June 6, 2019
Michael Benzaken, Former Acting Chairman, CEO, Nubenco Enterprises
Michael has extensive experience in various advisory, mentorship and leadership roles combined with his educational background in human behavior and cognition; this has enabled him to become a successful turnaround specialist in the life sciences industry.
He is the former acting-chairman and CEO of the Nubenco and PharmeuRopea group —a marketplace providing medical devices, pharmaceuticals, and medical equipment to distributors, NGOs, major multinationals, and government agencies worldwide. Michael has been involved in international markets since 2011 since he first stared his global role first at Nubenco's international business director. At Nubenco, Michael —among other notable accomplishments— expanded the company's foothold to over 12 new markets —including Latin America— and doubled the company's customer base.
Michael has recently co-founded Mist Medical —an early stage medical device company with a mission to gradually replace the demand for high consumption medical disposables, beginning with his first target: to replace the old syringe. Michael has a BA in Behavioral Neuroscience (pre-medicine) and Biological Foundations of Behavior from Franklin & Marshall College in Pennsylvania. Read more.
WEBVTT
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Welcome to the LATAM Medtech leaders podcast.
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This is a weekly conversation with med tech leaders who have succeeded in Latin America.
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Today our guest is Michael being second and Michael, thank you for being on our show today.
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Welcome to it.
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Julio, my pleasure.
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Glad to be here!
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Excellent.
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Michael.
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Michael has extensive experience.
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He embarrassed advisory, mentorship and leadership roles combined with his education or background in human behavior and cognition.
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This has enabled him to become a successful turnaround.
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Specialists in the life sciences industry is the former acting chairman and CEO of the new Banco and Pharma.
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You rippy a group, a marketplace providing medical devices, pharmaceuticals and medical equipment to the shooters, NGOs, major multinationals and government agencies worldwide.
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Michael has been involved in international markets since 2011 since he first started his global role first as[inaudible] international business director at New Vanko.
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Michael, among other notable accomplishments, expanded the companies foothold to over 12 neo markets, including Latin America and double the company's customer base as well.
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Michael has recently co founded ms medical and early stage medical device company with a mission to gradually replace the demand for high consumption medical disposables beginning with his first target to replace the old syringe.
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Michael has a BA in behavioral neuroscience, pre-medicine and biological foundations of behavior from Franklin and Marshall College in Pennsylvania.
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So my work is really, really a pressure to have you here and they show, I mean, you have an outstanding background and I'm sure listeners will enjoy our conversation today.
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Thanks Julia.
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Yeah, it's been a wild ride over the last four years, specifically after expansion.
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Got To meet a lot of interesting people.
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I learned a lot along the way.
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There was no blueprint for me, so I had to learn from those who I wanted to mirror and I've been very fortunate.
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So looking forward to chatting about it.
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Excellent.
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Excellent.
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Mike.
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All right, make sure, let's start with the first question that I usually ask our guests on the podcast.
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Please describe how you got involved with Latin America.
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I mean, how do you get to work in the region?
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So originally we didn't even think about Latin America in terms of a market.
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I spent a lot of time when I was young in summers living out there, getting to know the people used to the culture.
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So while kids were going to camp, I was going to Latin America.
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I came back and were telling my family how much I enjoyed it.
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It gave me great perspective.
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My father run a life science company that was two generations old and it sort of encouraged him to take a look.
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And this ended up looking first in Colombia, Chile, in Nicaragua, and that was our original foothold in Latin America.
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And then from there it just spread out and really had a successful time.
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Awesome.
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That sounds very intriguing.
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I can't wait to hear your stories are finding the shooters and all that in division.
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So Mike, thank you for that explanation of how you got involved with Latin America.
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So please tell us what's your overall perception of Latin America as a market to commercialize medical technologies?
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Well, so Latin America as a whole is very convenient.
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It's right next door.
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A lot of people speak English.
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That helps me because my Spanish is pretty poor.
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Uh, but each country and the nature of the markets, the risks and the upside is completely different.
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So when I look at Latin America, it's difficult for me to lay out a blueprint of what one needs to do step by step.
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It really depends on the nature of each individual country.
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I'll tell you, the first thing you want to do is find someone you trust.
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A lot of international business is based on partnerships or affiliations, synergistic relationships where you get good information and you develop a relationship with the other person enough that you can trust them, that the information is correct and that they're giving you what you need to succeed in the market.
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Very good.
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So specifically in what countries have you been involved in?
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Latin America?
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So we have an operation in Colombia in Bogota right now.
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It's quite a large operation.
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It's been there for I think 15 years now, about a hundred employees as of six months ago.
