5nines raises funding from Knife Capital
5nines specialises in a combination of hardware and software products that form part of its PharmaScout portfolio, aimed at providing a data analytics monitoring and communications solution for the local pharmaceutical industry.
PharmaScout seeks to overcome a litany of hurdles faced by healthcare professionals wishing to mitigate legal risk and meet the compulsory safety and quality standards of stored temperature-sensitive pharmaceutical products.
While the actual value of the investment into the company remains under wraps, Knife Capital says it has invested a "substantial amount" in 5nines Technologies, which will be used to accelerate product roll-out to pharmacies, medical practitioners and pharmaceutical warehouses.
"There are few pharmaceutical quality and safety issues more important than those relating to the storage and handling of temperature-sensitive products. PharmaScout and its related product suite deliver the most convenient and cost-effective way of meeting the professional responsibility and legal burden of temperature monitoring compliance in SA," says Doug Siepman, CEO and co-founder of 5nines.
"The investment will be channelled towards sales and marketing initiatives, new product development and adding more technology elements in the form of additional calibration chambers, firmware, and hardware and tool casings. It will also be used to fund research and development projects."
PharmaScout addresses the core pillars of a temperature compliance solution: appropriate hardware and software elements, temperature mapping of storage areas, including refrigerators, periodic calibration of the temperature measuring equipment, and continuous monitoring that includes alarms, notifications and data storage.
The health tech company has an array of customers across SA, including Clicks and Alpha Pharm, and is conducting pilots with local hospital groups.
Cape Town-based Knife Capital is an independent growth equity investment firm focusing on innovation-driven ventures. The firm invests via a consortium of funding partnerships, including VC firm KNF Ventures.
Keet van Zyl, investment partner at Knife Capital, says PharmaScout is an exciting investment opportunity for Knife Capital.
"PharmaScout contains all the elements that we look for in a portfolio company. There is a compelling investment case underpinned by recurring revenue, great people with execution abilities, resulting in proven traction and intellectual property elements that make the technology scalable. Macro factors in the industry, such as increased legislation and auditable but affordable medical compliance standards, also play in PharmaScout's favour."
Knife Capital says its investment into 5nines Technologies adds to a list of a well-performing portfolio of VC investments that includes ticketing business, Quicket; artificial intelligence company, DataProphet; and education technology marketplace, SkillUp Tutors.
Pharmacy Act amendment
In 2015, the South African Pharmacy Act was amended to stipulate that anyone storing, distributing or administering thermolabile pharmaceutical products must use appropriate storage facilities, electronic temperature monitoring instruments and conduct regular checks, including annual temperature mapping of storage areas and calibration of temperature sampling equipment.
To solve this challenge, PharmaScout launched its own range of refrigerators designed for storing pharmaceutical products in a compliant way.
"Unfortunately, most local domestic fridges fail to meet storage standards and specially designed laboratory fridges are impractical for small medical practices. PharmaScout owns and controls the entire pharmaceutical cold-chain ecosystem, offering healthcare professionals peace of mind by providing the tools and guidance to conveniently achieve best practices and compliance with mandatory temperature management requirements."
The investment from Knife Capital will enable 5nines to reach a wider market locally, as the company eyes international expansion.
"While we have global market expansion plans, our aim, however, is to acquire a large part of the local pharmaceutical market while researching and developing for expansion. Many of the global markets like the UK, for example, enjoy high-density healthcare providers within relatively short geographical distances. Temperature management regulations are very closely aligned worldwide and our solution will be attractive for many markets globally."