EPISODE 14: JOSEPH D. STORER, MANAGING DIRECTOR, ECHO CONSULTANT GROUP, LLC

Episode’s transcript

Julio Martinez: 0:05

Welcome to the Latin Med tech leaders podcast. This is a weekly conversation with med tech leaders who have succeeded in Latin America today. Our guest is Joe SAP or Joe[inaudible] is the managing director of Echo consultant group. Hey, Joe is great to have you here today. Thank you for joining us in this show.

Joseph D. Storer: 0:24

No, thank you for the opportunity.

Julio Martinez: 0:27

Awesome job. Well, Joe is an expert in the medical device industry introducing more than 20 new medical devices to Latin America. He work throughout 15 countries to introduce devices like poser similars, arterial pressure transducers, patient vital sign monitoring, nuclear medicine, and a new technology called evolution therapy. That's a difficult word to say and you just 30 years of experience. He included as a topic secretary of at a large company with Latin American operations, as well as countless interactions that allow him to observe you have all of these devices in saving lives. Joel attending school at Brigham Young University and later served mission in Brazil or the Church of Jesus Christ of later a Saint Joe's passion and for yearning also led him to Trinity College in Malaga, Spain. Exciting Place, Huh? Where he Yves an MBA in international business and business administration. So Joe is a real, real privilege to have you here. I'm sure it is in her will get a lot of insights from your experience in Latin America.

Joseph D. Storer: 1:37

Well thank you for the introduction and I hope that I can benefit someone.

Julio Martinez: 1:41

I'm sure you will. All right John. So let's get started. Bye. Asking you about your journey to Latin America. I mean, you're a gringo. You were born in the u s for how you got involved with African American. You ended up living in Brazil. So this is going to be a really interesting history behind that.

Joseph D. Storer: 1:56

Well, it's basically by accident. When I was 19 years old, I volunteered to be a missionary for the Church of Jesus Christ of Latter Day saints. And somebody thought it would be a bright idea to send me to Brazil. So they did. And of course they have a very intense language training program that they put you through before you go. And so I went and I learned Portuguese. When I came back, I decided that there wasn't a big need for Portuguese in the u s as there was her Spanish. I had grown up in a ranching area of Idaho and we had a lot of workers that were Spanish and you're always running into Spanish speakers. So I decided that I needed to get and around and learning Spanish. So I took a brief course in Spanish of about 40 hours, and then the instructor kicked me out because he said there wasn't a whole lot more he could teach me, that I was just going to have to go down and start spooking it and learning it, that I had the basic fundamentals of the vocabulary in the conjugation and all that stuff. So, uh, I did, and first it was kind of humorous because I spoke a lot of pork Junio. As time went on, I, uh, became a lot more proficient at separating those two. But even then, I did not work in Latin America. I was working as a domestic manager for a idol signs monitoring company called space labs. Happened to be out of Seattle, Washington at the time. And, uh, that 1989, I was working at the American heart show in Dallas, Texas. And when there was suddenly a large influx of Latin Americans, they came to the show and nobody could speak to them. So I was doing presentations in Spanish and Portuguese and our company CEO happened to see it and he called me and the next weekends asked me where I learned the languages and I told him and he says, he happened to be a native of Peru, a gentleman by the name of Carl Lombardi. And uh, Carl basically told me, he said, uh, I got a new job for you and that's the run Latin America. I said, well, I'd love to do that. I haven't done that before. And he says, well, I think you'll figure it out. I asked him if I got a choice. He said, no, but I got a raise. And so it was worthwhile. And that's how I got started in Latin America. Initially. First big task of Latin America was of course to go down there and build a distribution network, all I could do is fall back on what I knew at that time. We were looking at using a hybrid distributor set up. And uh, the first thing I did is look at it and said, uh, it's a huge market geographically, but when you look at it from a population standpoint, the bulk of your populations are in two countries, which are Mexico and Brazil. So I initially focused on those two markets and went down to those markets and visited the major hospitals, found out who their top distributors were that they like to work with, and then went out and recruited those distributors to carry our product lines and was able in a very short time to build a very effective distribution network that way.

Julio Martinez: 4:44

Alright. So Joe, please tell us about your experience conducting clinical trials in Latin American general and also tell us what you think about the potential of Latin America for clinical trials and also the potential to sell medical devices.

