Episode 6: Michael Barbe, Principal, Medaron Consulting
Michael is principal at Medaron Consulting, and director at Med Market Access. Michael assists early-stage life sciences companies with global expansion initiatives and foreign companies expanding into the US and beyond. Michael has held senior management roles in large blue-chip and early-stage companies and has established and grown medical device markets globally.
Prior to that, he was Director - Europe, Middle East, Africa, Canada & Latin America for Misonix, a US company that specializes in the development and commercialization of ultrasonic surgical devices for neurosurgical, spinal, advanced wound care, and general surgery procedures. Prior to that, he was Region Director, General Manager - Latin America for Smith & Nephew where he managed an $80M P&L and 200 direct employees. Michael was also the Region Director - LatAm for Johnson & Johnson, and Director for Spinal & Guided Surgery - LatAm for Medtronic.
Michael has extensive experience across multiple markets and surgical disciplines. His portfolio has included cardiovascular surgery, neurosurgery (spine and skull-base), neurovascular surgery, orthopedic surgery, and wound care. Michael is originally from Connecticut, and is fluent in Spanish and Portuguese.
Michael has expertise in different areas of the medical device business in Latin America including regulatory, clinical research, financial, legal, compliance, and human resources. Throughout his years of experience, Michael has accumulated a broad network of surgeons, researchers, administrators, trade organizations and in-country specialists that he can quickly leverage to execute cost-effective go-to-market strategies in Latin America.
Michael has a B.A. in business from the University of South Florida and an M.B.A. with a concentration in international business from the Thunderbird School of Global Management. Learn more.
Julio Martínez-Clark: Welcome to the LATAM Medtech Leaders Podcast. This is a weekly conversation with medtech leaders who have succeeded in Latin America. Today, our guest is Michael Barbe. Hey Michael, it's great to have you here today, welcome to the show!
Michael Barbe: Hey Julio, thank you very much for the invitation.
Julio Martínez-Clark: So, let's get the interview started. Listeners, I'm really thrilled to have Mike on the episode today. He is an outstanding Latin American expert and you're going to understand why after I read his bio. So, Michael is now principal at Medaron Consulting, and director at Med Market Access. Michael assists early-stage life sciences companies with global expansion initiatives and foreign companies expanding into the US and beyond. Michael has held senior management roles in large blue-chip and early-stage companies, and has established and grown medical device markets globally. He has have many positions including director of Europe, Middle East, Africa, Canada & Latin America for Misonix, a US company that specializes in the development and commercialization of ultrasonic surgical devices for neurosurgical, spinal, advanced wound care, and general surgery procedures. Prior to that, he was Region Director, General Manager - Latin America for Smith & Nephew where he managed a $80M P&L and 200 direct employees. Michael was also the Region Director - LatAm for Johnson & Johnson, and Director for Spinal & Guided Surgery - LatAm for Medtronic. So, I am really excited about our conversation today, Mike and I cannot wait to hear your tips, best practices and experiences in Latin America. So, to get the show started, Mike, could you please tell listeners about your journey to Latin America? I mean, how did you get involved with the region?
Michael Barbe: Well, it's interesting that, I'm very different to a lot of people that you see in the United States, the United States as you know, has literally millions of Hispanics that have become Americanized, that have come to the states, and I was actually the opposite. My father was in the oil business and when I was very, very little, we moved to Venezuela and, I essentially grew up as an American expatriate in Venezuela. So, I speak Spanish natively and over the years I've become quite fluent in Portuguese, but my affinity, my association with the Latin America region started actually when I was very young, and it gives me the ability, certainly as a management executives, it gives me the ability to straddle both worlds, like culturally understand and identify with Latin American culture but at the same time I'm fully versed in the way business operates in the US environment and that makes me very comfortable presenting about Latin American issues before a management organization of a US based company.
