EPISODE 15: KIRK ZELLER, CO-FOUNDER & BOARD MEMBER, ASIA & AMERICAS - MEDMARKET ACCESS, LLC

Episode’s transcript

Julio Martinez: 0:05

Welcome to the Latin medtech leaders podcast. This is a weekly conversation with med tech leaders who have succeeded in Latin America

Julio Martinez: 0:13

today. Our guest is curt Zeller EBA. Kirk, it's great to have you here today. Thank you for joining the show. Thank you. Happy to be here. Appreciate the opportunity. Oh sure. Correct. What it is hers. I mean Kirk is a very special guest. His probably being the only make the clutter right now off the has a doctorate degree in business with a specific concentration or emphasis in medical devices. So Kurt is very knowledgeable about medical technologies, how to expand markets without very in depth. Um, practical experience in Asia. He has over 25 years of medical device industry experience in sales and marketing, market development and business development in general. He has led and executed the launch of medical devices for neuro cardiac vascular spine and pulmonary technologies. Turk build the Micros business in Asia and successfully launch many medical devices in that featuring as well here. Cost spent much of his career luncheon devices, the bellow by Silicon Valley startups and he has studied business in seven countries including Japan, China and India and has spent 10 years of his lives working and studying in Japan. So he's quite a fascinating individual and I'm really, really honored to have you here on the show. And thank you again for joining our episode, the not tech leaders podcast.

Kirk Zeller: 1:37

Thank you very much for the kind introduction.

Julio Martinez: 1:40

Sure. Kirk. Well let's get the conversation we started with your journey to Latin America. I know you have very good practical experience in Asia, Kirk, but how do you get involved with Latin America in your past positions?

Kirk Zeller: 1:54

Yes, I started my career as you mentioned, working in Japan, working for distributors in Japan and my first exposure, Latin America really was only to a lot of international distributor meetings. So I was involved with a lot of products, mostly from the United States and Europe, you know, launching them in Japan. And so I'd find myself going to international distributor meetings each year and that's where I started getting exposure to Latin America. We would mostly be in those meetings talking about the issues in different regions and oftentimes a special, my role expanded beyond Japan. I saw a lot of similarities between the challenges that those folks were facing with the launching these products in Latin America and the ones that we were faced with and launching and several of the countries in Asia.

Julio Martinez: 2:34

Sure. Okay. And Kirk, what's your overall perception of Latin America as a place to conduct first thing, human clinical trials or to commercialize medical devices?

Kirk Zeller: 2:45

I think it's getting a lot more attention these days than it probably was in the past. And I'm also running an ischemic stroke company. We're certainly planning to do first in man in Latin America. I think you and I have talked in previous conversations. I think the changes in Europe, particularly with the EU MDR implementation, it was really raised the barriers to entry for commercialization in Europe. And subsequently people I think are thinking about when it comes to first in man, other places to do first in man and how to segue that into commercial experience as well. So I think they'll certainly be more companies that we'll look to do first in man and early commercial work as well. I'm in Latin America and you know you mentioned in the intro about my academic research and at the time that I did it I was focused on European market entry strategies for venture capital finance, medical device companies. Looking really closely at everything from doing the early first and man work and the early commercial work and I think if I were at this point in 2019 doing a doctorate and looking to research, this is exactly the types of topics that I think I would be embracing for that research. And I think over time more companies are going to look to Latin America for first and men and some of the early commercialization as well.

Julio Martinez: 3:57

Very good. Excellent. I'm very happy to hear that you have a positive outlook in Latin America for first in human trials and early converse realization. What specific advantages do you see in Latin American Kirk that are appealing to

Kirk Zeller: 4:12

medical device companies looking to do first in human trials or to sell their technologies in the region? I think you've got a lot of well-trained physicians when I've been working on looking at launching products in Latin America in the past and then a lot of physicians who were trained with some of the world renowned physicians in their specialty and then they go back to one of the Latin American countries and practice and I think those physicians bring that same level of expertise that you have at any of these leading centers in the u s and Europe, but you have a little bit lower barriers to getting that work done in Latin America. And I think over time as more work gets done there and the physicians get more exposure, hopefully we'll see a trend towards that gap between commercialization in the U S and Europe and Latin America. There often tends to be a pretty significant gap and hopefully over time as more and more companies do their early work in Latin America, they'll proceed with getting approvals and actually launching.