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And it's really fantastic.
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I love my employees down there.
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I love spending time in Colombia.
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We have our own sets of issues that we need to deal with that's not unique to the Colombian market, but certainly one that needs to be resolved before one enters the market.
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I would say the most important thing is to be weary of collections and of currency fluctuations.
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Columbia recently went through a big drop in the cop against the dollar, so all the distributors that were there ended up having their assets cut in half in effect and recently dropped another 20% so if you're looking at starting a distributor ship in Colombia, that's one thing.
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If you're looking at exporting to Columbia, that's something else.
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So it really depends on what business model you are going to approach and what markets you're going to be approaching your work.
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Great answer.
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What about other countries at the beginning?
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You mentioned something about Nicaraguan Chili.
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Yeah, yeah.
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We have a smaller, about 50 40 50 person outfit in Nicaragua, nothing like Colombia.
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So these are two very different markets.
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So Columbia, it's important that you have good relationships.
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With Nicaragua.
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It's mandatory that you have good relationships.
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The regulatory process can be grueling.
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There's a the boys circle that either you're in or you're not.
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If you're not, you're going to have a difficult time to have access to timely information, accurate information to have products registered.
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Understand that Nicaragua has a partial nationalized health care system and pharmaceutical distribution system, so you're competing with the government of Nicaragua, so that's not a small feat if you're not friends with the government of Nicaragua.
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So when you're looking to select the country, I would say be weary, look at it in terms of is this a free market or do I need to play games to succeed?
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And if your conclusion is that you need to play games to succeed, I would argue not worth it.
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Start where you don't need to focus on the relationships and you'll do quite well outside of those territories.
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But we were very fortunate in Nicaragua specifically because we have a relationship here in the states.
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I live in New York and looking at the George Washington right now as we talk and I spend a lot of time at the hill with certain super nationals.
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One that you would know is the Pan American Health Organization.
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If, uh, your audience has never heard of them.
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They were the ones who started a small fund in the 70s.
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The gentleman who started that fund was the one who developed the vaccine for polio and they eradicated polio and they have, I believe malaria and TB on the horizon almost completely wiped.
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And the beautiful thing about Palau actually is that they don't just dump it products into a country and then give a quarterly report back to whomever is giving them funding saying, oh look how great we are.
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This is how many people we helped.
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Nothing like that.
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Which is the reason why I value them.
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And I've formed my relationships with them in DC.
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Uh, no, they expect the member countries who will receiving these immunization programs global or Latin American and North American initiative.
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By the way, the sister company that everyone would know of is the WHO, you know, the medical arm of the UN.
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So these are these large super nationals that cross borders?
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No, they know how effective the program is.
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Probably because the government has to pay it back, right?
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The government has to pay back the loan.
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They have to support the purchase of syringes and these various pharmaceuticals, immunization drugs and having to pay it back, I believe makes the government take it more seriously.
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And the facilities who administered the drugs understand that it's a privileged position to be in and take it more seriously as well.
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Excellent.
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All right, so moving along, Mike, Talking about the approach that you took in Latin America, when you first get started or when you first decided to move into the region, do you have a proactive and well thought out strategy where you created the market access plan for each country you were planning to enter in the region?
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Or did you have an opportunistic or reactive approach where you waiting for the shooter to contact you and then you move forward?
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Right.
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So when I was promoted to CEO, I had inherited a group of countries and distributorships and I'm not sure what had been done prior to that.
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But by the time I had received that, I realized that the risks were not properly managed.
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And roughly 50% of the relationships were suspect at best.
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So I went through a period of cleaning up the relationships, reaching out, building new relationships that you're going to hear that over and over again.
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Trust and relationships, trust and relationships where they would get to me, accurate and reliable, timely data from the market.
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I need to know pricing data, I need to know who's purchasing the products.
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I need to know when we can expect to get paid.
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I need to know what the terms of the purchases can I work with local banks so they can mitigate my risk of collection in which case I need to throw a couple of points on the margin as cost there but well worth it.
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So I assessed the market in terms of its risk factors.
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I then determine if I have a sufficient margin after correcting for those risk factors.
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And if the answer is I do and I have someone I can trust to continue to give me that information because markets change often like the winter times, uh, then I know I have a good investments in registering the product.
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Now that to me is an export.
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If I were to be a distributor, that is a completely different scenario.
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So it really depends on your intent.
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Either you intend on finding a distributor and you're the next quarter, in which case it's a certain, I'd say a best practice or a if you're going to become an operation in country, in which case there's a completely different set of best practices.
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Very good.
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All right, so there are usually two management styles in our polling territory.