Julio Martínez-Clark: Wow. Michael, that's really a fantastic personnel and professional journey and talking about professional experiences, How were you putting first in a position to manage the Latin American region? Did you start your career in the US, managing the US operation of a US medical device company and were transitioned over to Latin America, or how did the whole thing unfold?
Michael Barbe: Well, it was always my objective to get involved in international business. I studied international business as an undergraduate and then I have an MBA from a small but fairly well known international business school based out of Arizona called Thunderbird. So, it was always my objective to enter international business and of course being a resident of South Florida and speaking the local languages, and when I started looking at in my career, I was actually recruited by Baxter Healthcare for a Latin America role and that was my entry to that, but that actually only lasted for a few years and then some roles hopped up in Baxter Healthcare that had me managing joint ventures and manufacturing subsidiaries for Baxter Healthcare in Eastern Europe, Asia, Middle East, and Africa. So, it's a little bit ironic. I started in Latin America, went over, spent literally nine years on these other emerging markets, which by the way, there was a lot of consistencies in emerging markets across the world and many of the practices of a go to market strategy in a place like Latin America very much applies to other emerging markets worldwide. But that was my initial foray into Latin America, and I left for a while and then later I was recruited back by Medtronic to run their neurosurgery and spine business unit and pretty much from then on I've had a significant amount of focus on Latin America. Right up until that most recent role that you mentioned at Misonix where I once again had a big portion of Europe and in the areas surrounding it.
Julio Martínez-Clark: Excellent. So first, Mike, tell us about your overall perception of Latin America as a market to commercialize medical technologies. Is it upbeat, negative, I mean, what's your stand on Latin America?
Michael Barbe: Well, Latin America has roughly 7% of the world's population. So no matter what, it's a significant market. You look at countries like Brazil, which is approaching the 10th largest economy in the world, Argentina, which I believe is some noise around the 12th or 13th and don't quote me on that, but there are markets that are very relevant to the worldwide medical market. The thing is you have to put it in context. It's still relatively small compared to other markets like the US which are disproportionately responsible for a very large segment of the healthcare revenue but nonetheless, these are important markets, and they have significant organic growth. The populations are growing, the populations are young, the middle class is expanding and there is a considerably strong increased demand for quality healthcare and then that drives the potential to introduce new products and new technologies.
Julio Martínez-Clark: Very good. All right, Mike. So what about the specific countries where you have being involved in?
Michael Barbe: Well, I've had some involvement with virtually all of the regions. I have always had managed to keep my focus on the larger markets because that's where the larger opportunity is. So, though my focus has traditionally been Brazil, Mexico, Colombia, and Argentina. The other markets pass that tend to be more secondary in terms of their overall market opportunity. So, the strength of the focus of my business has been in those, and ironically also Puerto Rico. Puerto Rico is often lumped in with Latin America by most US companies and Puerto Rico, despite having a very small population, has a very, very strong penetration with Medicare and Medicaid, and so the reimbursement levels compared to other Latin American countries is through the roof, and it's a relatively easy market to manage. You must have FDA because it's an FDA jurisdiction; so you can't have products that have only CE Mark, they must obviously have FDA, but it's a small, potentially very lucrative market.
Julio Martínez-Clark: Excellent point. All right, Mike, so what about your experience obtaining regulatory approvals or market clearances in the major markets in Latin America? What's your overall stand? and if you could share best practices with the listeners will be fantastic.
