EPISODE 33: DENIS JACOB, VP AND DEPUTY CHIEF COMPLIANCE OFFICER AT ORTHOFIX

Episode’s transcript

Julio Martinez: 0:04

Welcome to the LA MedTech Leaders Podcast. This is a conversation with MedTech leaders who have succeeded in Latin America. Welcome to another episode of the LA MedTech Leaders Podcast. Today we have Jacob vp, deputy Chief Complying Officer Arthur P. Dennis has over 15 years of business experience, mostly with the publicly traded large multinational companies and working with international teams on functions related to finance, business, legal, manufacturing, ethics, compliance, and audits. DE is now the VP Deputy Chief Compliance Officer for pic , which is , uh, an American medical device company with over 900 employees with locations in the us , Italy, Germany, France, the uk, Brazil, Australia, and Puerto Rico. The company's products help patients in over 70 countries around the world. Deni, thank you for being on our show. It's great to have you here today.

Denis Jacob: 1:05

Thank you, Hulu . My pleasure being here. Thanks for in invitation. Always a pleasure. Awesome,

Julio Martinez: 1:10

Deni. All right , so let's get started with the interview today, Deni . So could you please tell listeners about your journey to Latin America? In other words, how do you get involved with the region? Sure.

Denis Jacob: 1:22

I think describing how I got involved with Latin America is describing my own history to a certain extent because I was born and raised in Brazil, in Sao Paulo, so I have actually lived most of my life there is to have family in Brazil and lots of friends there and also in other parts of the region. So very connected with the region and , uh, from a career standpoint, I started my career in Latin America. So I went to dental school for a couple of years. I was my first choice of college, and uh , after some time I decided to make a change there and go to the business school instead. And , uh, then I started with my career on a banking side. So I went to work for Citibank for a couple of years, left Citibank , went to Deloitte to work in public accounting and external accounting in Brazil as well. And after a couple of years working in finance, I was invited to join BD back in Dickinson and I joined as in a position of , uh, internal audit in Latin America. So without an opportunity, I had the chance to actually to visit most of the countries to Latin America and perform audits on the financial , operational compliance and other sides of the business in the region, which was very nice for me to learn about all those different aspects of , uh, how organization performed business in the region. After some time , uh, at bd , I was invited to join co convenience's , now part of Medtronic, but back then was a separate company. And , uh, I was hired by, by Ian and I started their compliance practice in South America in a position of channel compliance manager and was very interesting to launch this and work a lot with distributors in Brazil, Julie in Argentina, particularly crossing like , uh, compliance matters and working in partnership with the channel manager as well. So very close with the business initiatives there . I worked with K for for some time and then I joined back bd , BD was starting a , an international compliance group and I was hired as a senior manager for Latin America and I helped BD launch their compliance program there also with the distributors and other partners as well, but not only with that, but a lot of work related to engagements with healthcare professionals and other higher risk consultants in the region. After a couple of years in BD Latin America, I was promoted and I took responsibility also for Canada and Western Europe. And more recently in 2015 , I was promoted to a global position and I relocated the United States and uh , where I became director of international compliance for bd, I worked for BD until January this year and in January I joined , uh, Orthofix here in Texas as their VP and deputy chief compliance officer.

Julio Martinez: 4:06

Fantastic. Dennis , what an interesting background. You have <laugh> . So Dennis , the next question I have for you is what about your overall perception of Latin America as a market to commercialize medical technologies? In other words, what would you say to new companies or to companies in general who are new to the market, who are thinking about expanding the foothold in Latin America?

Denis Jacob: 4:30

Oh, Latin America, I think first of all is great potential as a market. Like we're talking about countries like with the good size of population, like and and big size sometimes like Brazil and Mexico, others like in the middle size like Columbia , Argentina, and Chile. So is a very great potential as a market for those companies. And also if we think about like the trends we're seeing in healthcare today, they also apply to Latin America populations living longer. So we have like an older population that's gonna require more support from micro device technologies. We also seen actually an increase in sometimes the investment in those areas. A look for new technologies because governments in every part of the globe have restrictions on their budgets and I think like all of us and they're looking to ways like how can we improve healthcare for the population and how can you use technology to do this at a more affordable cost ? So Latin America definitely an attractive place for companies to come, but also on the other side and we always need to be aware of that is not an easy place sometimes to make business and that's where it requires a lot of like help from local companies and local partner that can help to navigate some of the challenge of doing business in the region like Latin America with complexity and sometimes different levels of maturity from the country or from the government or from the requirements. So very attractive, but it needs like a , a little bit of assistance to navigate some of those challenges.