Joseph D. Storer: 4:59

Well clinical trials, Latin America has been for a number of the companies that I work for. A great place to uh, conduct clinical trials. You had a lot of very skilled and talented practitioners there that are looking for opportunities to gain recognition and try some of the new product we have. We used them in evolution therapy, the early days of angioplasty. There was some stuff done down there. We did a lot with catheters. Even in the early days of pulse oximetry when we were going into Latin America, we had to get clinical trials from Latin America. They didn't just accept what was done in the u s we were able to work with physicians out of major universities in Mexico and in Brazil, in Argentina and Colombia and Chile and get the data that we needed working with our clinical people. And they were very responsible and very good at doing the data we wanted and actually had some very interesting studies that they did.

Julio Martinez: 5:53

Okay. Very good. All right. But I guess we should perhaps the conversation

Joseph D. Storer: 5:58

today in conversation, we could probably have another episode for clinical research if that is something that you'd like to speak about more details, but in regards to the commercialization, Joe, what's your perception of Latin America as a market for medical devices today? I think it's a great market and I uh, propagated that to a couple of different companies that I got to start their operations going in Latin America because I've always felt that it's a great market and it's a market full of great people and who need us to bring down some of the life saving technologies that we have here in the u s there's challenges in Latin America. The biggest challenge is people don't understand it and don't know it. So originally I think a lot of companies because of out of ignorance, they did not do real good planning or real good investigation of what they were going to do first they would, the typical strategy was when we talked about earlier where you'd meet a distributor at a trade show and they would probably share a couple of beers and to some contract with him and send you back and say go sell. That is certainly a strategy but not an effective one in my estimation. It takes much more than that. You need the distributors there, but you need to find quality ones and part of the challenge was is there is not a lot of data. There's not a dun and Bradstreet on every distributor in Latin America, so it requires someone to do some research on each one. Fortunately, I had other contacts in Latin America from other resources and where I was able to investigate these people, check out their banking, check out their business practices. Again, talk to the hospitals and find out how they were dealing with them and you could build a profile of over who was good and who was not, but you had to do that and if you just went out and assumed that you were guessing it because you found a distributor you liked at a trade show, it was a pretty sure where you were going to get burned. But if you took the time to do what we would do, of course in any other situation here in the u s and treated the same as a business and not be afraid of it because it's a different language and find the right people and get the right things done.

Julio Martinez: 8:08

Yeah, I'm actually a Joel. If you look at the US Department of Commerce as a website, the have control report or pretty much all countries in Latin America or major markets in the region. In most of them, they talk about the fact that US companies should do diligence on produce years. I mean, he's a really, really freaky thing to find a good business partner down there

Joseph D. Storer: 8:32

and the key is it can't be done, Ray, a handshake in Miami. I spent endless hours in Latin America and there are times that I just had to bumble around until I got what I needed, but it requires a company to have a commitment to be invested in that market. If you want to just do it off the handshake, yeah, you're going to get some business with that. I can guarantee you that your business is not going to grow. You're not going to own it, and you're going to end up having endless compliance issues.

Julio Martinez: 9:05

Yeah. Good point. What we're going to get to that later, but let's address something that you are speaking about right now, which is the go to market strategy or the market access strategy. There are basically two strategies that I see happening in Latin America that the US companies have. One, he's a very opportunistic and reactive strategy would just wait for the shooter to contact them on a tradeshow or something or via email. And then they just sell them inventory. They consider the shooter a client and they just hope for them to sell something and the hope for them to place another order. Right. And the other strategy that I see is a more offensive or proactive strategy where companies decide what countries to focus their efforts on and they put together a market access plan when I go to market plan for each country. So what are your thoughts on these two different strategies?

Joseph D. Storer: 10:02

Well, I think when you talk about that, the uh, hands-on strategy, the hybrid strategy is really the only strategy that I've ever found that works in Latin America is hands off strategy of just handing off your product to someone and saying, go sell it doesn't work there. And if you think about it, what company does that in the U S and does it successfully? We're much more hands on. And that is that we have to work with our distributors into identifying what the market is, what the size of the market is, what the short term and longterm opportunities are. And then we have to work with them on targeting nos and how to get those. And that requires someone hands on, they ask how the gringo ended up spending so much time in Latin America. It's because if you want to be successful, it's not a matter of hiring distributors. You better have your own person there to work with them.

Julio Martinez: 10:53

That's a hybrid strategy for listeners. Um, we haven't defined it yet. That's what make sure our listeners understand. They have the strategy you're speaking about is a strategy where US manufacturer has somebody local or somebody from the u s that constantly is traveling to the region every month or something to work next to the shooter to develop the market to generate demand.

