gov't Exp. In US $B

4.90 3.59 3.75 3.80 4.11 4.7 5.15 5.66 6.26

Private Exp. In US $B

7.70 6.60 6.10 6.70 7.20 8.20 8.90 9.80 10.70

Health Exp. In US $B

12.60 10.19 9.85 10.5 11.31 12.9 14.05 15.46 16.96

Gov't % of Total

41.2 35.1 37.9 36.3 36.3 36.4 36.5 36.7 36.8

Private % of Total

58.2 64.9 62.1 63.7 63.7 63.6 63.5 63.3 63.2

Note: Years 2012 – 2015 are forecasted

38

Political Analysis – Private v. Public Cost Con’t.

The Chart below represents the Private v. Public cost from the year 2008 to 2016


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Political Analysis – Private v. Public Cost Con’t.

The Chart below represents the Percentage of Private v. Public cost from the year 2008 to 2016


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40

Political Analysis – Investment in Healthcare

Investment in Nigerian Healthcare

In November of 2011, the National Agency for Food and Drug Administration and Control asked the government for an intervention fund of $1.23B.

This intervention fund is meant to assist the agency perform more efficiently and to adopt a new system to help consumers verify its product certifications regarding counterfeit medicines.

In 2011, USAID invested roughly $56M in Nigeria to promote family planning and maternal healthcare.

The Chinese Government has recently invested $100M into the Nigerian healthcare system to enhance hospital facilities.

Nigerian Government investment has largely focused on Tertiary Hospitals and Medical Education.

Political Analysis

42

Political Analysis

Tertiary Hospitals and Political Investment

A primary area of focus and target should be the Tertiary Hospitals. These hospitals receive direct funding from the national government.

Preventive care receives just $2.2B from the Nigerian government. This figure is expected to rise given physician’s new interest in diagnostic based products.

Increase in minimum wage will create more disposable income; Citizens will be able to visit doctors more regularly for tests and services. This should greatly benefit diagnostic based companies.

New healthcare schemes further makes healthcare more affordable for citizens who need diagnostic testing.

Economic Analysis

44

Economic Analysis – GDP Growth

The table below portrays recent GDP figures in Nigeria

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

GDP (US $B) $47.9 $59.1 $67.6 $87.8 $112.2 $145.4 $165.9 $207.1 $168.5 $202.5

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The chart below portrays recent GDP figures in Nigeria

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The chart below forecasts near-term GDP growth in US Dollars

2011 2012 2013 2014 2015 2016

GDP (US $B) $247.13 $263.23 $283.77 $306.42 $331.56 $359.34

% Growth 6.89% 6.56% 6.26% 6.29% 5.95% 5.98%

47



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5.40%

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7.00%

2011 2012 2013 2014 2015 2016

Forecasted GDP Percentage Growth

49

Economic Analysis – GDP Projection

Over the past five (5) years, Nigeria has maintained one of the fastest growing economies in the world.

Depending on the source, GDP growth in 2011 varies from 6.8% to nearly 7.5%.

Much of the economic growth rate in Nigeria is due to the fact that the country has a vast supply of oil.

Since 2008, Nigeria has focused on re-structuring its banking system through collaboration with the International Monetary Fund (IMF).

Nigeria is moving away from its “military style government,” and as such has become more open to private enterprise.

50

Economic Analysis – Debt and GDP

The table below details central government debt as a percentage of GDP

Country Name 2003 2004 2005 2006 2007 2008 2009

Nigeria 63.86% 52.66% 28.61% 11.81% 12.83% 11.60% 15.20%

United States 46.16% 47.04% 47.28% 46.44% 46.71% 55.21% 67.43%

Note: These figures are based on the most current information in World Economic Outlook. USA is listed as a reference point for comparison.

51


The chart below details central government debt as a percentage of GDP

Note: These figures are based on the most current information in World Economic Outlook. USA is shown as a reference point for comparison.

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Between 2003 and 2005, Nigeria won approval from the Paris Club for debt relief.

In addition to the Paris Club approval, Nigeria also received a $1B credit from the IMF.

The total debt relief package totaled $30B; at the time, Nigeria had $37B in external debt.

This information provides an explanation to the reduction of debt percentages of GDP in the previous slides.