Julio Martinez: 5:04

Hmm. Very good. Alright. And what similarities do you see between Latin America and Asia, which is where you've done a lot of your work?

Kirk Zeller: 5:14

Yeah, our farm certainly does focus predominantly on market access in the Asia Pacific region. I kind of feel like there are a lot of similarities. One is you have a few really big markets that you tend to put a lot of your commercial emphasis on while at the same time leveraging the infrastructure you have in the region to service to some other markets. So obviously if you're looking at Asia and in China or the dominants markets where it's somewhere, depending on the product line companies, probably 80 90% of their revenue comes from those two markets. But if you manage the business while you can also grow some of the other countries in the region profitably.

Julio Martinez: 5:50

Okay. I like to get your take on the suggested go to market strategy for Latin America, leveraging on your experience in Asia and also taking into account the similarities between the two markets. I usually see companies approaching Latin America in two fashions. One is a proactive and well thought out strategy where they create a market access plan for each country they are planning to enter in North America and the other is a barrier opportunistic or reactive approach. We're just wait for the shooter to contact them. They sign out of the publishing agreement and just let us shooter wrong. They show on their own. What do you think about these two strategies? What's your prefer way to enter the market in Asia or for the sake of the conversation about American?

Kirk Zeller: 6:42

Yeah, so I think about Asia and particularly Japan being the largest market in Asia for most medical devices. We generally advocates the companies try to get the approvals in their own name and to be very deliberate in their distributor selection. And it's case by case, but I think our prescribed approach would really be to go out and find the right regulatory consultants and work closely and market access consultants and work closely with those firms to start from the perspective of which market should you enter and then work on getting into those markets and we usually don't suggest and just jumping out and getting any distributor that comes from the trade show. If the company has the budget to do it, we generally suggest that they get on the way with regulatory and all aspects where they have market entry and market access and do the distributor selection a little bit down the road and in the markets are from services. We know all the distributors and we can kind of give them a perspective on the strengths and weaknesses of each and help guide them through that process and through the due diligence. What of course happens in many cases, and I'm sure you've seen this a lot in your experience as well, is that people exhibited international or global trade shows. The distributor comes up to them and they end up signing the distributor an opportunistic way and often times they have the distributor register products and then the distributor owns the license for the approvals for those products and then when things aren't working out and they want to get out of it, then they have to realize that they have to start basically all over with the entire process. And so there've been a lot of disasters across Latin American, across Asia of people taking that sort of opportunistic approach and sometimes they get lucky and the distributed happened to contact them. It is in fact the best one for that geography. But I would say that oftentimes the more aggressive distributors are the ones that are less capable. I think companies should really spend some time on making sure they're doing that right and taking a step back, we usually start with international market prioritization on kind of a global view on that in which markets you should focus on or rich regions you should focus on within the regions then which markets you should focus on.

Julio Martinez: 8:44

Very well said, Kara. Actually, I once heard somebody, he's a CEO of a medical device company out of Israel and he told me once you know Julio, if you, you're the shooter around in a country or in a region like Latin America, you're going to have about three years of lost sales because you have to revise, you start the product, you have to find another shooter, you have to train this tutor and that is about three years to get everything back on track. Company shouldn't go through this if they do things right as you just described.

Kirk Zeller: 9:17

Yeah, and I think the other thing that a lot of times people don't take into consideration their thinking about the business aspects of this, but the last time and then the reputation in the market because if you get with physicians, they start to engage with one distributor. Build a relationship with them is very, very disruptive to change distributors. And I think sometimes companies just think, oh, we'll wing it if it's not working out. Once you get a new distributor, it's not that simple. Ramifications can be disastrous. And there's some of these physicians in particular that really dominate certain specialties and uh, you don't manage it well and get off to a bad start with them and they're the leader of all the societies that are related. You may find yourself ostracized and incapable of ever building a commercially viable business in that country. So I think companies oftentimes, I don't appreciate the importance of getting it right from the beginning. And many of these markets are very unforgiving and hazard approaches can be quite disastrous.