Michael Barbe: Yeah, this is always a fairly tough portion of managing a go-to-market strategy because there're so many variables involved and that's true even when you're dealing with organizations such as the FDA, but the key here is to have a good regulatory strategy and then add a certain amount of time to that for unknown things that are almost guaranteed to pop up. Brazil for years was considered to be an incredibly complicated market to register, it's much better now. They are now allowing, for example, let me back a little bit; so the Brazilian ANVISA organization, which is the equivalent of the FDA, has traditionally required two things: one is the usual sort of submission of regulatory documentation, etc. but secondly, they also require an actual site visit by their own employees to conduct a good manufacturing practices audit of wherever the manufacturing facility is, and over the years, this was the big timeline. You could run the submissions through in six or eight or nine months. However, you might have to wait two or three years before they would get around to do that GMP visit. So now, depending on the product and how the submission has made, they are willing to provide a provisional registration up until the point that the good manufacturing audits are conducted and that allows you to get that registration, which ideally should be somewhere six to nine months but in practice always ends up being higher simply because they ask questions and it takes sometimes time for the principle company to answer those questions and for the process to restart again. So, generally, you know, I tell clients to assume somewhere between 12 and 18 months depending on the complexity of the products. Meanwhile you get that provisional registration and that allows you to start generating sales in Brazil pending the results of that audit, and then additionally, they're starting to allow the use of notified bodies in Europe to be able to conduct the audit on their behalf. I don't personally have experience with that, but I understand that's one of the mechanisms that's available right now.
Major markets: Colombia and Mexico
Julio Martínez-Clark: Okay. That's for Brazil, what about the other major markets like Mexico, Colombia.
Michael Barbe: So that's the toughest. The easiest is Colombia. Colombia is the only country that allows a foreign company to be the owner of the registration, and it's a very simple process. So, as an American or as any foreign company, you can already own the registration that brings big values. Typically throughout most emerging markets, you have to have a local entity that owns the registration, and they require this primarily for post-market surveillance issues. They want to know who they can go to in the event that there is an issue with a product. Colombia however, allows a foreign company to register and be the owner of the registration, in which case whenever you are the owner of the registration, you can name whatever distributors you want, and that's important cause distributors are essentially sales organizations and some perform well and some don't, and you need to ideally have the ability to make changes if you need to. So, Colombia normally takes about six months, six or seven months, and the cost is also, that's one of the factors we have to look at, the cost is also a lot less, you can register in Colombia for under $10,000, whereas Brazil right now is running roughly about a 100,000 reales, so it's a somewheres around $35,000 the cost of registering products. So that covers Colombia and Brazil is the two extremes and sort of in between is Mexico and Argentina, in both take roughly about a year to do the registration. By the way, as long as we're talking about hosting both Mexico and Argentina, roughly about 10, maybe $12,000 to conduct a registration. Again, depending on what the class of the product is and then that'll affect obviously the timeline, these timelines throughout our primarily for surgical products, which tend to be class three, in Brazil, they add another class, class four, which is their highest risk stratification, but that ends up being class three in most other countries, but as long as we're talking about regulatory in the strategy related to regulatory, I think one of the most important things is the ability to have control over that registration in case you want to make changes in your local market. In Brazil, there are hosting companies as they're called, are usually some kind of a regulatory company or a law firm where they will register on your behalf, but they are noncommercial entities. They do not actually conduct sales. What they do is they enter into contracts with their principals and that obligates them to act as the principal's proxy in the countries. So, you can end up owning your registration by proxy in Brazil, in Mexico, and Argentina I haven't done it, but I understand that it can do it, and that's very important, especially Brazil being as big and as fragmented as a market as it is or just as large as a market as it is. You have one distributor that may have a very strong and say the Rio area or even the Rio and Sao Paulo area that are relatively close to each other, but it's a big country and they may not necessarily have the reach out to other peripheral markets on the north and the south of the country. So, have owning the registration and giving yourself the option to name even more than one distributor for a given country, even Mexico, Mexico has, you know, the Mexico City area, but then there's also the Monterrey area up north and one distributor that's effective in one region may not necessarily be effective in the other. So, a good regulatory strategy how so has to take into consideration the potential for owning or controlling the registrations through a proxy, and it gives you a significant leg up. The downside that comes with that is the cost, if you name a distributor who is willing to undertake to pay for the cost of the registration, well then that's an expense that the principal does not need to incur and of course after that own the registration and if you ever want to take it back, it's a process and it's an expense, so you manage that. In the case of Brazil, I think it's extremely valuable, but it's also a big nut to crack the $40,000 expense that is essentially upfront, and then you have to wait over a year to be able to register your products. So, it's one of those factors within the overall go to market strategy.
