EPISODE 03: ARMIN BECK, CEO, SUNTRIX MEDICAL

Episode’s transcript

Julio Martinez: 0:00

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 Armin Beck. Armin is an entrepreneurial medical device executive with a broad, multi-disciplinary background. His extensive work with start-up companies has resulted in many successful worldwide product launches. His broad medical device background includes implantable devices, disposables, diagnostic and biotech products in general. He is a leader and builder of R&D, quality, regulatory, clinical affairs& operations structures within organizations. Armin is the CEO of Suntricks Consulting, a clinical regulatory and quality medical device consulting company. He's also the Co-Founder and Chief Operations Officer of VasoFlow Medical, a medical device company focusing on innovative products for Vascular Surgery and Interventional Radiology markets. Armin earned his MBA in economics and his M.S. degree in engineering, regulatory and quality from a leading university in Germany, Armin is based in northern California. So, Armin, welcome to our podcast. It's great to have you here today.

Armin Beck: 1:54

Thank you so much, Julio. I'm more than happy to joining your podcast.

Julio Martinez: 1:57

Great! Armin, could you please briefly tell listeners about your journey to Latin America? In other words, how do you get involved with the region?

Armin Beck: 2:07

Well, I mean, as you mentioned, I have significant experience in clinical research, I have conducted many clinical trials worldwide, I have been a principal investigator for several studies and I have worked worldwide include Europe, United States, Asia, Korea, and I always looking for a great market doing clinical research what make it easy, what make it inexpensive and accessible for devices. For example, right now as you mentioned, I'm the Co-Founder and CEO of VasoFlow Medical. We are focusing on interventional cardiology as well on vascular surgery. Compare starting clinical trials with this kind of devices in the United States is painful by dealing with the FDA, dealing with IDE, going to Latin America saves me significant time and money to get my clinical data. We want to have real clinical data, we are not just going ahead doing a 510k being this a"me too" device company who tried to get clearance without clinical data. We are really focusing on, and we are looking for markets where we can do clinical research where the regulatory hurdles are not high, on the principal investigators willing to do the clinical trial from a research point of view where they try to help companies and not just try to make a huge amount of money.

Julio Martinez: 3:42

Ok, Armin. Let's talk about your practical experience conducting early stage clinical research for medical technology companies in Latin America. In what countries have you been involved in clinical trials in Latin America, Armin?

Armin Beck: 3:55

Well, there're two different things. I mean, a couple of years ago I worked actually, with a device that I was looking into a clinical trial. This was a blood filter that filtered bacteria, bloodstream infection out of a filter. So, when you're looking at the application of the device, it's very difficult to find patients in the northern area, also the United States or northern area of Europe who have this kind of bloodstream infection. So, I got actually looking worldwide where can I find my patient population, and one of the best countries actually, or actually were three countries in Latin America; they were very good to where I can find my patient population; that included Colombia, that included Costa Rica, and I have to say that I forgot what the third country was. So, for certain devices, it makes a complete sense to look at the region. I know a lot of companies making the mistake, they tried to go to fancy universities doing clinical trials and they run their clinical trials for many years because they can not find any patient. So, it's very important to understand your market and where the patients are. Another point also I have seen in Latin America is patient compliance; patients want to participate in a study and they want to provide the necessary commitment to the study.

Julio Martinez: 5:22

Awesome. Please, tell us about your experiences and your recommended best practices for finding a principal investigator in Latin America.

Armin Beck: 5:34

Well, I mean, I remember. This is what I try to do, I mean I do a research on the Internet, I asking CEO's, including yourself, about possible investigator and if I find an article about one investigator who have written articles about this, I typically try to connect with them and I tried to meet with them and then I try to also get from them information, what else investigator he would like to have in this study or who should participate in this study. I talked to one guy, and he suggested, as a couple and they'd be building actually this clinical study around this one guy, and this is typically working very well.

Julio Martinez: 6:19

All right. What about the selection of a CRO, a Contract Research Organization? What can you tell us about it?

Armin Beck: 6:27

Well, I typically like to have a US-based CRO who has a commitment to this market, who understand the market and who has also the connection in the market. Sometimes it's difficult. I mean, from a time change and also from a language change working directly with a local CRO. For me is important, I can meet with my CRO in a very easy way, communicate with them. It's much easier.

Julio Martinez: 6:53

Good. What about the study, site or project management, for a trial in South America or in Latin American in general?