Julio Martinez: 10:10

Sure. Yeah. Yeah. All right. So let's speak a little bit about how to find and conduct due diligence on the shooters. You already touched a little bit on that, but I'd like to get a little tapers with listeners. King have practical and actionable information for your character and also like to talk about the two approaches that you usually see companies in US companies trying to manage the shooters in Latin America. One approach that I see is that just to have a handoff management approach where they just sell products or distributor and let this shooter run the show on his own and were, the other approach that I see is a hybrid approach where they have of course local distributors and or sales agents in a country and they have a very, a strong support of that. The shooter, you know, they travel very frequently or they have somebody from Miami managing the shooter or they have a local person in the major markets like Brazil or Columbia or Mexico. So I'd like to get your take on these two topics. One is how to best find and conduct due diligence on the shooters and second, how to manage and support this shooter apps you use and a distribution agreement.

Kirk Zeller: 11:23

Yeah, so I think with the distributor due diligence, I obviously don't like the haphazard approach of just waiting to see who comes to you and then picking the best from that lot because I don't believe that's probably a very effective way to do it. I think the best way is to engage, you know, local expertise is critical in certain geographies. I think a lot of American companies are very familiar with Europe. A lot of people have traveled to Europe very frequently and they probably don't see much value in necessarily in having some of these third parties help them. But I think with Latin America and Asia, it's really critical to, you don't have an understanding of those local markets understand how to assess effectively potential distributor options. And sometimes people think they marginalize or don't appreciate the importance of these considerations. So I think the best way is to find people, whether they be individuals or market access firms, find firms or individuals who have the local expertise and can help guide them through that process. And I think it's important for people to travel to the geography. A lot of times distribution deals will be done at international meetings in the U S and Europe for distribution products in Asia or Latin America. And I think it's important to go to a couple of the key conferences within the geography before you make a decision. You can tell a lot by the presence of that organization observing the dynamics between some of the Kol and the companies that you're considering and really get firsthand information and Intel and one thing that a lot of times people don't understand is the distinction between like a master distributor and the actual distributors out there with sales rep selling the product. I've seen so many scenarios and this happens quite a lot with Latin America as well, where companies will say, Oh, we've just done a distribution deal for all of Latin America through one company and sometimes I don't think they really appreciate how things work with these master distributors who then have individual distributors, sometimes multiple distributors in each country or distributor in each country. That seems in theory like a great way to do it and in some cases it does work. A lot of times they're not necessarily, you know, the best option. You really need to get on the ground and travel with local experts and get some real world intel on the firms that you're considering. I don't think you can really do proper due diligence purely based on looking at paper.

Julio Martinez: 13:39

Yeah, good point. And also just to elaborate a little bit on what you just said, because I think it's he here, I've heard from companies curve things like, oh my, the shooter in Brazil can cover Columbia, Ecuador, Peru. I mean, come on. These very truly different countries. It's not like in the u s where you have almost no borders between states, but in, in Latin America, you cannot really have a Pan American distributor that can cover more than one or two countries. It's just difficult. You don't really see that.

Kirk Zeller: 14:11

But there are a lot of people who do that and I think I've seen that happen a number of times in the past when I was responsible for a lot in America, I had a lot of those master distributors contact me as how you can leave the whole of Latin America up to us from times he's busy. The folks that manage international. I know from my own experience, one year when I found myself in 22 different countries in one year you're slammed, you're busy, you're on the road all the time. There is a certain appeal to the simplicity of signing up one master distributor and letting them do it. But if you really want to optimize, and it is a case by case I guess decision, but I think in most cases it's probably not the optimal decision. And if you want to optimize a opportunity for your firm in the region, you're probably gonna need to contract individually with the distributors in each country and invest the time and going through, you know, a proper process for doing the due diligence on those firms.

