PPE and medical spare parts production
PPE and medical spare parts production
Business Model Description
Establish and operate 3D printing farms to produce personal protective equipment (PPE) and spare parts for medical devices.
Expected Impact
Increase Kenya's capacity to produce essential medical devices and personal protective equipment, which in turn will contribute to health and wellbeing.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Kenya: Nairobi (Province)
- Kenya: Nyanza
- Kenya: Rift Valley
Sector Classification
Health Care
Development need
The Sustainable Development Report 2020 indicates Kenya's performance against SDG 3 - Good Health and Wellbeing is moderately improving, yet it is considered a major challenge.(1) COVID-19 has reversed some of the progress made on this goal by overwhelming health systems, and reducing access to health services for the population, especially vulnerable groups.
Policy priority
The Government of Kenya prepared a project called Transforming Health Systems for Universal Healthcare (THS-UC) with the World Bank to improve primary healthcare, focusing on reproductive, maternal, newborn, child, and adolescent health services.(2) Among the 'Big Four' policy agenda of the Third Medium Term Plan is reaching 100% universal healthcare coverage by 2022.(3)
Gender inequalities and marginalization issues
Around 25% of Kenya's population lack regular access to healthcare, which is exacerbated by poverty and gender. Studies estimate that each year, approximately 2.6 million people fall into poverty traps due to ill health.(25)
Investment opportunities introduction
Kenya is currently undergoing a transformation in its healthcare system to increase the affordability of services and medicine. Healthcare exhibits high policy momentum, and as such, presents attractive opportunities for investors. COVID-19 has also brought attention to new healthcare technologies / medicine / treatment methods that present a potential for innovation.
Key bottlenecks introduction
The main bottlenecks include regional disparities in services coverage, the low numbers of medical staff, low qualifications of medical personnel, limited healthcare infrastructure, lack of medical equipment and spare parts, high cost of medical equipment (mostly imported), limited access to drugs and medicine, difficulty in accessing medical universities and the lack of medical waste disposal.
Medical Technology
Development need
The outbreak of COVID-19 demonstrated the need to establish rapid supply chains of personal protective equipment and other medical devices such as ventilators, to ensure collective health and wellbeing and meet the demands on the healthcare system at times of crisis.
Policy priority
The Government of Kenya prepared a project called Transforming Health Systems for Universal Healthcare (THS-UC) with the World Bank to improve primary healthcare, focusing on reproductive, maternal, newborn, child, and adolescent health services.(2) Among the 'Big Four' policy agenda of the Third Medium Term Plan is reaching 100% universal healthcare coverage by 2022.(3)
Gender inequalities and marginalization issues
Around 25% of Kenya's population lack regular access to healthcare, which is exacerbated by poverty and gender. Studies estimate that each year, approximately 2.6 million people fall into poverty traps due to ill health.(25)
Investment opportunities introduction
The rising demand for personal protective equipment (PPE) and other equipment such as ventilators generated by COVID-19 rendered investments in this area essential.
Key bottlenecks introduction
High input and logistics costs, as well as the import of medical devices and technology, drive up prices in this subsector. Domestic manufacturers will need to compete on prices with foreign technology providers.
Medical Equipment and Supplies
Pipeline Opportunity
PPE and medical spare parts production
Establish and operate 3D printing farms to produce personal protective equipment (PPE) and spare parts for medical devices.
Business Case
Market Size and Environment
20% - 25%
According to the Economic Survey 2020, government expenditure on health services is expected to rise by 50.9% to USD 1.06 billion in 2020.(13)
Moreover, the potential will rise because the 3D market is expected to grow at over 20% in upcoming years, with an expansion of printing for healthcare as a significant driver.(5)
Even though Kenya imports at least 70% - 80% of medical devices compared with 95% average in low resource areas, the high costs of import creates an opportunity for local production.(5)
Indicative Return
15% - 20%
The estimated return rate for investors is 18.3% - 22.3%. This rate is a benchmark calculated as a cost of equity with a country specific risk premium, reflecting an average return required by investors active in the subsector.(11)
Investment Timeframe
Medium Term (5–10 years)
Medical equipment and supplies require an estimated timeframe of 5-20 years depending on scale. But due to the disruptive effect of 3D printing, the expected return will be closer to the shorter timeframe.(11)
This opportunity requires purchasing 3D printers, setting up a factory and obtaining safety certificate.(5)
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Business - Supply Chain Constraints
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Medical devices and equipment are vital for properly operating healthcare. However, in Kenya medical facilities were reported to carry only 77% of necessary equipment according to World Health Organization standards.(5)
Together with regular breakdowns, the situation poses a serious threat to healthcare quality which requires private investment (15) and can be solved by 3D printing.