Julio Martinez: 5:56

Well said . Yes, I agree with that. Well, let's get a little deeper, Dennis , what was your strategy that the companies you work for use in Latin America? In other words, were they opportunistic? In other words, were they waiting for the shooter to contact them or They had a very well thought out and offensive position towards the market where they , uh, put together a business plan for every country or a market access plan for every country they wanted to enter.

Denis Jacob: 6:28

I cannot comment specifically about like my company now or my previous companies, but I can talk about my experience of the things I've seen in the market that things that I've seen , uh, working more successfully is always like a , a more organized plan. So like , uh, as , as I mentioned before, we have different countries in Latin America with different levels of maturity. So for new companies, historically what I've seen in the marketplace is companies going relying more on distributors and channel partners in the region, which makes more sense, especially for a new entrant in the market. When you talk about more mature companies in , in a country, if they already have a physical presence, what I've seen is a more like of a mixed model and that applies to most of the , the mature markets . So normally what I've seen as an evolution, like starting with an interact model and then go into a mixed model and a hybrid model, but always with a plan. So like , uh, definitely you need to know exactly what you expect, what kind of like , uh, role this partners will have for you . Otherwise like , uh, given that it's a country with a high level complexity , complexity , you can get yourself in troubles if you dunno exactly what to expect, what kind of partners you're gonna select and how you're gonna measure success in the work with those partners.

Julio Martinez: 7:40

Okay, well said. So in other words, what would you say is the predominant way of conducting business in the region ? Or what exactly have you seen from your experience? A hands-off management distributor strategy or a hybrid where the company is based in the Euros or Europe and has a local agent to help distributors push sales and generate demand.

Denis Jacob: 8:05

I would say like , uh, in the major markets like Mexico and Brazil, definitely a hybrid. I see this like , uh, very clearly in emerging markets in the region like Columbia , that's becoming more and more relevant in the last, let's say 10 years. I'm starting to see that as well. In other markets still like a presence where you see more distributors operating more independently with Dell , like direct assistance, but it's more like , uh, overall. And you have companies that are different. They operate in different models depending on the size of the company in those markets as well. Companies that have a bigger presence, they tend to go more direct in . Other companies are starting or have a smaller presence, they tend to go more interact or like a more hands off approach. So it's kind of like mix , but it depends on the size of the market, how long that company has been operating the market, how mature the company is there . But it's definitely a hybrid model.

Julio Martinez: 8:56

Okay. Excellent. Alright , so let's speak about regulatory approvals in Latin America tennis . What about speed of getting a product clear through the regulatory agency in different countries in the region? What's your experience, what's your perception about that?

Denis Jacob: 9:13

Well, it it's not my like a specific area of expertise like , uh, but of course I work very closely with , with colleagues in other companies, in my own previous companies in regulatory areas. And then of course it's not optimal. We , we , we have some countries where I have some like much faster processes. Like I think Chile is one of those examples where you have like a very three line process and you have countries like , uh, Brazil where we still have some work to do and we see some like , um, interest from governments as well to become less bureaucratic or to become more supportive of business initiatives. And at the same time protecting of course patients, but at least leveraging what's being done in other countries. Like with the new , the election of new president in Brazil, we've been hearing quite a few things in that direction and hopefully we're gonna see this materializing in the future. But I know there's been dialogues going on between a visa and other regulators, the same thing we we're being hearing in Mexico. But overall, if we look at Latin America's one region, it's still like a slower process or it's sometimes a more complicated process just because of some bureaucratic steps that we still have to follow. So there's definitely space for improvement there, but it's getting better. But um, still I think we can always work to be better to make sure we do follow all the steps and we get safe products in the marketplace, but also with a process that's more organized and more efficient.