Julio Martinez: 15:03

Yeah, absolutely. And also you have to take into conservation the fact that the masculine shooter adds a few points over the price of the product. So eventually the product gets more expensive. You have the master distributor, then you have the actual local distributor. There's really no need for that. So

Kirk Zeller: 15:18

yeah, if you're going to leave the registration, the local registration up to the distributor, you also need to assess the regulatory capabilities of that distributor. I think that's another area where yeah, you get your very commercially minded sales person running it and they're looking purely at the sales capabilities when if you can't get through the regulatory process, there no value to having that. So while I don't usually believe that's the best way to go and don't want to get a situation where the distributors hold the licenses. If you are going to go that route, you definitely need to make that assessment as well. And then of course you need to assess the compliance aspects and again, you know the very experienced folks running international, they understand that very well. But in the case of startups, a lot of times you have people wearing a lot of hats. I mean their primary role might be you at marketing but because they are trying to stay lean and they find themselves also responsible for international distributors and sometimes they don't do their homework early on that and there is good processes and good tools out there for helping you to be able to, you know, assess the compliance of a, of the distributors.

Julio Martinez: 16:26

Sure, sure. All right. Let's talk about uh, how to manage distributors. Remember that we kind of touch on the idea of a hands off management approach versus a hybrid approach where you have a sales agent, we're a local office or something in the metro markets to support the work we use. Tutor. What's your take on these?

Kirk Zeller: 16:44

I've been involved with that a lot over the last 26 years and it is somewhat case by case. I mean if you're dealing with a very specialized product where the market opportunity is small, you may not be able to justify having somebody in the region when it's feasible. I definitely prefer a hybrid approach. I'm not leaving everything up to the distributor. I mean there's a number of ways of being able to do that. Certainly you can set up a local office and hire people if that's not feasible. There's the kind of the training wheels step where you get a market access from to be able to act on your behalf, go to all the conferences, help facilitate the training and help facilitate the building of relationships with Kol and things and I think that's important because part of it is with dealing with distributors is is driving mind share. They've got however mini bag, get a product in their bag, maybe 20 other companies' products in their bag and which one are they going to pull out when they're in front of the customer. If you've got somebody in the region, they're traveling weekly with the distributor reps in that region. If your representative is standing right next to the distributor sales rep, yeah, it probably them pulling out your bag or your product from bag is of course much, much higher and as they know, in two weeks you're going to be traveling. Somebody from your company is going to be traveling to the region and traveling with their reps. Of course they're going to be pre-selling. It's and making the most of that, but if you're not present, if you're just signed a distribution agreement, send them some samples, do a web training. Those things aren't going to happen and quite a high probability that you're just gonna fall lower and lower on their priority as the companies that are doing those kinds of things are there and they're grabbing the mind share of the distributor and the distributor Reps.

Julio Martinez: 18:17

Yeah, well said. I mean, right on the point

Kirk Zeller: 18:20

in my own experience, that's generally the way I ran it and you mentioned micros in my intro, we had multiple people working on the ground for us and we were probably on a good trajectory to overtake the number one. We're number two in the space and we were on a good trajectory and overtake the number one a player in that space. I when we got acquired byJ andJ and I think a lot of that was having people there locally, making things happen on a day to day basis. I was there much of the year and those I take are truly an investment. Obviously having he ad c o unts a nd having people on the ground is not an insignificant investment, but when the market opportunity is large and it's a highly technical sell, I' m l ike it is in that case in neuro, there's a great deal of value to having those people there.

Julio Martinez: 19:01

Yeah, very good point.[inaudible] and what about demand generation? Kirk, let's talk about that in a little more detail. I think based on what you just said, you are in favor of having somebody local working alongside the shooter to support the work and help the shooter generate demand. Have you ever been involved in situations like this where you've had to go directly to insurance companies or government agencies or hospitals to generate demand a directly should have? The sugar can fulfill it?

Kirk Zeller: 19:36

Yeah. It's usually a kind of a hybrid approach. We're working really closely with the distributors to make those things happen. When you touched on the reimbursement authorities and absolutely. When I was working for companies, we did a lot of that. Our firm now does a lot to help support that process. Oftentimes we're working with specialized reimbursement firms, but I do a lot to support that process and be actively engaged in that process and I think that engagement can be very helpful. Again, that aspect, not every distributor is really great and working with hospital administration or working with a reimbursement authorities and if you have the bandwidth and the capability of being able to actively be a part of that process, it certainly would be the preferred approach.