The situation became even more dire due to expansion of COVID-19, which requires immediate action and activation of manufacturing to produce personal protective equipment.(16) 3D printers can help to scale their production and ensure high quality.
Gender & Marginalisation
Around 25% of Kenya's population lack regular access to healthcare, which is exacerbated by poverty and gender. Studies estimate that each year, approximately 2.6 million people fall into poverty traps due to ill health.(25)
Expected Development Outcome
Limited spread of communicable diseases (e.g. COVID-19)
Reduced interruptions in healthcare caused by non-functional medical devices
Raising awareness of work safety regulations
Gender & Marginalisation
Increase access to healthcare and personal protective equipment (PPE) for women
Primary SDGs addressed
3.8.1 Coverage of essential health services
Health care access and quality index score: 48.7 (26)
World average is 53.70; high income countries have a score of 83.10 (26)
9.2.1 Manufacturing value added as a proportion of GDP and per capita
9.2.2 Manufacturing employment as a proportion of total employment
9.b.1 Proportion of medium and high-tech industry value added in total value added
8.37% of GDP (26)
8.59% of total employment (26)
15.03% - proportion of medium and high-tech industry (MHT) value added as a percentage of total manufacturing value (26)
Double the share in least developed countries (26)
Double the share in least developed countries (26)
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Outcome Risks
Plastic masks may contribute to pollution after being thrown away. (17)
Exposure to ultrafine particles from the 3D printers (18)
Big energy consumption may disrupt the transmission lines.(19),(20)
The unused input for printers has to be thrown away/recycled.(21)
Impact Risks
Efficiency risk: The probability that the impact could be delivered with fewer resources at a lower cost
Gender inequality and/or marginalization risk: Stakeholder participation risk - the risk that the produced services will be inaccessible for females and low income groups due to unaffordability issues
Impact Classification
What
3D printing of personal protective equipment and medical spare parts will increase their production and cut down the non-operational time for medical devices.
Risk
Although the model is market proven and tested, there is a risk that electricity outages may diminish its profitability.
Impact Thesis
Increase Kenya's capacity to produce essential medical devices and personal protective equipment, which in turn will contribute to health and wellbeing.
Enabling Environment
Policy Environment
Through the Ministry of Health, the government has constituted a National Coronavirus Taskforce to evaluate the evolving risk and advise on appropriate measures for preparedness, prevention and response to mitigate the public health impact.(22)
The government will encourage all tertiary and secondary schools to acquire 3D printing capabilities. All innovation hubs and maker labs will be provided with a grant to acquire additive manufacturing capabilities.(23)
Under its Big 4 Agenda, the government aims to create new jobs and raise the share of manufacturing to 15% of gross domestic product (GDP) by 2022. To achieve it, the government will create new Special Economic Zones and industrial parks as well as provide training and skill enhancement for new small and medium enterprises.(3)
Financial Environment
Fiscal incentives: Deductions are granted on the cost of manufacturing buildings and machinery (24). Investments situated within Nairobi, Mombasa and Kisumu receive a 100% investment allowance. Investments valued at KES 200 million situated outside these areas receive a 150% investment allowance.
Fiscal incentives: Newly listed companies receive preferential corporate tax rates depending on the percentage of listed shares. (The normal rate is 30% for resident corporations and 37.5% for non-residents.)(24)
Other incentives: Investors receive an allowance granted to cater for wear and tear on machinery - Class II @ 30%.
Regulatory Environment
The Health Act 2017 and Health Products and Technologies Regulations impose an obligation that all medical devices require evaluation and registration. To help with registration, proper guidelines for document submission have been released.(11)
The Kenya Pharmacy and Poisons Board supervises medical devices.(9)
The Kenya Bureau of Standards (KEBS) introduced three new standards that will guide local manufacturers on key specifications for making personal protective equipment.(8)
Marketplace Participants
Private Sector
TotoSci Ltd, NJA Technologies Ltd and Metal Equipment Company Limited, Kijenzi, Gearbox, QTron Industries, Kuunda 3D
Government
Ministry of Health
Multilaterals
VC4Africa
Non-Profit
KEBS, African-Born 3D, Kenyatta University, Dedan Kimathi University of Technology, FabLab, Kenya Connect
Target Locations
Kenya: Nairobi (Province)
Kenya: Nyanza
Kenya: Rift Valley
References
- (1) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press.
- (2) World Bank (2021). Transforming Health Systems for Universal Care. https://projects.worldbank.org/en/projects-operations/project-detail/P152394?lang=en&tab=procurement
- (3) Republic of Kenya (2018). Third Medium Term Plan 2018 – 2022 Transforming Lives: Advancing Socio-economic Development Through The 'Big Four', 2018.