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One is a hands off management style where you let your sales to the shooter and you let the shooter around the shell on his own, or a hybrid model where you have your shooters and you also have a local agent or a local office that represents your company's interest and that is supporting the work of the shooter and he's helping the, the shooter generate demand for your products in every country.
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Do you have a hands off management distributor or a strategy or a hybrid one where you have a distributor and you have a local agent or obvious that supporting the worker, the shooter.
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So we've never done that set up.
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I can walk you through the setups that we've done and sort of partial it out.
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There's two scenarios.
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One where we've exported, in which case our primary contact and are trusted relationship is with the distributor in other where we selected to be the actual entity within country and hire someone within the country to manage the operation.
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Very rarely did we just select an agent and appoint them to a distributor.
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A lot of the time we felt like that was encroaching.
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And to me that didn't feel like I trusted the distributor.
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And that's the truth is that you want to develop a trustworthy relationship and if you need to babysit then maybe it's not the right distributor.
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Now I have no problem, you know, covering your bases.
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Right.
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But some people may not take too kindly to that.
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Although in terms of margin, having a single agent on the ground who you could just pass through to the direct tenderer is one of the more aggressive ways to export, directly distribute into the, uh, the final procurement agency in general.
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These were my contacts.
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I never took a hands on approach.
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My general managers and the owners and the CEOs of the companies that distributed the goods and for us, uh, as well as my department heads, we had different what we call communication circles.
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So at the end of the week I had touched down with those three levels of management organization, external and internal to the company because the less you do that, the more risk you're assuming.
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And I would prefer to strengthen the relationships if it doesn't take too much time.
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So I would say for anyone looking to get involved in the market in general, the Latin American people are built on relationships.
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They like good solid relationships.
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A lot of them in Columbia for me became like family.
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The people that I trusted very, very deeply.
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It's not just about making money, it's about making a difference.
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And if you can build relationships and improve lives and have a positive effect along the way, it makes assuming those risks much more worthwhile.
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Have a good answer.
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Actually I'm Colombian myself and I totally understand where you're coming from with that comment is very accurate and not only in Columbia and many other countries, but Columbia specifically.
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People are very warm and they first have to trust you as a friend and then they do business with you.
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I love the Columbia where country great people.
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Fantastic.
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Great.
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Thank you for that.
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I appreciate it.
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Coming from Columbia and I read, make moving along.
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Let's speak about your experiences and recommended best practices on the following areas.
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What about obtaining regulatory approvals or market clearance in each country in the region?
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Can you please tell us about your experience from that?
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So my experience is limited there.
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I had people that I trusted to do that.
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I can tell you the major differentiators were how well developed the market was.
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So the more developed, the more they go through the process and we can predict how fast and the cost it would take to get the product approved.
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The less developed the markets, the more artificial barriers to entry, the more uncertainty as to the timeline, the longer the timeline if it will ever happen.
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But the final cost will be, I will tell you that when it comes to registering in any country, it doesn't matter where it is, you need to own the exporter should own the registration.
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Now each market is different in terms of assigning one or two distributors and what that takes to add to distributor, to the registration, but do not form a relationship with the distributor and give them the ownership of the registration.
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It is a con game and you will end up burned and uh, avoid that if you can.
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Great Advice.
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Thank you.
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All right, so what about the shooter selection?
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Where are your thoughts or tips on how to find a distributor?
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Which by the way, it is one of the most demanded or sought after topics on these podcasts.
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I recently did a poll to my linkedin network and that's 70 something percent of the borders on the poll said that they wanted to know how to find any sugar in Latin America.
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So please share with us your experiences there and best practices.
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Absolutely.
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So as an owner or let's say as a leader in the company or someone in Business Development, if you're not going to the major events, four times a year, one in Germany, one in Dubai, one in China and one in Miami.
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If you're not going there, and I'm sorry, one in Brazil as well, then you're not doing your job.
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So finding the right distributor first means you need to have the option of assessing a variety of distributors.
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Once you have the variety of distributors and you understand the market with which they distribute, and let's say three of them have the same terms of distribution, the question is who do you trust?
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But you are networking.
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This business is about networking and building relationships, attending the events.
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Of course you can go online, you can generate a list, you can purchase a cold list, email in and try to meet them that way.
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For me, it's too impersonal and I've had a lot more success the other way around.
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So I love those trade events.
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Nothing replaces them in terms of being able to network well and when it comes to distributors selection, who do you choose?
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Choose the person that you can trust.
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It doesn't have to be the biggest distributors.
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There's some benefits there, but it could be a smaller distributor who you can trust that is very ambitious and that has a good idea and he may be able to do for you something that the larger distributor just wouldn't because you're not important enough to the larger distributor, let's say relatively speaking.