Armin Beck: 7:01

There're two aspects of site management. One is a sort of a regulatory part where I can hire my site management from the local CRO or from the US-based CRO. They find a person who can manage my site, then I also see my site management from business development. For me as a company, I want to manage not just a site and the study, I want to also build a great relationship with the physicians because the physicians become my key opinion leaders, and that leads in my whole sales and marketing. I mean, you have to have absolute perfect relationships with your KOL(Key opinion Leader) to build the product. So there're two sides.

Julio Martinez: 7:46

Okay. What about regulatory study approval process? How was the approval process for the trials that you got involved with?

Armin Beck: 7:55

Well, I assume it fast and easy. I need to compare this to other markets. For example, I mean, the US market is very difficult, the European market is very difficult and it's very timely. So, what my experience in the Latin America market the approval process was very easy. I think you can typically get approval in less than three months to start a clinical trial and this is amazing. I mean, I've done a lot of studies in Germany, not because I come from Germany, but from a cultural point of view, if you want to sell in Europe, you always should have a study in Germany and it take, I would say between 12 and 15 months to get approval to start the clinical trial and let me back up a little bit, I mean, why it takes so long, also why I'm looking for a different market. I would say still about 10 years ago in Germany you had a central IRB; that was a private organization and they actually approved your study and then the German government changed the rules and now the government has to approve the study and as you know from a government point of view, everything takes forever.

Julio Martinez: 9:00

Okay. What about shipping and importation of investigational medical devices?

Armin Beck: 9:06

I mean, I had no issue with shipping and the importation of devices. I remember from a customs point of view, you declare everything. The only downfall what we having in tier three countries from the US point of view is the export law, that's when you doing clinical trials with high-risk devices, pretty much class three devices in the United States, you still need IDE approval here by the United States. That's can be a little bit painful, but from the other point of view, from the pure shipping, and importation of the device, there are no issues, very easy, very straightforward, very short and Latin America is not far from the United States, I mean, it's be done in a couple of days.

Julio Martinez: 9:52

Ok. The top countries in Latin America have free agreements with the US and shipping and importing devices from the US shouldn't be an issue. Also, you have DHL, FedEx, etcetera. They can ship devices from the US to Latin America in a matter of days.

Armin Beck: 10:09

Right, I mean, really if it appears a little bit more, it's done in 24 hours. And the other thing that I would say, I mean, flying from the US to Latin America is no problem. So, you can take actually a lot of devices with you on the airplane, what I have done too.

Julio Martinez: 10:25

That's done in countries where the importation rules are not as strict. In the case of Colombia, that used to be the case when I started working with clinical research in the country and you have direct flights from any major cities in the US to cities in Colombia, like Bogotá, Medellin, etc.

Armin Beck: 10:43

Yup, and you still can do this. I mean, you still have to do the custom declaration when you arriving on the airport, yes, but it's just how simple it is, I mean, depends from where are you flying, I mean, it can be painful, but flying to Colombia from the US is really just very easy.

Julio Martinez: 11:03

Yes, it is. Are there any other areas that we haven't mentioned that you think listeners should be aware of?

Armin Beck: 11:09

I think from broad experience with a broad explanation, I think we have covered everything about conducting clinical trials in Colombia, let me mention you one thing with the value of the clinical data. I mean, if you have a US site, approved site, either Colombia, the data will be accepted. And I know exactly for CE Mark, CE Mark accept all the data that come out of Latin America. So, from regulatory approval, there should be no issue using just your source or main data of clinical evidence. It's important because a lot of companies are afraid if this data can be used for regulatory approval, and it's an important thing to understand that, especially if it was CE Mark accepting this data.

Julio Martinez: 12:02

Very good. Excellent point. So, Armin, from these experiences, what did you learn to do or not to do in reference to clinical research in Latin America?

Armin Beck: 12:13

Good question, difficult for me to answer. I mean, there's always little things what you're learning and what you shouldn't do this, but I can not really give you a specific answer to this one. So, my experience overall it's all the studies I've done there have been run very, very smooth.

Julio Martinez: 12:33

Well, I was really referring about best practices. What would you recommend people to do to speed up the process of getting a trial approved or selecting an investigator, things of that nature, you know, do you have any tips for listeners?

Armin Beck: 12:50

No, I clearly recommend working with a CRO who knows the market, again, I see us in the beginning, I mean, the ideal situation is finding a US-based CRO who has the connection in this market, who have local authorities, dealing with government approval, dealing with the paperwork, dealing with the translation, dealing with the local IRB. For an investigator finding, they can truly help if they have the market. Otherwise from a company is also important dealing directly with the investigator, it's more important that the company deals with the principal investigator rather involving the CRO too much in the investigator. On the other hand, the CRO is really important to do the paperwork, to do the site management and overall just the logistics for the study.