- (4) Quartz (2020). Kenya's 3D printing community making COVID-19 equipment. https://qz.com/africa/1838608/kenyas-3d-printing-community-making-covid-19-equipment/
- (5) Beroza, A. (2019). 3D Printing In Low Resource Healthcare Settings: Analysis Of Potential Implementations. Open Access Master's Report. Michigan Technological University. https://digitalcommons.mtu.edu/etdr/944
- (6) Ministry of Information, Communications and Technology (2019). National ICT Policy 2019. https://www.ict.go.ke/wp-content/uploads/2019/12/NATIONAL-ICT-POLICY-2019.pdf
- (7) OECD (2020). Africa’s Response to COVID-19: What roles for trade, manufacturing and intellectual property? https://read.oecd-ilibrary.org/view/?ref=134_134617-5ewrwojglf&title=AFRICA-S-RESPONSE-TO-COVID-19-What-roles-for-trade-manufacturing-and-intellectual-property
- (8) Mwita, M. (2020). KEBS unveils new standards for local PPE manufacturing. The Star. https://www.the-star.co.ke/business/kenya/2020-05-08-kebs-unveils-new-standards-for-local-ppe-manufacturing/
- (9) World Bank. Medical devices regulatory systems at country level - Kenya. https://www.who.int/medical_devices/countries/regulations/ken.pdf?ua=1
- (10) Pharmacy and Poisons Board (2018). Guidelines on Submission of Documentation For Registration of Medical Devices Including In-Vitro-Diagnostics (IVDs). Ministry of Health.
- (11) PwC analysis based on Prof. A. Damodaran data, 2020.
- (12) Privacy Shield Framework. Kenya - Medical Equipment. https://www.privacyshield.gov/article?id=Kenya-medical-equipment
- (13) International Trade Administration of Kenya (2019). Healthcare - Medical Devices. https://www.trade.gov/knowledge-product/kenya-medical-equipment
- (14) Ministry of Information, Communications and Technology (2019). National ICT Policy 2019. https://www.ict.go.ke/wp-content/uploads/2019/12/NATIONAL-ICT-POLICY-2019.pdf
- (15) Dutta, A., Maina, T., Ginivan, M. and Koseki, S. (2018). Kenya Health Financing System Assessment 2018: Time to Pick the Best Path. Washington, DC: Palladium, Health Policy Plus.
- (16) UNKenya (2020). Articulating the Pathways of the Socio-Economic Impact of the Coronavirus (COVID-19) Pandemic on the Kenyan Economy.
- (17) Aragaw, T. (2020). Surgical Face Masks As A Potential Source For Microplastic Pollution In The COVID-19 Scenario. Marine Pollution Bulletin. https://www.researchgate.net/publication/343210219_Surgical_face_masks_as_a_potential_source_for_microplastic_pollution_in_the_COVID-19_scenario
- (18) Dunn, K., Hammond, D. and Menchaca, K. (2020). 'Reducing Ultrafine Particulate Emission From Multiple 3D Printers In An Office Environment Using A Prototype Engineering Control', Journal of Nanoparticle Research. https://link.springer.com/article/10.1007/s11051-020-04844-4
- (19) Ajay, J., Rathore, A.S., Song, C., Zhou, C. and Xu, W. (2015). 'Don’t Forget Your Electricity Bills! An Empirical Study Of Characterizing Energy Consumption Of 3D Printers', University at Buffalo. https://cse.buffalo.edu/~wenyaoxu/papers/conference/xu-apsys2016.pdf
- (20) Flynt, J. (2020). How Much Electricity Does A 3D Printer Use? 3D Insider. https://3dinsider.com/electricity-3d-printers/
- (21) Garmulewicz, A. and Holweg, M. (2010). Redistributing Material Supply Chains For 3D Printing Project Report. University of Oxford. https://www.ifm.eng.cam.ac.uk/uploads/Research/TEG/Redistributing_material_supply_chains_for_3D_printing.pdf
- (22) UNKenya (2020). The Socio-Economic Impact of COVID-19 in Kenya.
- (23) UNKenya (2020). Articulating the Pathways of the Socio-Economic Impact of the Coronavirus (COVID-19) Pandemic on the Kenyan Economy.
- (24) KENIvest. Investment Incentives. http://www.invest.go.ke/starting-a-business-in-kenya/investment-incentives/
- (25) Oxfam. Kenya: extreme inequality in numbers. https://www.oxfam.org/en/kenya-extreme-inequality-numbers
- (26) SDG Tracker (2021). End poverty in all its forms everywhere. https://sdg-tracker.org/no-poverty