53

Economic Analysis – Healthcare and GDP

The Table below represents the Healthcare Expenditure from the year 2001 to 2010

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Health Exp. In US $B

$2.50 $2.31 $5.10 $6.11 $6.73 $8.29 $9.77 $11.88 $10.24 $10.27

Health Exp. % of GDP

5.22 3.91 7.55 6.96 6.60 5.70 5.98 5.74 6.08 5.07

Health Exp. per Capita $

$18.01 $17.64 $38.02 $44.44 $52.61 $59.14 $67.79 $79.30 $66.64 $62.78

Gov’t Exp. on Healthcare %

3.20 3.11 5.11 7.83 6.41 7.06 9.19 7.75 5.94 4.41

54

Economic Analysis – Healthcare and GDP

The chart below shows healthcare spending per capita trends.

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55

Economic Analysis – Medical Device and IVD

Since 2010, medical device sales in Nigeria have seen double digit percentage growth rates.

Year over year growth rate averages roughly 15%.

Medical device sales is expected to continue its growth due additional funding being placed in the healthcare sector in Nigeria.

Nigeria is in desperate need to update its hospitals, medical services, and capital equipment.

The Nigerian space has been large ignored by large, Western medical device companies.

Diagnostic equipment is severely lacking. Harrison Hayes estimates that less than $5M is spent each year on new diagnostic equipment.

Even simple tests such as blood pressure, ECG, blood glucose, cholesterol, mammograms, etc. are needed in Nigeria.

56

Economic Analysis – Medical Device and IVD

The Table below represents the Healthcare Expenditure from the year 2007 to 2015

2010 2011* 2012*

Device Sales in $M $162 $192 $224

Device Sales % of GDP .08% .08% .09%

IVD Sales in <$5M <$5M <$5M

57

Economic Analysis – Reimbursement Trends

Healthcare Reimbursement and Identification of Payers

Healthcare reimbursement in Nigeria largely depends on the healthcare scheme and office location.

The government is the primary payer and reimburses medical services from each scheme’s “pooled assets.” Individuals may also pay out of pocket if not a member of a healthcare scheme. Government reimbursement is roughly 30% of the total.

Most health expenditures in Nigeria come out of pocket, roughly 70% of the total. This is counter-intuitive given the high rates of poverty.

An average Community Based Healthcare schemes typically provide $14 per month into the total asset pool.

Most HMOs in Nigeria prefer to operate in urban areas where they are more likely to receive reimbursement.

58


Healthcare Reimbursement and Employment

Healthcare coverage varies greatly in Nigeria based on the healthcare scheme and patient location.

Citizens who are part of the Formal Scheme or Self-Employed Scheme typically receive the best care.

Most individuals in the Formal Scheme or Self-Employed Scheme live in urban areas.

Due to the high rate of poverty, most individuals do not have health insurance. As such, most patients pay for healthcare services out of pocket.

59


Healthcare's impact on the economy:

“I think it is the irresponsible political system and a style of governance that is so ignorant and unaccountable that I truly find inappropriate. It is simply atrocious and a big shame that our approach to healthcare delivery is still the ‘fire-brigade’ approach. We should not, at this stage of our national life, given the resources we are endowed with, be found grappling with developing basic platforms for effective and equitable delivery of healthcare to our people. When a former military dictator took over power almost 3 decades ago, he famously proclaimed then that our teaching hospitals have become mere consulting clinics! Successive rulers after him have consistently neglected to do anything massively tangible about the health sector. They have consistently ignored the sensible maxim ‘health is wealth’ by refusing to commit government funds into developing our healthcare systems and infrastructures in order to create a wealthy and healthy nation. .”

Femi Olaleye Managing Director of Optimal Healthcare Limited

Economic Analysis

61

Economic Analysis

GDP and Healthcare Spending

Nigeria has one of the fastest growing economies in the world.

As a percentage of GDP, healthcare spending has not increased. It is expected that this should change given Nigeria’s pledge to the World Health Organization.

Given this information, diagnostic based companies should position its diagnostic products as a key item for preventive care in Nigeria.

Preventive Care (vaccines and diagnostics) appears to be a primary area of focus for the Nigerian government moving forward.

Social Analysis

63

Social Analysis – Population Dynamics

The table below outlines population growth on a demographic level since 2001.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Population 126,704,722 129,832,447 133,067,097 136,399,438 139,823,340 143,338,939 146,951,477 150,665,730 154,488,072 158,423,000

Population % Growth

2.41 2.44 2.46 2.47 2.48 2.48 2.49 2.50 2.51 2.52

Female % of Population

49.52 49.50 49.48 49.47 49.45 49.43 49.42 49.40 49.39 49.38

Male % of Population

50.48 50.50 50.52 50.53 50.55 50.57 50.58 50.60 50.61 50.62

Population % Age 0-14

43.03 42.95 42.89 42.85 42.82 42.81 42.81 42.82 42.82 42.81

Population % Age 15-64

53.73 53.80 53.84 53.86 53.87 53.86 53.84 53.82 53.80 53.79

Population % Age 65+

3.24 3.25 3.27 3.29 3.31 3.33 3.35 3.37 3.38 3.40

64


The chart below outlines Nigeria’s population growth since 2001.