Joseph D. Storer: 11:15

Yeah, I mean I uh, was based out of Miami for years, which at that time was a decent strategy because I spent probably two and a half, three weeks every month in Latin America. I had good access from there. It's a short flight from Miami to Mexico City. Uh, it's an overnight flight to Brazil and Argentina in those markets. So you weren't that far out that you couldn't handle it. Now, ideally it's great to have your own person living in the market, but that requires a higher investment and some companies aren't ready to do that. We tended to work with more of a hybrid where as we got more, we got dedicated managers for Brazil. One point I had a Brazilian manager and Andy's manager and what we call upper North American Latin America, which was Mexico and Central America managers who work with various distributors in the countries in Mexico, in Colombia, in Venezuela, back when Venezuela was a good market also in Chile, in Peru and uh, Argentina. So those were good opportunities. And initially though, we started out with about four countries. As I said, initially it was Brazil and Mexico. And then we expanded rapidly into Colombia, Venezuela in the early days, and Argentina because those were the most available markets in Chile, not because of the size of Chile, but Chile was a very western friendly,

Julio Martinez: 12:45

it's easy to enter. I mean the regulatory pathways, we much none

Joseph D. Storer: 12:50

in Latin American. It was interesting, you speak regulatory, the regulatory parts in Mexico and other parts of Latin America used to be relatively easy. If you had your FDA certification and you had the certification for Europe, they would accept that and your product would come in. Brazil on the other hand is a little different. They started their own and they wanted to, and it's, I think a financial thing is what it really boils down to. It's another form of taxation, but they want to verify everything that you did from the FDA and for a Europe. So they started their own governing body became much more difficult and now it takes in Brazil probably a year to get a product registered and able to sell. So that's a new challenge that you have to be ready for.

Julio Martinez: 13:36

Yeah, and it's expensive as well. I've heard

Joseph D. Storer: 13:39

it's expensive. Yes, if it's done right, it can be moderate. If it's done wrong, it's very expensive. And in Brazil, I took it all away from my distributors. In fact, because the problem you had is if your distributor got your registration for you, he owned you. We worked with a third party company, a primarily a company called Vera Rosa, which is still there and very active, which was run by a very reputable individual. And all that they did was get registrations for you. They were illegally entity. You had to be a legal entity in Brazil to how the registration, so they would get it for you and hold it, but there were illegal entity that held it and then you could go out and give it to the distributors that you wanted to without surrendering yourself.

Julio Martinez: 14:23

That's a very good point. You're bringing up. He happens. So frequently, companies choose a distributor or a trade show. The distributor offers to pay and to process the registration. And they don't tell you, they don't tell their company or they control their, when you straight. So for, in the case of most countries, five years, in the case of Columbia, 10 years, what is the student who doesn't perform at the end of the year? How do you get rid of it? I mean, how do you get the registration back? You can,

Joseph D. Storer: 14:50

you have to buy from them.

Julio Martinez: 14:52

And the other thing is it was very important legally when you set up your contracts outside of countries like Brazil, that you had a clause in your contract that stated that, uh, if there is a separation that you owned the registration, not the distributor, and that was some security, they would tend to challenge the legality of it when the fact came up. But they might challenge that. But I don't know that we ever lost one of those. So that was how we manage that. And I think today it's probably changed a little more. I, you know, you have to have a good legal person that can work on that with you. Yeah. Hey Joe. And now that I have you here, there's something I've been thinking about and I want to get your thoughts on this. What about when the manufacturer gets bought, gets acquired and the distributor Spence years developing a market and then he realizes that he is no longer the shooter for the company because the company was acquired by a bigger company and that'd be your company wants to go direct. Au has already a salesforce in the territory. So what do you think about these? I haven't seen anything like this. I mean what's been your experience?

Joseph D. Storer: 16:04

It's certainly right yet with often, and quite frankly I think I was probably at odds and nearly fired three times over. That's very subject. I'm fiercely loyal to the distributor. I believe that as a company in the u s if that happens, you would be legally required to compensate that distributor in some way if you just took his territory from him. Quite understand why people think that when you're Latin America, you're not required to do the same thing. So I always tried to sit down and negotiate. If the company was not going to keep my distributor, I always felt that it was important for the goodwill of the market and to keep the market strong, to have some type of a reasonable settlement.

Julio Martinez: 16:47

Okay. Can you give us an example of a settlement of others who work?

Joseph D. Storer: 16:51

You have to sit down and look at the market and decide what it's worth to you to pay them to work with you on it. If you're going to cut them out completely, you have to look at their investment and their time that they put in it. It's no different than an employee that's gone down and worked so many years in, built great market for you, and suddenly you're bought out and you're going to let him go. Somebody has to sit down and look at a reasonable severance package. That's kind of what you have to look at. I think to be honorable, I don't state that every corporation I worked for and may have been as honorable as perhaps I and I, and that's just my estimation.