Julio Martínez-Clark: Excellent answer, Mike. Thank you for that, and I like to add something about Colombia; you mentioned six months and I have some great news for listeners, INVIMA, which is Colombia as equivalent to the FDA, the Ministry of Health recently issued a mandate where they are obligated to respond to your submission with a 90 days. So, if you have a very solid submission dossier package, you should get approval in 90 days.
Michael Barbe: I just learned something there myself, Julio, I appreciate that. Certainly when it comes to Colombia, Colombia is one of my absolute favorite places to visit, but it's also a fantastic resource for establishing key opinion leaders, what we in the industry called KOL, key opinion leaders, which is, you know, surgeons that have a not only a particular expertise but are also very well respected in their communities and on several occasions I have introduced products in Latin America, but specifically used Colombian key opinion leaders to be able to act as proctors and then help with the training and the professional talks at meetings, at trade shows, at congresses, just because somehow the Colombian surgical market allows for that. There's some really, really skilled people, some incredibly well equipped centers. Colombia always pleasantly surprises me.
Julio Martínez-Clark: Very well said about Colombia. I am a Colombian myself and I can attest to that. It is true. Okay, Mike, moving along, what about your experience with market access plans or strategies in the region? I just want to understand what's being the approach that the companies you were involved in had in Latin America. Do you have or did those companies have a proactive and well thought out strategy where they created the market access plan for each country they were planning to enter? Or did they have an opportunistic or a reactive approach where they just waited for a distributor to contact them at trade show or via email? So, how was it?
Michael Barbe: I have to laugh a little bit. There's a famous US general, I'm not sure exactly who it was who said that the very best laid battle plans go right out the window the minute the first bullet flies, and I have found that that also applies very much in business, certainly in emerging markets. Certainly the key things that you look at in a go-to-market strategy is number one reimbursement; assuming we've got the regulatory portion out of the way is number one reimbursement, how our products paid for and in all of these countries you've got large single payer organizations, and these large single-payers are the public healthcare system. The public healthcare system is usually run through a series of fairly complicated and very bureaucratic bids and tenders what in Spanish are called "licitaciones", and these bids can sometimes take years or even they'll occur and then there'll be challenged, they'll be canceled that the public market is usually a big challenge and then within the private market there are significant differences, but the private market usually will pay a higher price for products and they will pay much more efficiently. By the way, one of the reasons you have distributors in the US there's, you know, many companies have sales agents and they have a sales agents because they have relationships with doctors and in many cases, having those relationships is very good, but I think in my view, one of the key functions that a local distributor will have in Latin America and a market is just the ability to collect cause if you tried to run a business remotely from the US it almost impossible to collect and that's why you really need a local sales agent. So, looking at the market is the ability to sell, the ability to get reimbursed and get a good price for your products, your ability to collect on those and then of course to see what the collection process, what those prices are like because in the public healthcare system they may purchase a great deal more, they may purchase 20 times as many exes of a reference product, but it might be at a price that it's so low that is just simply not worth it. That happens a lot in Brazil, for example, they have this very large public healthcare system called the SUS, the unified health system and they buy enormous amounts of products, but in some cases the prices are so low that it just simply isn't worth it and then you focus on the private healthcare market. So, these are kind of the key things in assuming that you can sell, that you look at each individual market in terms of what that reimbursement is like and the ability to collect or the ability for the distributor to collect and get paid on your products. That's, you know, I tend to look at things on the fairly abstract way and that's for me is absolutely key.
Julio Martínez-Clark: So, Mike, would you agree that companies should have a market access plan or at least an outline of their strategy before they enter a market or not? I mean, what's really your opinion on the approach a company should have in countries in Latin America or should just wait for a distributor to contact them.