Julio Martinez: 13:42

Alright, Armin. So, let's move to the topic of commercialization of medical technologies in Latin America. What's been your experience with that?

Armin Beck: 13:51

Well, that comes back to the point that I made about the KOL and the principal investigator. It's very important when you start your study to build the relationship, involving them in the sales and marketing, understand the Latin American market, what is important for them, developing marketing material and have everything done. I mean, you need to find distributors, in my opinion, in Latin America is a fantastic thing. Most distributors are very committed to this one, I mean, they have connections in many, many other South American markets. If you sign an agreement with them, you have the right KOL who supporting your product and you have already the marketing material ready, they're really fantastic to work with. I think, it's much easier working with distributors in Latin America or South America than here in the United States. It's a commitment. I mean, I would almost compare the commitment of distributors in Latin America with the Japanese guys because the Japanese guys are the same way. They really want to sell your devices. Whereas sometimes in the United States, it depends who you're working with, they have almost too many devices to sell for one sales guy, and if your device doesn't really generate the big revenue, they may have no interest really selling your device, so there is the lack of commitment here in the US, what I see in compared to Latin America.

Julio Martinez: 15:25

Interesting. Now, that we are speaking about the distributors, any tips on how to find a distributor in Latin America?

Armin Beck: 15:33

What I typically do, I going to trade shows. There're so many trade shows including, I mean, one of the biggest ones is in Germany, typically November. This is the biggest trade show and you can actually find the avenue, getting connection, and if I have a specific market in Latin America or South America, I looking for trade shows and then I visit them and finding then my distributors. Or I using a connection. I mean, I always can ask a CRO if they know somebody because they have the experience with other companies and they might help you to find the right distributor.

Julio Martinez: 16:10

Okay. What about regulatory approval or market clearance in the region? In what specific countries have you been involved in selling medical devices?

Armin Beck: 16:20

I have sold pretty much almost in every country in Latin America and South America, and I have to say this: most markets are very easy and that includes Colombia, Chile, Peru, they're really easy to work in; most Latin America markets that are very easy, also Mexico still very easy. There's a of couple markets that are very difficult from a regulatory view. One of the main most difficult markets is Brazil. Something that I have to say is, do I really want to sell to Brazil? I mean, it makes me nervous, I mean, going through the regulatory approval process, dealing with a site inspection. It's in my opinion sometimes it's not worth dealing with this one. But overall, I mean, the market approval or let's see, the registration of your device in most countries can be done within a couple of weeks. This is the thing, I mean, from registration or a sales point, as advice for a lot of sales and marketing people, yes, they want to sell something, but you also have to calculate how much time it takes to register your product. I mean, there are countries in this world, where the registration takes over a year. So, let me maybe give a little bit more background. So, when you have a regulatory approval is one thing, but you typically have to register your device in a certain country. For example, there's a couple of countries in the Middle East, including Kuwait where the registration process takes about a year, that's means when you actually start the paperwork to get your device in a specific market. And, may I say the Latin America, I mean, the registration project, I mean, I typically working with the distributor together they do this actually for you and it take just a couple of weeks, and it comes back to what I am saying, the commitment of the distributors or the salespeople to really sell your devices, and they put their best effort into really bring the devices on the market and they're working hard to get this done in a couple of weeks.

Julio Martinez: 18:30

Yeah. There's also the issue of not having the registration under the distributors name, which is a tricky thing to do in some countries because they don't allow a foreign company to have your name on the registration certificate.

Armin Beck: 18:45

Well, yeah. There is a thing, I mean, it's you have to be careful what you're doing. I mean there's, in general, you would have an independent person as your rep in certain countries to register your device, but then you have to have a second person to do this or you trust your just distributor to do this. So, in the end, effect, I mean, whoever your importer is, that's what you need to choose. I mean, I wouldn't say I have a preference to do this one, a lot of people believe if the importer is also your distributor, you would give them too much power, especially if you don't like them, if you want to change this one. So, the whole registration project has to start from the beginning, yes, that's a concern, but my point of view is, I mean, you pick your distributor because you want to trust him because he's selling your device. If you don't trust him in the first place, don't work with them, you know? I mean, there has to be some trust, I mean, you need to trust the people you're working with.