Julio Martinez: 17:29

Hmm. Yeah, makes sense. It's reasonable enough. Yeah. All right. What about Joel Demand Generation? I mean, have you ever been involved in strategies where you work alongside you, the shooter, or directly from your employer on things for later too, generate demand for your products at hospitals or insurance companies directly?

Joseph D. Storer: 17:49

Oh, absolutely.

Julio Martinez: 17:50

We did that in Brazil. We worked alongside of our distributor on some programs to get registration for our products approved on different projects that we did to be able to get input from the market. In other words, patients that would help influence the governing bodies to give you license for your product and it wasn't uncommon at all for us to employ a strategy using some clinical trials or whatever, or a marketing strategy to bring to the attention the need for products. It was done with angioplasty very effectively. It was done with a stents very effectively, particularly coated stents, and we did it using evolution therapy as well. There we were able to use a female population because we were treating a lot of fibroid tumors. We could eliminate almost 80% of the hysterectomies that were being done because of fibroid tumors. So we were able to get on national TV, uh, with a person that's like the, uh, top Nolan celebrity in Brazil. And, uh, she touted our product and suddenly we saw a lot of pressure put on the government to, uh, authorize this product for registration. So it worked very, very well. These opportunities are there. You have to look at them. We used to regularly hold what we called an intersect meeting and that's where I used to sit down with my people in those markets, my distributors and my direct people and his talk about intersects, where does our technology intersect with possible uses in the market? And we found some amazing opportunities. I think of one outside of Brazil actually happened to me in Japan, but we were selling evolution therapy, which is a delivery method for delivering chemotherapy drugs through a crystalline bubble that goes down and delivers it directly to the tumor. Uh, in Japan, we were able to partner with a Japanese company that wanted that technology is their delivery form and they paid us$4 million for the rice to do it. So you look for those intersect opportunities because you'll be surprised sometimes what you find will help you get into markets. Okay. Hmm. Very intriguing. All right, Joe, moving along. Let's talk about pricing in that. The America, some people say that Latin America is a price sensitive region. I mean, what do you think about this?

Joseph D. Storer: 20:27

It's definitely price sensitive. It's a market that you're not going to get the premium that you get in the u s they just don't have the same funds that we have, but there are opportunities. I remember one, we a leave out the name of the manufacturer, but we were selling a cap piece of capital equipment with a disposable hospitals, had a lot of problems having the finances to pay for that piece of capital equipment. What we came up with was a program where we had massive amounts of these pieces of capital equipment that he came back on trading for a newer model in the u s which we refurbished and made new, and we went down to the hospitals and they had two budgets. They found that they had an operational budget and a capital budget. The capital budgets had no funds. The operational budgets, however, had funding. So we were able to sell them a disposable and if they used enough of the disposables and we would give them the capital equipment, and that was a way that we found to solve that pricing problem. When we sold the disposable in the market where I was told you couldn't sell disposables

Julio Martinez: 21:32

[inaudible] very clever strategy indeed. Okay. Okay, so let's talk about reimbursement. John, have you ever been involved in dealing with government officials, the Ministry of Health in our country or insurance companies in a country trying to get your product accepted in the system?

Joseph D. Storer: 21:49

Yes, we were very active in Brazil in particular working with that. As I said, we had the programs where we tried to get women's movements involved to help us. I remember working with our distributors and going to keep politicians that were in the system and other government officials and presenting our products to them, showing them the technology and trying to get their support. It was interesting. A lot of them, nobody had ever come to them and tried to do that before with the new surprise to them to have somebody come and ask. Lee actually asked them for their help. I think that we were able to get some registrations that other companies may not have gotten. It's the same strategy you would employ in the US, but for some reason it's like people go into Latin America and they forget everything they've learned.

Julio Martinez: 22:36

That's a great point. I like these comparisons that you make between the u s in Latin America because companies behave differently. I don't know why.

Joseph D. Storer: 22:45

It's bizarre to me and I think it's nothing more Julio than part of it is a language barrier, which it's so minor. I tell people, look at me as you hear me speak, there's nobody more gringo than I am. It'll, it's my new home. We began, he fell apart. The gaze, Winco Bait. If you want to learn it, you can and you can apply those shore. Hmm.

Julio Martinez: 23:11

Excellent. All right, job. So let's move along here and tell us, speak about importation in that the American, I like you to tell your experiences about getting products through costumes. I mean, importation duty, things of that nature. Any experience that you've had here. Nice.