Michael Barbe: It's funny you asked that because I have seen companies that have sort of blindly just kind of jumped into a market without really understanding it, and then they're surprised by it. Their lack of performance or lack of ability to collect, so yeah, you absolutely have to understand what you're getting into with any foreign market, and in the case of these markets, what I try to do for my clients is I try to paint a picture of panorama and say, okay, this is what the market looks like. It has these dimensions, it has these particular qualities, it has these traps, it has these sand traps, it can get stuck in; it also has these tremendous opportunities for companies that are able to position themselves within certain areas and understanding where those opportunities and where those traps are is absolutely critical. I think pretty much in any go to market strategy worldwide.
Julio Martínez-Clark: Well, said. Okay, Mike, moving alone let's talk about distributors and there are usually two ways to approach a market. I mean I'm speaking high level; one is a handoff management strategy where you let your distributor do everything, you just ship and collect payments from distributors and shipped the products through them, and you let them free in the local market, or other companies usually have a local agent or if they are more matured, they have a local office, of course, a country manager and that local representative in whatever shape that representative is, could help distributors generate demand, a partner with marketing or co-marketing initiatives, etc. So, what's been your experience? I mean, what do you suggest companies do in Latin America? I hand off management approach or a hybrid approach?
Michael Barbe: Well, if you look at a distributor virtually anywhere in the world, and that even applies to a sales agent in the US which the people sometimes refer to as distributors, even though they're just sales agents, what is the absolute most valuable thing that a distributor has? and very often that's their intimacy with their market, their understanding of how the system works and their relationship with the key opinion leaders and the surgeon community in general, of course, I'm talking about surgical products here, but the same would apply to other areas as well. So, one of the things, if you don't get involved as a company, they're going to try to protect that intellectual property, those relationships that they have because they know that's what really makes them valuable to other potential principals in the market. In my case, I want to get to know who those doctors are, I want to develop a CRM platform and have people populating it, so I know what doctor is doing, what and where and how, so that becomes the intellectual property of the company, not just of the distributor. So, in the distributor selection though, you want to get a highly capable distributor that has the ability to literally do all those things and you can give them the products and they can hit the ground running and make it happen. So, I want highly qualified distributors, I don't want to do their work for them; so what the model that I like best is the clinical specialist model where you have somebody from the company that regularly visits the customer and regularly visits their most important customers and is there actually the support of the distributors, they're to help provide technical and clinical information and teach them and work with them, but at the same time, that person is also developing relationships with those key clients and then that becomes part of the principal's intellectual property. So, my distributor selection is always pick the absolute best, most solid distributor that you can that does not manage a competitive line, and that's one of the big challenges is making sure that you're not selecting a distributor that has a competitive product line and then has the luxury of deciding which product he wants to choose without necessarily putting all the time and effort and energy that you would want them to put into your particular product.
Julio Martínez-Clark: Okay, Mike. So, let's talk about how to search, select, and conduct due diligence on distributors. I mean, what are your tips on this?
Michael Barbe: Well, it's a challenge, especially when you're going into a market for the first time as I said, I think greenfield environment, I think surgeons are the absolute best source of referral. Again, I'm talking surgical markets, but people that are in the market they usually the absolute best source of referrals, but one of the best ways to enter a market, if you're not familiar with who the players are, is to go in and see the doctors, and you can do this even as an owner, all you need to do is understand what might be the players and that usually just basic research can tell you who the top oncologist is, or who the top brain surgeon is and reach out to them directly and sometimes you can do that even through LinkedIn and through social media, but also it's good to have face to face and they will tell you, when you're talking to these opinion leaders, they can tell you who is in the market, who are the good distributors; you have to be careful that they don't recommend their own brother-in-law, which sometimes happens, but they can tell you who the players are and in many cases those players already have competitive products. So, that becomes a challenge, but then what you do is you go through this process and you're working with your actual end-user. Always look at where the rubber meets the road because that's the most important thing and at that point they will share with you who potential distributors are, and then you go through an interview process and in some cases you take it a step further and you go through some of these actual due diligence organizations that exist in the US that they look at it in depth but is very difficult to find out exactly who you're dealing with, but there are other means you can find out anecdotally through search and community through networking interactions and people like myself who have very extensive networks or yourself who have very extensive networks are usually one of the best sources to be able to find a good distribution partner in any market.