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Population Growth since 2001

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The chart below portrays Nigeria’s Age demographic changes since 2001.

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Breakdown of Age Population Percentages in 2030

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Social Analysis – Demographic Analysis

Analysis of Demographics by Age Group

As the previous few slides indicate, Nigeria is a growing nation.

The Nigerian population is currently young and will continue to be so through 2030. This is primarily due to the high fertility rates.

By 2050, Nigeria will be the 5th most populous country in the world.

It is expected that the 64+ and 15-64 age groups will not experience significant growth over the next twenty (20) years.

The <14 age group is expected to slightly decrease over the next twenty years.

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Life Expectancy in Nigeria (in years)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Men & Women

47 47 48 48 49 50 50 50 51 51

Men 46 47 47 48 48 49 49 50 50 51

Women 48 48 49 49 50 50 51 51 52 52

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Social Analysis – Demographic Analysis

Analysis of Age on Healthcare

The low life expectancy in Nigeria is directly correlated to the poor healthcare system, nutrition, and water availability.

Nigeria must undergo vast infrastructure improvements in order to be considered on par with other emerging countries such as South Africa.

Much must be done in Nigeria regarding family planning and improvement in adequate healthcare in order to increase life expectancy.

70


The image on the right is a map of thirty-six (36) Nigerian States

The States of Lagos and Kano are the largest in Nigeria and also home to the highest growth rate..

Lagos is the largest city and has the highest growth rate in all of Nigeria. (Just the city of Lagos).

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The image below represents the current population density of Nigeria.

72


The table below outlines the percentage of citizens living in urban areas.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Urban Population %

43.24 43.98 44.72 45.46 46.2 46.92 47.64 48.36 49.08 49.8

Rural Population %

56.76 56.02 55.28 54.54 53.8 53.08 52.36 51.64 50.92 50.2

73


The chart below outlines the percentage of citizens living in urban areas.

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Migration Flow Analysis

As the previous few slides indicate, Nigeria is quickly becoming a more urban nation.

Today, the Nigerian population is split nearly 50/50 between urban and rural.

Lagos is by far the largest city in Nigeria, home to nearly 14 million citizens.

Lagos also serves as the primary destination for migration within the country.

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Social Analysis – Disease Prevalence

Rank Cause Death per 100,000

1 Influenza/Pneumonia 174

2 HIV/AIDS 170

3 Stroke 149

4 Heart Disease 122

5 Diarrheal Diseases 101

6 Tuberculosis 85

7 Malaria 79

8 Diabetes (I & II) 55

9 Lung Disease 42

10 Maternal Problems 37

Top Ten Causes of Death

Note: Information on slides 72 and 73 is from different sources for context. Data above is based on most recent death per 100,000 citizens.

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Main Causes of Morbidity and Mortality

Note: Information on slides 72 and 73 is from different sources for context. This slide references Nigeria’s country profile according to WHO in 2008.

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Risk Prevalence % in Men Prevalence % in Women

Obesity 5.1% 5.3%

Use of Alcohol 48.7% 10.4%

Obesity and Alcohol Use

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Identification of Disease Prevalence

As expected, many of the most prevalent diseases in Nigeria could be solved through proper vaccination. Malaria is extremely prevalent in Nigeria compared to the rest of the world.

Obesity is not nearly the concern in Nigeria as it is in the developed world. This is due to the fact that much of the population is malnourished.

Cardiovascular Disease is one of the leading causes of death in Nigeria. This figure may be greater due to poor records in Nigerian death certificates.

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Non-Communicable Diseases Assessment

Data related to non-communicable diseases in Nigeria is unreliable.

Appropriate diagnostic equipment is largely unavailable throughout the country, so it is often difficult for patients to be appropriately diagnosed.

HIV/AIDS and Malaria are clearly of much more concern than non-communicable diseases in Nigeria.

Due to the large population of Nigeria and the severe lacking of IVD products (and diagnostics as a whole) there appears to be great opportunity for a company’s IVD portfolio.