Julio Martinez: 10:35

Excellent. All right , so what about finding distributors, Dennis , what do you think is the best practice to find distributors or what have companies you work for in the past done in in this regard?

Denis Jacob: 10:48

Well, I think I have an structured vision of what you want. And I think that's the key thing. Like not only selecting a distributor , of course all companies wanna make sales. You wanna grow your business, but you need to be a little bit deeper with that, how you want to do that. Get back into a strategy and understand exactly what's good for that market , what works for that place. And then you're gonna be able to start like looking into the right partner. So before you even start looking for the partner, you need to know exactly what do you want. Once you know exactly what do you want, what kind of partner you need, that's when you start like looking and assessing companies based on their proven experience, based on their capabilities, based on their infrastructure, of course, based on their compliance mindset in their ethical culture because it's like some companies in the past didn't pay that much attention. And I think now everybody realize and , and I'm very happy with that . I work compliance of course , that when you look for partners share the same ethical values as their own company . So business with this very strong foundation . And I think once we got all of that, then we need to work with those partners in a shared vision . So we need to, to share what's good, what's the definition of success for those two companies. So we need to be somebody that work for both sides. So more like in the formula, I think it's more about like aligning those partners with your strategy, where you wanna go, what kind of capabilities they have and if they don't have, if you could develop this together. So once you do that, I think that's key and the way to find those partners, there's so many different ways. Normally one way that I suggest is working with , uh, local interest associations. We have lots of them , we have a mean , we have , um, abed , we have different others in different parts of the region. Definitely recommend working with them because they're like a great resource to put your company in contact with companies in the local market at least to start having that conversation.

Julio Martinez: 12:44

Okay. Excellent. So you basically recommend using the services of a third party to help search and identify those distributors,

Denis Jacob: 12:52

At least to put you in contact with , with some of them . Like if you don't know anything at the market, definitely like getting somebody in the marketplace that knows and have those relationships I think definitely can be helpful. So connect with , uh, somebody that you know, or even like the , the trade association there can help you to get this first step in there and once you start developing those relationships, things just becoming more natural.

Julio Martinez: 13:16

Okay. Sounds good. All right . What about demand generation? Have you ever been involved in strategies and tactics to generate demand from the end user perspective to the distributor?

Denis Jacob: 13:29

Well, like that's not normally where like a compliance team gets involved directly , but I get involved in supporting those initiatives and I see this and what I see more effectively is actually working from in the market point of view , so looking what kind of like un unmet need that market has, like what kind of like solution that specifically government or state is working to help the population. So what's affecting that, that region so you can understand exactly what's the need of that market and what kind of solutions you can provide. And then it becomes pretty much a gap assessment, you know, what's needed there and you know what you have to offer. And now of course you need to work on generating awareness for what kind of solution you have. And I think even , um, which goes very much together with demand generation those days is how affordable those technologies are for those markets and how can you prove the benefits of those technologies. So in the past, like um , discussions were not always very structured, but right now like there's a very clear understanding and interest for the health economics of new solutions. So I think for team and generation training awareness and definitely a very strong support in clinical data and health economics are very key to be able to promote any kind of like medical advice product in the industry in Latin America.

Julio Martinez: 14:49

Yes. Okay. So moving along Dennis , what about pricing? I mean, what do you think Latin America is comparable to other regions around the world in terms of price sensitivity?

Denis Jacob: 15:03

Well, it's hard to compare exactly. Of course there is a price. It's very, very sensitive to price in Latin America because we have a very tight budget in most countries. Like the region hasn't been growing as like , uh, we would like in the last couple of years in terms of GDP , when it looks . So governments are under a lot of ion , but I don't think this phenomenon is in any way exclusive to Latin America. I think that's, we're seeing everywhere. So price is definitely a big thing. And also when you think about the way we do business in Latin America, most countries they do business through governments or at least government funded institutions. And then we have to deal with tenders and tenders normally are driven by price. Of course you can have other elements like quality in some specific functionalities of product, but price is a big thing. So definitely Latin America is very sensitive to price even more than other regions. And that where actually the legal environment sometimes , uh, connects with the business world because like we need to understand exactly how those tender laws, tender requirements operate in certain countries so we can navigate them properly and to make business , uh, with adequate prices. Otherwise, like either we're not able to do business or we made business that are not very profitable. So like companies need to definitely understand this actually how the markets are organized, how the markets operate, particularly on the tender side. And sometimes like now , especially now with consolidation in the marketplace that's going on in Latin America as well in other parts of the globe.