Julio Martínez-Clark: Totally correct. Mike, Thanks for that answer. Well, what about end-user demand generation strategies in countries in Latin America. Have you ever being involved with things of these nature? I mean, marketing strategies, end-user demand strategies where you needed to reach out to the end user on behalf of clients or your own employer, and you have to help the distributor generate that demand because distributors do not always, of course, depending on the product, but they don't always generate enough demand for products. So, what are your thoughts on this?
Michael Barbe: That's true in many cases because they don't necessarily understand that as effectively as possible and usually when you bring in somebody from the outside, like a mentioned earlier clinical specialists, somebody to assist the company, then all they really need to do is tee up the meetings with the surgeons and then you can come in with your experts. In many cases, it also adds a tremendous amount of credibility to the distributor when they show up and they've got product specialist from the manufacturing company that comes in from overseas and is willing to sit down and talk to the doctors and present a particular technology in order to generate that demand. The other part of it, of course, is also having the skill to be able to drive whatever quotation processes that might have and through the administrative processes present a product that is a new technology or a better technology or a lower cost, whatever the key drivers are. Those are all the critical elements, but I find that clinical specialist model is the best one for getting the doctor's attention.
Julio Martínez-Clark: Very good. All right, so let's speak about pricing in Latin America. Some people say that Latin America is a very price sensitive region. What are your thoughts on this?
Michael Barbe: Well, it is, it's a function of compared to who, right? The United States has 5% of the world's population, however most companies, if you look at the P&L of the very large companies of the Boston Scientific, the J&J, the Medtronic, normally the US is about roughly 40% of sales, and that throws everybody off because there's no other market in the world that can compete with that and foreign companies tend to look at the US, especially American companies, tend to look at the US as the benchmark, as the norma, but the fact is in the United States, we spend a disproportionate amount of money per capita on healthcare. So the US is not the norma, it's not the benchmark, and that's one of the toughest things to convince a foreign company or a manager from a US market who believes that the sale price for his particular device in the US is the norma and that therefore everything that is different is abnormal and it's actually not true. The US is the outlier. Now having said that, Latin America does have for the most part a lower reference pricing and you have to look at that, especially even in that'll change even within the market in Brazil, the example I mentioned earlier of the public healthcare system versus the private healthcare system, sometimes in spit some products, the prices in the local private healthcare system might be two or three or four times the price of the same reference product in the public sector.
Julio Martínez-Clark: Okay, great insight. What about reimbursement? I know you touch on that already, but let's get a little deeper into that. If you have been involved with meetings or lobbying efforts with government agencies or Ministry of Health in Latin America to try to get a product reimbursed or also at the insurance companies. I mean, a lot of companies in Colombia, insurance companies really own the patient and they really control of reimbursement. So what are your thoughts on reimbursement?
Michael Barbe: And that's also true in Brazil as well. I think one of the big factors in that question is the function of innovation. If you have a highly innovative product and it's something that's truly new and different and that's obviously my favorite type of product to bring to market, then you have the unique position of being able to set the price, to set, the benchmark, you know, you look obviously at the predicate device and you're able to show, wow, this is much more innovative, has much better patient outcomes, it has a much lower cost overall, even though the price may be higher. All of those things you can do if you're driving something that's highly innovative. If you're coming in with a product that is more, for lack of a better term, me too. Then that becomes a real big challenge because they just look at the predicate device and these are less sophisticated markets, then you'll see in the US and Europe and for the most part making the argument that the use of this product results in savings over time is very challenging because they have very specific budgets, and they don't necessarily will care in many cases whether or not a patient is staying five nights in the hospital versus six nights. So it's a big challenge when you come in and you drive a new product, you're in a good place. However, if you've got a more common product for lack of, for not wanting to use the word commoditized, it's more of a challenge and you have to be able to drive efficiencies or bundle with other products and you have to be careful because there are some markets with restrictions around that, but sometimes being able to bundle a series of products together and get reimbursement for the whole thing can be a very good strategy when you're dealing with administrative sectors of healthcare systems.