Joseph D. Storer: 23:29

It depended a lot on the market. Some countries were very easy to import into and they didn't have high taxes and high restrictions. Brazil, however, was always a very restrictive market as far as importantly and that situation. We had to look at it and we looked times at some stetting up, possibly a local branch of our company as a Brazilian company so that we could import into that company and not be taxed by the Brazilian severe a Brazilian taxes. And we were able to come up with some creative structures that allowed us to do that and to get around some of those prohibitive taxes. As time went on, it became more difficult. But there's always a way when you work hard enough to find it and you're admitted to a market.

Julio Martinez: 24:19

All right, so let's, before we move to the next topic, I guess things now with free trade agreements are changing a little bit, at least in countries like Colombia, Chile, Mexico, Roseola is a different case. It's always been difficult. That's the overall perception that people have about Brazil.

Joseph D. Storer: 24:38

Brazil is protected. They want you to come in and take an active role as a business in Brazil, and that's a big investment. Companies are afraid of that. Some of the companies that have done it have been wildly successful. There's been some others who've had paramount failures. But again, those go back to I think management decisions and compliance.

Julio Martinez: 24:57

Okay. Let's talk about complaints. So what's been your experience with corruption or bribery in light of the FCPA, the foreign corrupt practices act of 1977

Joseph D. Storer: 25:09

yeah. Well, I think it just brought people back to being, having integrity. The very things that they asked you not to do in Latin America, we wouldn't do in our own country. We need to eliminate dual standards. So we went in and we worked with these countries. You know, corruption just wasn't acceptable. Now there's a difference between corruption and creativity. There were situations where in order to get products well known in a market, rather than go through Krupp means we use creative means, which was by doing studies, university funded studies to get products recognized and into the market to some degree. There was trainings that we used. Anything that was legal within the compliance laws we would use. But you don't step outside of those laws. They're just, you can't do it. You are going to destroy a business.

Julio Martinez: 26:01

What about your distributors? I mean, have you ever being involved with shooter that was trying to go something, have Saturday limits?

Joseph D. Storer: 26:09

I, uh, had a situation, a the distributor one time in Mexico that had actually bought some of our product out of deep storage from the u s military and was selling it as new. Well basically because it had never been used, but it had been in deep storage in the u s military for 10 years. Yeah. So it was not daze models and it wasn't to be sold that way, unfortunately. It caused us to have to terminate it.

Julio Martinez: 26:36

Wow. Impressive. All Right Joe, we are getting close to the end of the, but before we close, talk about major trends that you see come into Latin America. So what are you see effecting the business thing, the medical device, a clinical trial or commercialization business in Latin America?

Joseph D. Storer: 26:59

Well, as you know, Latin America is in a bit of a slump at the moment. That economic slump is causing a lot of problems for companies at, you have to be conservative and wise as you're going through that slump and you might curtail some of the activities you do. But I think you have to be careful not to pull out and run all the way. I worked at for a company, a again, who I won't mention that had a technology that was great, but they wanted to get to the next level. They could have sold the current product that they had, but they decided to pull out and try to come back in later. Well, when they tried to come back and later they had no base of business anymore because what their basic business go. It's important as the markets, Wayne to hunker down and maintain your core businesses and prepare for the time that those start to open up and they're going to turn around again. I remember the decade of darkness we call it, which is in the late seventies most of the time through the 80s it wasn't until the late eighties that Latin America kind of came out of that decade of darkness and was very good, so they're in it now. I think some political changes in Brazil are going to affect it enormously. I actually think some of the actions of what our politicians do here in the u s can have a big effect on what happens with business in those markets. I am one that's very pro trade with Latin America. There are most proximal and our built in national partner, which I think is often overlooked. It's an important base for us to support and to help. So I'm very pro Latin America. My advice to any CEO or it's time to start looking and start planning because if not, you'll be too late to, for the entry when it gets good again. If you're not already there, you're going to show up too late.

Julio Martinez: 28:51

Well said. Excellent. All right Joe. So, um, how can people find you?

Joseph D. Storer: 28:58

I am around, they can reach me via my email at a j d store, 52 at Gmail and uh, my phone number, that's been the same for 25 years. If nine five four five four zero, zero five one five

Julio Martinez: 29:12

and Linkedin, how do you show up

Joseph D. Storer: 29:15

then? I show up as Joseph's store. Excellent.

Julio Martinez: 29:18

All right, Joe, thank you so much for being on the show today. I am sure listeners get it out from your insights in to that thing, America, and I can't thank you enough. I mean, I really enjoy our conversation today. Thanks.

Joseph D. Storer: 29:32

I really appreciate it and enjoyed it and I'm passionate about Latin America and I wish more people were so grateful for the opportunity.

Julio Martinez: 29:41

Well said. All right, job. Bye. Bye. take care.