Julio Martinez: 19:53

Also, if you do your due diligence right, you should not have an issue with the distributor and that’s another problem I see with some companies. They don’t always do their due diligence properly. So, at the beginning their relationship is all rosy and everybody is happy, and at the end of the year they realize the distributor didn’t meet its sales goals, it is underfunded, it didn’t really have the coverage it claimed it had in the country, and then you have to switch distributors and then the company is stuck because it let the distributor register the product under the distributor’s name, and then the distributor doesn’t want to transfer the registration certificate to another competing distributor.

Armin Beck: 20:47

You're absolutely right. This comes to your due diligence, but you should do this as a company, regardless if you're working with your contract manufacturer, if you're working with your distributor, it's important that you build your relationship, I mean, you need to visit them, I mean, you need to see their location, you need to see the organization, so who is involved in this one? What is the connection? I mean, this is all part of your business and not just going there, finding somebody and save a couple of thousand dollars on airfare.

Julio Martinez: 21:14

Okay, Armin. So, what about demand generation? Have you been involved in strategies to make and also buy your product?

Armin Beck: 21:23

Well, I mean, the demand generation, that's an interesting thing from the see at some marketing point. I always said, if you're selling medical devices, a medical device is not an Apple iPhone. So, you have a certain percentage of people who are sick, who need your device and this is what it is. I mean, and then comes to a point, if you have competitors then you actually have a whole competition. I mean, how much market can you generate? But in the end effect, the demand is always the same; the question is how many other people are in the market and how can you solve this? How can you work with your distributors? Why do you think they are better than other distributors? Why can they work for you? But the demand is there, there's no doubt, and this is always the 100% in how much market actually can you get, I mean, that's why I mentioned in the beginning about VasoFlow, we are a company, we are developing devices not existing on this market. So, we typically getting already 100% demand versus device. So, other companies who just copying other people's devices start with the sales and marketing effort, demand generation, I mean, it's become a marketing nightmare to do this, but if you have an innovative device, you have your 100% market share.

Julio Martinez: 22:39

All right. What about pricing, Armin? Some people say that Latin America is a very price sensitive region. Would you agree with that statement or not?

Armin Beck: 22:49

Well, I would say from a pricing point of view, this comes back to the reimbursement and pricing. I believe Latin America from a pure sales price is lower than the United States and Europe. However, you have to see this also from your value, If I have, or if I need a huge sales organization in the United States where my fully loaded sales people cost me three to four hundred thousand dollars a year and then I using a really effective distributor in Latin America, my profit still higher than in the United States. So, a lot of people just go for revenue. How much can I get? I mean, I always have a problem with the revenue. I mean, if I have a huge, let's see, I have$10 million dollars of revenue and I make$1 profit and I have$5 million dollars of revenue or making million dollar profit, for me, I would go with a$5 million dollars of revenue, but I'm not working on Wall Street. So, from this point, I have a different view of this one, and there is a thing, I mean, there are lots of companies typically going more for the high revenue. I actually looking really more on a cost-effective thing and this is where my pricing or reimbursement comes in place. If I can sell easily, if my devices sell very fast because I have the right distributor in the place who really want to sell my device, then my device maximum stays six months on a shelf, and my profit is much higher than in other countries.

Julio Martinez: 24:29

Alright. Have you had issues with reimbursement in Latin America? Have you been involved in dealing with the government to get your device approved by the healthcare system in a country?

Armin Beck: 24:39

I have to say that I'm not a reimbursement expert, but I also know from a reimbursement point of view, that Latin America is lower than the United States or Europe where you always typically also higher than the United States, but again it comes to my whole pricing strategy or my profit. Again, when my reimbursement, let's see, it's 20% less than the United States, but when I can sell my devices very cost effective for having the right distributor in place, there's barely any shipping costs to Latin America. Everything is very fast. I still would make more profits vs a higher reimbursement here in the United States. Ideally, I am looking for selling to devices that already have a reimbursement code.

Julio Martinez: 25:28

Alright. Are there any other areas we haven't mentioned that we should cover here?

Armin Beck: 25:34

The only thing what I can think about is this whole import, export tax, and a VAT, and depends how you structure your company this is reimbursed right away, so there wouldn't be any tax issues and this is pretty much what I can think about, I mean, that's also important. There are certain countries in this world also asking for import tax what you have to calculate in your revenue or your profit.

Julio Martinez: 26:02

Okay. Another question is, what model most of the companies you've been involved with had in Latin America? Did they have a proactive and well thought out strategy where they created the market access plan for each country that were planning to enter in the region or did they have an opportunistic or reactive approach where they waited for a distributor to contact them?