Julio Martinez: 20:17

Very good. Okay. What about pricing curric? What's your perception of pricing in Latin America? I mean a lot of people say that Latin America is a price sensitive region. He has of course similarities with Asia and that's why I asked you this question. What's your take on this?

Kirk Zeller: 20:34

Yeah, I mean I think overall the perception certainly is that price sensitive region, but having said that, I think that there are a number of companies out there that have managed to sell their product quite good price points relative to other markets and sometimes they just have to focus on the South Pei segment of the market or the private insurance segment of the market that you may not be able to address the entire market in some cases, but not, yeah, I wouldn't say it's not every case where prices are low and they certainly trend to be lower than a lot of the other geographies, but I don't think companies should immediately assume their prices are too low. I think it's definitely worth it to do that diligence and really get a handle on the market and like I said, sometimes you have to forego, you know, the entire market and really focus on segments of the market.

Julio Martinez: 21:20

Okay. Okay. Good point. All right. What about the importation process, Kurt? Of course your experiences in Asia, but again, leveraging of the similarities of the two regions. Any tips on that? Any practical advice you can give listeners from that?

Kirk Zeller: 21:38

On what aspect of importation

Julio Martinez: 21:40

in general? I mean it's dealing with costume agencies, paperwork and he got just any headsup.

Kirk Zeller: 21:49

Yeah, yeah. If you're dealing with the distributor, they should be able to handle that. No. If you're gearing up for a first in man and you don't have a distributor at that point, then I think there are certainly specialized firms like yourselves who have that expertise and who understand how to navigate those processes. I think in general, from my perspective, when we're talking about some of the key countries in Asia war, Latin America, is the importance of that local expertise and not being afraid or[inaudible] willingness to invest in getting help to ensure that things go well.

Julio Martinez: 22:20

Very good. Yeah. I even heard from about three guests on the podcast, did they suggest that the shipper, that companies do not handle the shipment of the products directly because they may not have the experience shipping to a particular country because every country, you know, has certain forms, certain regulations and how the products are classified and things of that nature. So they guessed that I'm speaking about specifically suggest companies to hire or contract the services of a third party shipping company to has practical experience in this specific country. Where are they going to ship products to? Yes, to avoid any issues and from there there's a shooter will take over. Sometimes the distributor who has an office in Miami, the case of Latin America, and you just ship domestically from your location in the u s to Miami and the shooter will handle the rest, but in some cases that's not feasible, so you have to ship directly to a country and you need the help of an expert. Shipper offered that.

Kirk Zeller: 23:25

Yeah. I think that there's probably a lot of situations where that's the case. I think in my experience and when we've done some early cases in Asia, we've often times work with specialized firms to help facilitate the import of that product. In the case of Japan, sometimes we'll find that we'll have a client who's doing cases where the physician is important on their medical license and it's the physician's responsibility, but it's still very helpful to the physician and to everybody involved too. Engage a firm that has that expertise and they can make sure that the process goes smoothly, make sure they're asking for all the right information so that when product does get shipped and it arrives in customs, everything is in order and it can pass through smoothly. And there's no delay in not doing the cases and any cases where we're doing these types of import, it's for critical stuff that's not available in the market. It's not currently commercially available, so it can be life and death circumstances. And so doing it in a haphazard way where it gets stuck in customs because something's not filled out properly, can have substantial impact on the patients and their outcomes. So I don't think people should take that lightly and assume that they can take care of everything themselves, but rather to make sure it's done well. Particularly for products where a patient may have tubular disease that the treatment of witches is urgent.

