Healthcare clinic and pharmacy chains in Kenya and Nigeria: How are they regulated, and what opportunities and risks do they present to national regulatory systems?

Abstract

Introduction Regulating highly fragmented healthcare markets is a major challenge in low- and middle-income countries, with compliance often very poor. We investigated market consolidation through the emergence of clinic and pharmacy chains in Kenya and Nigeria and explored the regulatory opportunities and risks that chains present. Methods The study was conducted in Nairobi, Kenya and the Federal Capital Territory, Nigeria, with chains defined as businesses with four or more establishments. Data were collected through document reviews and 26 interviews with chain operators, professional associations and regulators between September and December 2018. A thematic analysis was conducted. Results While chain clinics and pharmacies still accounted for a relatively small share of these markets, their importance was growing. We identified both organic-growth chains which had started as single business locations and gradually expanded, and investor-driven chains that used external investment capital to rapidly buy out businesses or establish new ones. In both countries, chains were regulated in an identical manner to independents, with all branches treated as independent units. Regulators neither capitalized on opportunities presented nor guarded against potential risks. The chains’ brand visibility and centralized management systems were seen as having the potential to encourage self-regulation, and improve regulatory efficiency, but regulators were not exploiting this. Potential risks identified were chains gaining excessive market power, and encouraging greater commercialization of professional healthcare, putting public health at risk. Chains tended to have regular interaction with regulators, which some feared could lead to excessive influence over the regulatory process. Conclusion As the market shares of clinic and pharmacy chains continues to rise, regulatory bodies should modify regulatory requirements and process to take advantage of chains’ brand visibility and centralized management and quality assurance systems, as well as guarding against the risks of monopolization, commercialization and regulatory capture.