Julio Martinez: 16:32

Okay. What about reimbursement? What do you think about the reimbursement landscape in the major countries in Latin America? Well,

Denis Jacob: 16:40

Historically reimbursement has not been sufficient. I think that's something that we can see clearly and know this discussion is always like part of like a , a challenge the business have and how to supplement this reimbursement is always another part of the challenge. So like I know there's several discussions with Go and how can we make sure reimbursements happening at an adequate rate, but at the same time , like there's a big misunderstanding about medical inflation specifically because sometimes it doesn't connect with inflation overall. So I think there's a lot of conversation and communication that has to happen between government regulators, companies , uh, physicians patient association, so we can understand better what's required and what's the right level of , of reimbursement so we can make sure we have those technologies available in those markets as well.

Julio Martinez: 17:30

Okay, excellent. Well, moving along Dennis , there's another topic that I'm sure is , um, very important to a lot of US companies, which is shipping an importation of devices to Latin America. So what do you think about it? I mean, is it easier, is it hard ? Uh, is this past convoluted? I mean, what are your thoughts on this?

Denis Jacob: 17:52

Well, I think first thing Latin America's a big region. I think that's one thing sometimes people underestimate. So when I tell sometimes people that to fly from Sao Paulo to Mexico City takes me about 11 hours, some people get very confused about that because they think it's a very, the region's a lot smaller. So just from the logistics standpoint, already a very big region we have access to both the Atlantic and the Pacific Ocean. So it's already a logistic challenge there. So shipping and importing Latin America is, is not, not an easy thing just by definition. On top of that, we have a series of regulatory barriers there and a series of like bureaucratic barriers as well that makes the the process even more challenging. And bringing this even to my area of expertise in compliance, we have a big risk there , like , uh, just like dealing with brokers and customs and like , uh, any kind of like a of a tailgate like this brings always like a , a potential risk related to corruption or a bribery or anything like this. So whenever we have all those multiple hurdles in the process, it brings sometimes risk . And we see this in Latin America, which either like may cause compliance risk or cause delays, and those delays of course affect the entire supply chain and products end up getting to the other side either like with a much bigger lead time or in a much higher cost than companies who would like to. And of course this end up like re resulting less access to products from patient side . So I think we have a lot to improve in the region from the logistics standpoint and particularly from the , uh, governments could work to on efficient there, but also companies can help. So that's I think one of the areas where we can definitely like , uh, hopefully be more efficient in Latin America.

Julio Martinez: 19:35

Well said . Okay. Moving along to the topic that I understand is the senator of your work, which is the Foreign Corrupt Practices Act of 1977 or FCPA. What do you think about this and what , what do you think about corruption and bravery in Latin America?

Denis Jacob: 19:55

Well, I think , um, if we just follow the news, like we see a number of cases and like , uh, corruption case are not a like , uh, something that we don't hear Latin America we hear quite a bit and probably a lot on this. And then just reflecting my own career, when I start working in the compliance department back in 2009 , people normally would used to see me as their crazy person. Like, are you crazy? This is the way business is made , this is how companies make business. Say , no, no, no, it doesn't have to be like that. We can't change that. We can make business in the right way and discussing this with several different people saying , no, no, we're gonna change this. And I was very pleased and very glad in all my own experience because I've been able to work with a very good companies and great partners and change this perception. And of course we've seen lots of companies getting in trouble in many different parts of the region. We have seen several public cases, we have like the carwash operation in Brazil that's not only in Brazil anymore because parts of this is already spreading in Latin America right now we have more than 12 countries involved in the carwash operation . Uh , we have several new laws, local laws there are very similar to the FCPA and uh, and we have very strong cooperation between governments. So we have like the US government and other governments around the world cooperating a lot with Brazil or the UK or Peru and Argentina and other governments in the region. So very strong enforcement. Definitely a lot of cooperation there. Big risk for companies, but at the same time, and the way I see it, a business opportunity to companies as well because for those companies, they're doing the right thing, they're making the right investment and doing the right business in the right way, that can be a big differential, a big, big differential from a business standpoint because customers definitely want work with companies that follow the law, that do the right thing, they're ethical , they have very strong and ethical behavior. So for the companies that are doing the right thing and wanna invest in that, I think I see this as a great opportunity to differentiate from other players in the market that are not so interested in playing by the rules. So it can either be a big risk and a big problem, but it can also be a big opportunity for those companies that are like willing to do the right thing. Sometimes may take a little bit more time to get some things done, but if you really follow the rules that in the long term it pays back for sure.