Shipping & Importation
Julio Martínez-Clark: Very good. All right, so let's speak about a kind of a boring topic, shipping and importation in Latin America. What are your experiences or thoughts on this? Is it easy, is it ugly? I mean, what about it?
Michael Barbe: I can't say that's, from a management perspective, that's something that I, as a manager have had to spend a lot of time or energy on. Perhaps something as peripheral to that that is an important strategic value are the duties that are assessed on the product when they arrive, when they're shipped into the country, for example, Brazil, for many medical devices, the duties assessed on highest 35% or so. What distributors may not tell you is they actually claim some of that back on their taxes at the end of the year, they can claim some of it back on their taxes, but the cost of money is also fairly high in these markets. So if you have to wait a year to get your money, there is a cost associated with that, but then usually you have the local sales tax or what's referred to as the VAT, the VAT, and that's a legitimate expense and that actually adds a lot to the cost of a product and very often people look at an end-user price for a product and then they assume that they can just discount 30% off of that or 20% and then that would be a good acquisition price for a distributor, and that's just not true when you start to go through all of the expenses related to importing of a product and then paying local duties and paying the VAT and then having the products shipped and then going through all the regular marketing expenses, it's not really viable for most distributors to work with very, very slim margins, they become unmotivated, especially since they tend to have other lines. You also want to allow them the opportunity to generate a local margin that results in an incentive for them to drive the products and in order to do that, you really have to need to understand what that whole shipping process is and how the duties and import costs affect the overall costs in the local market.
Corruption & Bribery
Julio Martínez-Clark: Excellent. All right, so let's speak about another kind of ugly topic. FCPA, the Foreign Corrupt Practices Act. What's been your experience with corruption or bribery in the region?
Michael Barbe: You know, I came from companies such as Johnson&Johnson, Medtronic, Smith&Nephew and in compliance is an absolute paramount and it's a challenge. It's an ongoing challenge that has to be managed effectively in many of my management meetings, at Smith&Nephew, I had a dedicated compliance manager and there was no significant meeting that did not have a compliance dimension to the meeting. At some point we were talking about our processes, literally, everybody within the entire organization, whether it's supply chain or sales, it doesn't matter. The education relating to compliance is constant and it's ongoing, and it's a challenge because these markets do have some intrinsic corrupt nature of practices in it, but what I've found is if you work at it, you can turn a highly compliant practice into a competitive advantage. In other words, I've talked to surgeons, I said where I've told them, no, we're not going to give you what our competitor gives you, but in my case, your name will never ever be associated with anything on toward. You can bet that with us your name, we'll grow through the use of our products and we will support you in many ways, but what we won't do is do anything on toward and that will help your own reputation in the longterm and selling through ethics compliance as a competitive advantage is something that actually works.
Julio Martínez-Clark: That's a great insight. All right, Mike, before we move on to closing remarks, are there any other areas that we haven't covered that you think listeners should include in their market access or entry strategies in Latin America?
Michael Barbe: Well, we've covered a fair amount of ground here, but one of the things I think I would like to highlight is the importance of being able to look at Latin America as a total market and really understand what you're getting yourself into. So, the question of focus becomes paramount in the good go-to-market strategy will basically have you focus on top core markets and within those core markets focus on, you know, where the opportunities are, whether it's a private sector or public sector and understanding that there's a lot of temptation to add another market and somebody will show up and say, look, I've got a doctor in Peru who is interested and before you know it, it ends up becoming a real resource drag on the organization to add a smaller incremental market and the focus is really important. If you can grow sales in Brazil 5%, it's usually equal to opening a new market and that 5% increase in Brazil in the first year would probably continue to grow in some organic level and your overall strategy is very well served by having a good understanding of the markets and the focus on where the opportunity is.