Julio Martinez: 24:40

Good answer. Correct. All right, so let's move along here and speak about your experience with[inaudible] corruption or bribery in Asia in light of the Foreign Corrupt Practices Act of 1977

Kirk Zeller: 24:55

yeah, I think that going back to what we're talking about with compliance, it is really critical when you're picking distributors to do very thorough due diligence on this and transparency index and various indicators of probably how much emphasis you should put on certain markets. There are markets that are notoriously transparent and not corrupt. Some of the Scandinavian countries come to mind in New Zealand and there some others that are known for a low level of corruption and there are others that are known to have a very, very high level or the level of emphasis or resources you should put into the due diligence. It should have a lot to do with where they fall on the corruption index and for some of the more corrupt countries, you should absolutely make sure that it's going to cost you extra, but you make that extra investment to ensure that the distributors that you do select are compliant. Because you know, if you look back in the history of medical devices, there have been a lot of issues with compliance across the world and it's not just limited to emerging markets. A lot of people completely make that assumption, but even countries that are now regarded as some of the least corrupt, particularly Japan for example, there was a lot of corruption issues in the past in Japan going back 2025 30 years ago and things have changed, but there's a lot of countries out there where things have not yet changed and they're not as aware of compliance and frankly artists' compliance. So it is absolutely critical to do very thorough due diligence for those geographies.

Julio Martinez: 26:15

Good. Kirk, all right, before we sign off for today, Kirk, we're getting towards the end of the show. Do you have any final thoughts, more source of wisdom or are there new things for our listeners? In other words, what would you say to a small or mid size medtech company that hasn't looked at Latin America or that is just starting to explore this region as a potential market to expand this footprint or to conduct first human trials? I think the

Kirk Zeller: 26:44

first thing I would say is that times change, these get some of these people who've been in the business like myself for 25 plus years and sometimes they get set in the mindset when they first joined the business and the way things were, and I've dealt with that a lot. I'm sure you've dealt with that a lot and their perceptions of countries and whether it be positive or negative and they kind of get fixed sometimes and then become very dated. And I would encourage people to do some reading and I think you'll realize that both Asia and Latin America across the region have changed a lot over the decades. Then make sure that when you're doing international prioritization that you are not getting stuck in that mindset of 30 years ago and what it was like back then because things are not at all like they were 30 years ago and to make sure you're up to date and just to broadly not start with too many assumptions, do your homework with an open mind and make sure you do kind of international market a prioritization because a lot of people you'll ask them where do they want to go? We want to be everywhere. You have to be pretty structured in how you assess the opportunity for your product around the world. Now generally the key markets are going to be the u s of course are the big five in Europe or more broadly European Union and then there's certain Brazil, you know, Mexico, Colombia are oftentimes key markets in Latin America. For a lot of companies in Japan and China are generally the priority markets in Asia, but it's not the same for every product. To give an example. If you were to look at plastic surgery for example, I mean Brazil and career are huge markets in that space. They rank high. We're, for example, chronic total occlusion. I mean Japan used to be by far the largest market for chronic total occlusion devices, then us and other markets of Ghrelin. But the things do change with time and the general assumption of the state of the industry relative to the very specific product that a you're working on, it might be quite different. I mean generally they're the same, but then sometimes you'll get into a specialty area where one country and market is disproportionately larger for that particular type of product. Then the overall medical device market. So if people can really kind of look at the international market prioritization with an open mind, I think that's important. And I also think we're looking at where to do your first and man work. I think it's important to keep an open mind as well about that because I think in my experience, going back 20 years ago, if somebody would've said, oh, we did our first in man in Latin America, I probably would have held it. Not In as much regard as I do today. Having traveled to the region and talked to a lot of the physicians know how well trained many of these physicians are. Many of them have worked in institutes in the U s where they had to deal with all the IRB fees and the processes in the u s and I know many of them have taken those same processes back to their home countries and transplanted them there and are doing things that are very similar level. But I don't think the broad perception of the industry has quite caught up to where things actually are. And I think people need to have a very open mind when they're making these decisions and not to make them too much based on past perceptions. Excellent.

Julio Martinez: 29:41

Thank you so much for joining our show today and I think listeners got a lot of good insights and practical information from your comments, and it was truly an honor to have you here. So thanks again. Thank you very much. I really enjoyed it. Awesome. Bye. Bye. Thicker. Alright.