Armin Beck: 26:28

I actually had more a proactive approach where I contacted or get actually to the distributor. So, I did not start it from a company, from a marketing and sales, we want to get into the market and this is our strategic plan because it's typically not working. So, I did actually the opposite, I actually talked to the distributor, I was listening to them. What is the best access market? Which market to go first, where is the best reimbursement? Where's the best pricing? How can we really work with the distribution channels? Is my distributor already in this market? Do they have some access to the buyers? Do they have some access to the strategic buyers? Cause this is an important thing, for me as a US company or a European company sitting here and tried to make market access in Latin America without knowing the logistics, doesn't work. So, again, it comes to back to this business relationship with your distributor, trusting them, understanding the local markets because you can not translate the US culture to Latin America. It is different and we don't know this, they know this, so basically you rely on your business partner, and this is a very, very important thing for everybody who want to conduct a business in any foreign country. We need to understand their culture, we need to understand how they work, we can not translate our marketing strategy in any foreign country. That's why we fail it.

Julio Martinez: 27:55

Okay. So, what's your experience with corruption or bribery in the region in light of the Foreign Corrupt Practices Act(FCPA)?

Armin Beck: 28:06

Well, we all hear about this. I believe it is existing. I personally have not be involved in this one because I'm not a direct salesperson. I typically use my distributor and I've seen they have connections. I have no idea if there's a corruption or bribery and in the medical device field I think it's typically very clean. I mean, we're talking about the life of people and everybody want to help. I don't have any experience of this way.

Julio Martinez: 28:37

Excellent. So, do you have any final thoughts or recommendations for our listeners?

Armin Beck: 28:43

What I have talked about was basically a combination of the best practices what I have learned over the years. Let me summarize everything: finding the right market, findings the distributors, you have to work, when you bring a device on the market in Latin America, find the right business partner, in this case, your distributor, work with them, understand the market, understand the strategy and trust them. I mean, this is the biggest thing that you can do. I mean, find a right business partner, trust them and understand their market and work with them, not just going into this market and say, this is my way, I want to do this, this is my revenue numbers, this, this, this, and this... you will fail. It's a trust issue in finding the right partner. This is my biggest advice or my lesson, what I have learned to do.

Julio Martinez: 29:36

Good. I have a question that just occurred to me, Armin, it’s in regards to having a local agent in a country. Besides a local distributor, some companies choose to also have an agent that works locally to represent the interests in country. What do you think about this model?

Armin Beck: 29:58

Well, it's possible, but then my question is. then you have the same thing, so basically if you have a local agent, and the reason why you're choosing a local agent is because you don't trust your distributor to manage them. Can you trust your local agent? This is the same thing. Is your local agent managing the distributors, and I've heard many, many times that companies want to have some local agents to managing a distributor. My answer to this one is clearly no, don't do that. Nobody wants to be managed or control. If you bring a person to control to your distributor, it doesn't work. They will work less, I mean, the point is your distributor want to make money. If they cannot sell your device, there is nothing that you can do. So again, a distributor wanna make money if they having, I mean, they're buying this one, if they can not sell it, probably nobody can sell it. So, bringing a third person into this model, I would not suggests it.

Julio Martinez: 31:00

Okay, makes sense. So, moving along, Armin, what major trends do you see in Latin America relevant to our discussion today?

Armin Beck: 31:10

Yes. I would say over the last 10 years, the Latin American market is becoming a growing market. The reason for this one is, why is a growing market because the biggest markets like the US, Japan and Europe are pretty much stuck. They are not so much growth anymore. I mean, the revenue or a profit is still significant, but we also have to look in different markets. We can access the market very easy, and Latin America is clearly one of the fastest growing market in the world right now, besides China.

Julio Martinez: 31:45

Great, Armin. So, do you have any final comments before we finish our episode today?

Armin Beck: 31:51

Well, the final stat is, I mean, if you want to do business in Latin market, work with the people, understand people, don't get in this market that you know everything. I mean, it's really be try building a friendship, working with the people and trust them. That's my opinion. But you should do this regardless in which market you're going. You should not be demanding too much. I mean, just go in, listen to the people, listen to your partner, understand what's going on and start a really relation or a business relationship on trust.

Julio Martinez: 32:27

Thank you so much for being in our podcast today, Armin, it's being a delightful conversation.

Armin Beck: 32:32

Thank you so much, Julio. It was my pleasure joining you.