Julio Martínez-Clark: Well said. All right, Mike, what major trends do you see in Latin America that are relevant to our discussion today?
Michael Barbe: Well, there's a number of trends going on, I know that we're starting to see some more public and private partnerships going on, PPPs, where the government is getting involved, providing incentives for companies to move into their markets, providing incentives for advantages to getting into local bids, etcetera. If you have local manufacturing, we're seeing some of that. We're also seeing much more cohesiveness in these markets, they seem to be interacting between them much more effectively, there're more free trade agreements and other agreements of this natures, so there's a unification trend that we're seeing that where the markets are a little bit less disparate, a little bit more cohesive than they were and that's very good, that makes it possible for you to be able to leverage what you're doing say in Argentina with what you're doing in Brazil and then, you know, the big watch out obviously is these markets tend to be cyclical and there are trends that will occur debased on socioeconomic, financial issues and things and understanding with general direction of the market is important in terms of being able to set targets and objectives for the year. Some countries performed well over time and then something happens, they have an election, that kind of thing, and then that will change for a while, you see this all the time and it's an ongoing part of managing not just Latin America, but any emerging markets and understanding where you can take the market in any given year so that you don't have ugly surprises and at the same time, that goes both ways because if you know what you're doing and you're on an upswing, you don't want to be surprised by over performance because you want to know that you're going to achieve that higher performance level.
Julio Martínez-Clark: Excellent. All right, Mike, before we close, do you have any final thoughts to our listeners? In other words, what would you say to a small- midsize medtech company that haven't looked at Latin America or that is just starting to explore the region both as a clinical trial destination or as a potential market to expand its footprint?
Michael Barbe: Yeah. We really haven't talked about the clinical side of it and as I'm sure some of your listeners know, the European organizations, the healthcare organizations, where traditionally I've been very friendly to foreign companies coming in and establishing the initial safety studies so they can get the CE Mark and start selling in Europe. Well, that's going to become much more challenging in the future, and I think over time we're going to see an increased demand for countries and markets where you can do initial safety studies, demonstrate the safety of a product and then move forward onto demonstrating efficacy of products, and I think certain countries, especially Colombia, but a certain countries are in a really lend themselves to the opportunity to use those markets as locations to do your initial studies, to do first-in-man studies, that kind of thing. So I know it's late in our interview to be talking about a subject that I'm sure it could take up a full interview, but I believe also that you're far more qualified than I am to peak on that, but yeah, overall I think Latin America will continue to play a stronger and stronger role in the global healthcare system as they become more sophisticated as they work together, the world is becoming a smaller place. So yeah, I would absolutely encourage any company, certainly looking to develop new technologies as a place for clinical development, but also as a place to be able to pick a few key selected markets and go ahead and establish a presence because that makes an early-stage company more attractive, if they have an exit plan that includes being acquired by a large multinational several years down the road and have multinational companies looking at them, and they see that they have a footprint outside the US and they've developed markets effectively, not just in the US, but outside, it gives a lot more credibility and makes that company more valuable.
Julio Martínez-Clark: Very well said. So Mike, thank you so much for being on our episode today. I truly enjoyed our chat today our conversation, I absolutely loved your insights in the region and I'm sure listeners did as well. Thank you again, it was a privilege to have you here today with us, and I look forward to another interview in another more specific topic.
Michael Barbe: Very good. It'd be my pleasure. Thank you very much, and congratulations for everything you're doing on line and being able to take these messages and bring them across to all of these new markets.
Julio Martínez-Clark: Excellent, Mike. Thank you so much. Bye!