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Social Analysis – Opportunity for Diagnosis

Opportunities based on disease prevalence:

“Accurate high quality diagnosis should be our “holy grail” as it is the single most important step in transforming the health care service in Nigeria from dependency on health tourism to independence. It is the critical building block in ensuring that our country can provide a health service comparable to the best in the world because we are already blessed with Nigerians who have expertise in all aspects of any comprehensive health care system. ”

Austin Obichere, MD

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Social Analysis – Change in Population

Observation of Rural v. Urban Population:

“People in rural areas are far way from health facilities, unlike those in urban areas. Pregnant women in rural areas are less likely to attend antenatal clinics and they are more likely to end up in the hands of untrained traditional birth attendants.”

Dr. Azebi Korikiye MD Practicing in rural areas of Nigeria.

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Social Analysis – Service Providers

Pressure on Hospitals

Nigerian hospitals are under to provide better services to its constituents.

Unfortunately, most of these hospitals do not have the funds or capabilities to improve this service and/or equipment.

The Tertiary Hospitals and Teaching Hospitals are best positioned to improve medical equipment and overall services for the foreseeable future.

Just fourteen (14) Teaching Hospitals exist in Nigeria, six of which are poorly and inadequately equipped (these are hospitals located at Benin, Calabar, Ile-Ife, Kano, Nnewi, and Sokoto)

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Number of Healthcare Providers in Nigeria

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Pressure on Physicians

With roughly 60,000 practicing physicians and nearly 160 million citizens, Nigeria has one of the largest shortages in the world.

The primary issue with physicians that currently practice, or are still in medical school, is defection to other countries.

Thousands of physicians and other medical professionals leave Nigeria each year to practice in more developed areas of the world.

Currently, Nigeria has not been effective in reversing this trend.

Social Analysis

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Social Analysis

Life Expectancy

The low life expectancy presents an optimum opportunity. Clearly preventable and treatable diseases represents a primary area of concern for Nigerians.

Economic value must be shown in diagnostic equipment. This must be accomplished through an analysis of “back-end” cost savings.

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Social Analysis

Migration

Nigeria is traditionally a rural nation, but this is rapidly changing.

In the next three (3) years, more Nigerians will live in cities that rural areas.

In order to be successful, diagnostics must targeted to the more highly populated areas, most importantly the Lagos state.

Urban areas typically have a Tertiary Hospital or State owned hospitals. These should also be a primary area of focus.

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Social Analysis

Disease

Both Communicable and Non-Communicable disease is rampant in Nigeria.

Diagnostic products address these disease states. Appropriate diagnostic portfolio and these prevalence figures represent a clear opportunity.

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Social Analysis

Doctor Shortage

The shortage of physicians in Nigeria is alarming and it appears that this problem will continue for the foreseeable future.

To combat this issue, it is recommended that diagnostics be intuitive for the general population.

Not only must the diagnostics be intuitive, but the diagnostic results should be easy to understand as well. This is especially the case in rural areas where the shortage of physicians is especially high.

Due to the lack of medical professionals, diagnostic devices must be plentiful at all point of care and non-traditional point of care locations.

Technological Analysis

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Technology Analysis – Overview

Technology and Innovation Overview

Nigeria has one of the fastest growing telecommunications industries in the world.

This growth has been instigated by President Goodluck Jonathan who believes improving telecommunications and its infrastructure will increase foreign investment.

Nigeria remains reliant on Western Europe and the United States as its suppliers of telecommunications goods.

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Technology Analysis – Overview Con’t.

Technology and the Internet

Nigeria has an estimated 1,400 internet hosts and 45 million internet users.

Internet is available primarily in large cities throughout Nigeria.

An estimated 30% of the Nigerian population has access to the internet.

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Technology Analysis – Interest

Increased interest in Technology

Due to the increased interest in technology in Nigeria, many Western companies have targeted Nigeria for global growth.

“Africa is challenged with many serious health issues and IBM believes that the application of modern technologies has an important role to play in addressing some of these problems. Our consultants have been able to apply some of their global experience for the benefit of the local people. At the same time we've been able to gain valuable experience in tackling some of the most challenging healthcare issues and learning more about local approaches.“

Taiwo Otiti, Country General Manager, IBM West Africa

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Technology Analysis – Interest

Technology and Healthcare

“I believe that a functional mHealth system will reduce the emigration of health personnel for greener pastures and create a new revenue stream for the country through those coming into Nigeria to seek solutions to medical challenges.”

Dr. Adesina Iluyemi, Medical practitioner and co-founder of ModiSe, mHealth

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Technology Analysis – Innovation

Ease of Doing Business Defined

Defined by the WorldBank, higher rankings indicate better, usually simpler, regulations for businesses and stronger protections of property rights. Empirical research funded by the WorldBank to justify their work show that the effect of improving these regulations on economic growth is strong.