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So, um, distributors selection, you want to understand the financial capabilities of the distributor.
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That's something that's very, very important.
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Can they work with the local banks?
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Do they understand the procurement, uh, centers and would they be able to absorb the risk or not?
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If the answer is no, you're going to end up with problems.
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If the answer is yes, which is usually the case with the larger distributors, then you have less problems.
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So in my opinion, the best case scenario is go to the events, find the smaller, trustworthy and ambitious distributors who also understand how to work the financial nature of their specific market.
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That's who I liked the most.
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It's funny cause I liked that the most, but we always ended up with the bigger distributors, but I'll tell you if I had to do it all over again, that was the way I go about it.
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Excellent answer.
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The financial aspect of the sugar search and selection processes, very key.
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Especially in countries like Columbia where hospitals, one, two suitors to provide to them.
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Even Terry and they can only invoice once, ain't been Terry is a result or paid by the system, so there's a financial aspect of the business that the shooter has to take them to the conservation.
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They have to observe that financial costs of having their inventory on the hospital's warehouse.
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Right?
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That's right.
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There's a lot, especially the Columbia, which is my baby, if I'm going to pay a Columbia was was my baby the greatest operation I've had the privilege of leading.
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Yes.
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There's a lot of costs built in to be able to deliver the product, especially in Columbia.
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The ports are expensive.
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So I would say be smart.
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No, your logistics.
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I played what's called Ping Pong logistics.
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So understand where you're exporting from, where you're importing to and try to get your costs down that way.
00:19:42.970 --> 00:19:50.579
That some very general advice that people who are serious players need to hear and then it's, you know, how are you going to get the goods into the country?
00:19:50.580 --> 00:19:52.619
How are you cutting your costs along the supply chain?
00:19:53.220 --> 00:20:04.920
And then there's the matter of storing the product and sometimes giving the product out or let's say giving a piece of equipment out and then have a agreement that they will buy the disposables from you, but then you've got to ensure that they follow up.
00:20:05.309 --> 00:20:30.720
So I would say there was a lot of costs specifically in Colombia and risks associated with maintaining inventories in country just because of the currency fluctuations that the ideal approach for someone considering Columbia would be to start a smaller operation and find a place to store inventories outside of Columbia or just export directly to Columbia, to a distributor who is financially capable.
00:20:30.750 --> 00:20:31.470
Very good answer.
00:20:31.650 --> 00:20:33.089
All right, moving along, Mike.
00:20:33.450 --> 00:20:34.769
What about end user?
00:20:34.799 --> 00:20:35.970
The man generation?
00:20:35.971 --> 00:20:51.990
In other words, there are cases where your business is a combination between institutional sales and trade or retail sales and sometimes there's shooter cannot buy cell generates sufficient demand for your product.
00:20:51.990 --> 00:20:59.819
Have you ever been involved in situations where you've had to work with your local distributor on your own to generate end user demand for your products?
00:21:01.089 --> 00:21:01.779
Yeah, absolutely.
00:21:02.019 --> 00:21:02.589
So, okay.
00:21:02.590 --> 00:21:18.759
Towards the 2017 we started carrying a niche group of wound care products and they would be slightly more expensive than the studio commodity, a generic, you know, talking about gauze and bandages and and such.
00:21:19.210 --> 00:21:21.640
So we would have to create that demand.
00:21:22.269 --> 00:21:27.420
We would have to be able to create value that would justify an increased the unit cost.
00:21:27.970 --> 00:21:36.519
And the way that we will create value is have to show how the benefit net decreases the cost of whatever function is trying to achieve.
00:21:36.910 --> 00:21:43.210
So absolutely, uh, generating end user demand is all about relationships.
00:21:43.450 --> 00:21:50.109
It's takes a certain personality to be able to sell someone on something new, especially if it's more expensive.
00:21:50.470 --> 00:21:53.440
So your marketing is going to be important.
00:21:54.069 --> 00:22:02.230
But then again, if your focuses are on where the lion's share the procurement is, you're not going to be doing a lot of promotion.
00:22:02.230 --> 00:22:06.190
They already know what they want and you just have to hope that your price makes the color.
00:22:06.859 --> 00:22:06.859
Yeah.
00:22:07.119 --> 00:22:13.529
Have you be phased in situations where you've had to compete with Chinese and Indian products?
00:22:14.329 --> 00:22:14.779
Oh boy.
00:22:14.930 --> 00:22:15.440
Yes.
00:22:15.799 --> 00:22:16.970
I like good competition.
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