The Bumpy Road to Success for Clinical Laboratories

Although Addis Ababa is not new to clinical laboratories, their steep rise in number over the past decade has been extra-ordinary. Encouraged by the growth in demand for such services, investors are now more interested in spending their money on setting up these labs. The road to success, however, has been a bumpy one. Despite their soaring numbers, experts say they are still too few considering the population of the country. EBR’s Ermias Mulugeta explores.

Dawit Moges, an economist by profession, is a shareholder of Sister Aklesia Memorial Hospital in Adama town, located 99km away from Addis Ababa. Soon after completing his undergraduate studies, Dawit was entrusted with the daunting task of running his family-owned hospital named after his mother, Sister Aklesia, a renowned Gandhi Hospital nurse who died of traffic accident. But doing so was not easy for Dawit who was expected to travel from Addis, where he lives, to Adama every day.

His family saw two doctors working for the hospital lose their lives in traffic accidents and feared that the same fate would encounter their commuting family member. Heeding his family’s concerns, Dawit started looking for a business opportunity in the capital. He then discovered that there is a need for clinical laboratories. Luckily for him, he met investors who were willing to sell their higher clinic that was operating under loss.

Even though the company was on the verge of bankruptcy and located on the outskirts of the capital right next to CMC Michael Church, where there was a low demand for private medical services, Dawit did not hesitate to realize his plan of setting up a laboratory. After acquiring Hema Integrated Higher Clinic for two million Birr, he renamed it Hema Advanced Diagnostic Laboratory. “When I bought the clinic, I was sure that I wouldn’t keep it as it was. Even though the income in the first months was discouraging, I kept struggling.”

When Hema opened a decade ago, there were few clinical laboratories in Africa’s second-most populous country undergoing its fastest economic growth episode, regardless of the expansion of health infrastructure during the period. Although untapped, remarks Dawit, the business did not pay off at the beginning. This is despite the fact that most patients were forced to spend hours in long queues at higher clinics or referral hospitals just to get the medical laboratory services that the then empty clinical laboratories provided as well. The laboratory business was at its infancy and people had to send their blood sample abroad to access services unavailable in the country.

To capitalize on this opportunity, Hema tirelessly worked to promote its services. It now has 22 employees, up from 12, with a plan of opening three additional branches in different parts of Addis Ababa. The ISO accredited laboratory now serves 120 patients every day. “Through a lot of ups and downs, we have survived and managed to be one of the most successful clinical laboratories in Addis Ababa, and thereby Ethiopia,” says Dawit.

Arsho is a name that has defined clinical laboratories in Ethiopia over the past half a century. The pioneering laboratory founded in 1958 by Arshavin Terizian is the brand that comes to everyone’s mind when mentioning medical laboratories. Through time, however, many have understood the business value of clinical laboratory services. In the past decade, seven clinical laboratories have opened. While this has provided patients with alternatives and proximity to the services, it has also created hundreds of jobs for medical and non-medical professionals.

ICL Laboratories is among those that has managed to climb the ladder of success over the past decade. International Clinical Laboratories (ICL) went into business with three branches and 45 employees in Addis Ababa. As the years rolled by, ICL embarked on rapid expansion throughout the country. It currently has ten branches in the regional states and another three in the capital. With 247 employees throughout the country, the company serves between 700 to 1,000 people on average every day in each of its branches, with plans to expand to Rwanda, Djibouti, and Somaliland.

ICL provides services unavailable at other clinical laboratories and general hospitals. Pathology services, immune histo-chemistry tests, real-time PCR assays for Hepatitis C and Hepatitis B, DNA quantification, and detection of HPV for prevention of cervical cancer are treatments that put the laboratory at the forefront. “The fact that we seriously implement quality controls both internally and externally has helped us succeed and provide very efficient services,” said Atsede Kaheli, ICL’s Business Development Director.

Clinical laboratories can be categorized into two: ‘advanced’ and ‘basic,’ according to the Addis Ababa Food, Medicine, and Health Care Administration and Control Authority. Basic laboratories can be opened by a first-degree laboratory technician or laboratory technologist. But advanced clinical laboratories must have a specialist with at least a master’s degree and are required to have five laboratory technologists and additional support staff. It was after meeting all these requirements that Addislife Clinical Laboratory (ACL) began delivering services at its office located in front of Meskel Flower Hotel in October 2019 with a start-up capital of two million Birr.

Contrary to the owners’ expectations, however, the road to success was a bumpy one for ACL, which has 11 employees, four of whom are laboratory technicians. “The return on our investment is very minimal,” says Nardos Mekonnen, General Manager of ACL. “Though we offer full-fledged laboratory services, including DNA Tests, the return is way below our expectations and is very disappointing.”

Introducing price cuts have not helped ACL win the hearts of new customers and improve its earnings. It costs between ETB100 to ETB5,000 for a different range of laboratory services at ACL while patients are expected to pay ETB2,900 for a general checkup, involving 70 different examinations. Even after the reduction in the price of its services, ACL serves less than 30 patients daily.

The fact that ACL has set relatively lower prices than other laboratories but still struggles to draw the critical mass required indicates that price is not a prime factor in gaining the attention of customers. “What we realized is that location has a larger role than price for success in the sector,” says Nardos. “We have started to provide free diagnostic services at our sister clinic as a new strategy to attract new customers. We have also partnered with a South African private hospital, known as Life Health Care, to develop our skillset through trainings and capacity development programs.”

It is not only the new entrants that are facing challenges. Industry insiders complain that laboratory examination inputs and reagents disappear from the market unwarrantedly due to foreign currency shortages. “This is dragging us back from pursuing our expansion projects. We are being forced to send some samples abroad and spend hard-earned currencies,” says Medhanie Teklay, Marketing Manager of Arsho, which has nine branches and annual revenues of ETB120 million. “It is common knowledge that health is an important segment of the economy but the priority given to the sector is not satisfactory; and that needs to be corrected promptly,” remarked the Marketing Manager.

Yirgu Gebrehiwot (MD), Director of Clinical Services at the College of Health Sciences in Addis Ababa University, agrees, but from a different perspective. “The number of active clinical laboratories is not enough for a 100 million plus population. Taking this into account, the government must provide incentives for new entrants and solve the challenges of existing ones,” he argues. “Equally important, however, is the strengthening of the regulatory mechanism as false results in some clinical laboratories are causing harm to patients,” he cautions. EBR

9th Year • Feb.16 – Mar.15 2020 • No. 83