In 2012, Nigeria was ranked 133 out of 183 countries assessed regarding the “ease of doing business.”

Technology Analysis

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Technology Analysis

Reliance on Outsiders

Nigeria is extremely reliant on foreign countries/companies from a technology perspective.

Primary interest is currently focused on overall infrastructure, mobile technology, and hospital records.

Ecological Analysis

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Ecological Analysis – Major Trends

Water

Water availability and clean water availability is one of the primary issues facing the Nigerian government and its citizens.

The lack of clean water is one of the primary drivers of the poor health and low life expectancy in Nigeria.

"If you have good water, many of the diseases of Africa would disappear. Clean water is the key to health in Africa. It is paramount.“

Yakubu Gowon, former Nigerian head of state

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Water Scarcity

Population Base Percentage of Population w/

Access to Clean Water Percentage of Population

w/out Access to Clean Water

Total 58% 42%

Urban 74% 26%

Rural 43% 57%

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In regards to water availability in rural areas:

“Good health and safe environment are interrelated. Provision of basic amenities including safe and clean water in the cities towns and villages, good durable road networks, stable electricity etc., are necessary to achieve improved health status in any society.”

Dr. Femi Akinwumi of the University College Hospital, Ibadan

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Energy Security

Nigeria has long been dependent on its wealth in oil.

Oil remains largest source of income and most important part of the Nigerian economy.

Nigeria is attempting to become more diversified, but oil will remain extremely important in the future.

Oil spills, as the image below portrays, are common place in Nigeria.

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Energy Consumption

2001 2002 2003 2004 2005 2006 2007 2008 2009

% Fossil Fuel Consumption

17.74 18.76 18.41 18.43 19.05 17.98 16.64 18.55 14.74

Energy Use per Capita

733.86 744.82 740.46 740.60 745.22 733.49 720.66 735.88 700.71

Energy Use per Capita: use of primary energy before transformation to other end-use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport.

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Climate Change

Climate change may affect currently stable ecosystems such as the Sahel Savanna.

The Sahel Savanna may become vulnerable because warming will reinforce existing patterns of water scarcity and increasing the risk of drought in Nigeria. Building codes are already being changed in order to meet newly enforced energy efficiency levels.

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Climate Change and Water Availability

Reduced water volume in streams and rivers, arising from different scales of water diversion for rudimentary irrigation activities, siltation of stream beds due to deposition of materials by water run-off, as well as evapotranspiration ;

Drying up of water sources due to increased evapotranspiration, and loss of vegetation in head waters.

Deficiencies in freshwater availability will worsen the already poor sanitary and health conditions in these areas; as well, uncontrolled disposal of wastewater and human wastes will result in a deterioration in water quality leading to high organic levels in surface and ground water thereby increasing epidemics of water-borne diseases such as cholera, hepatitis, typhoid and malaria.

Reduced stream velocity due to loss of gradient from siltation.

Ecological Analysis

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Ecological Analysis

Lack of Clean Water

The lack of clean water results in numerous diseases and overall sickness.

As a result, diagnostic based products could play a significant role in preventive and early diagnosis.

Water and waste regulations are currently in its infancy stage in Nigeria. Outside companies should be prepared to address these issues “from the ground up.”

Legal Analysis

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Legal Analysis – Healthcare Regulations

Key Healthcare Regulatory Bodies in Nigeria

National Agency for Food and Drug Administration and Control (NAFDAC)

Federal Ministry of Health

National Advisory Council on Health

Department of Public Health

Department of Health Planning

Department of Personal Management

Department of Hospital Services

Department of Food and Drug Services

National Primary Health Care Development

National Health Insurance Scheme

National Tertiary Hospitals Services Commission

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Legal Analysis – Healthcare Regulations

Key Regulations

Please see attached document for NAFDAC’s application process and specific regulations.

Legal Analysis

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Legal Analysis

Approval

Medical device approval in Nigeria is loosely regulated.

In a separate document, Harrison Hayes has provided Application Guidelines for medical devices.

Regulatory approvals from the FDA and European Union regulatory bodies should be well-received in Nigeria.

About Harrison Hayes

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About Harrison Hayes

Harrison Hayes is a strategic consulting firm to the life, chemical, and material science industries. Specific areas of expertise reside in our unique and proprietary research methodologies that support strategic and tactical decision making processes for our clients.

www.harrisonhayes.com

Phone: 704.972.2412

Email: [email protected]

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