Julio Martinez: 22:17

Excellent. Dennis , are there any other areas that we haven't mentioned that you think are worth , uh, speaking about?

Denis Jacob: 22:26

I think we, we mentioned most of this like , uh, I think generally a trends , I think we discussed quite , I mentioned , uh, consolidation of the channels we're seeing in hospital systems. Definitely compliance, I would say is the one trend we're seeing effect in a lot. Not only healthcare, but definitely healthcare in the region. And I think it's gonna continue to be like this and the search for efficiency and the use of technology there. I think , uh, if I could summarize in those three last topics, I think that's what I'm seeing definitely like a , a big change in the business mindset. So I used to see a much more transactional business model and now we're moving to some of them a lot more strategic. So like companies are looking for strategic partners that share the same vision and share values as well. So it's a lot more , uh, connect and they used to be in the past. And uh , we have like those stronger partnerships, but that also requires a very strong shared vision, strong capabilities and all that should be supported on a foundation of ethics and compliance behavior to avoid those bumps along the road.

Julio Martinez: 23:30

Excellent. So Dennis , before we close, are there any major trends above what you just mentioned that are happening in Latin America that are relevant to our discussion? In other words, what do you see as the future of Latin America in the commercialization of medical technologies in general? Is it a bright future or an ugly future ?

Denis Jacob: 23:53

No, no, I think it's a bright future. It's not an easy one for sure. Like I think there's a lot of work, but it's definitely a , a bright future. I see like , uh, as I mentioned before, like , uh, this search for strategic partners. I'm not only talking about distributors and manufacturers, I'm talking about hospitals, I'm talking about labs, like , uh, companies are definitely looking for those partners to be a lot more present on the elaboration of strategies . So companies really need to work together and I think that's the one training I'm seeing with a consolidation that we've seen in hospital systems and everything else. So a lot of consolidation, but at the same time a much stronger partnership between companies and for that to happen , like you really need to be able to trust and to rely on your partner . So that's why I mentioned before as well , not only because I work directly with that , but because I really trust in this , that like , uh, compliant companies and ethical companies would definitely are gonna have like a , a competitive advantage because they're gonna be able to be more attractive to those partners. And partners will be willing to do business with those companies based on a much higher standards than only like focus and exclusively on price. Price is always gonna be an element of any business partnership, but it , it's not gonna be the only one. It has to be part of like a much bigger discussion.

Julio Martinez: 25:09

Okay, very good. So before we finish our episode today, de do you have any final thoughts or recommendations for

Denis Jacob: 25:20

Listeners ? Well, I think I'll bring this back to my world, gonna be on the compliance and ethics side. So I think this is not only like a , a trend, but it's a change on the way companies are like , uh, experienced, like , uh, and how they should be doing business. Like follow the law should, should not be a change . Companies should always be doing that. And I think the change that we're seeing right now is not only like , uh, the expectations, not only following the law and doing the minimum required there, we've seen like a big change, and you can see this in a number, but public cases not only in healthcare about ethics and how ethical behavior is driving consumer perception, patient perception, society, shareholders and everybody. So definitely like the need of a stronger understanding like , uh, how important it's ethics and compliance for companies, especially when you're like looking for new partners or new business. I think that that's the key and the last message that I leave because once you have that incorporated into your business model, that becomes very natural and very sustainable as well. And then we can go back and fix the other issues related to import exports or regulations and all of that become a lot more clear because we don't have to worry about like , uh, other elements there that should be like part of our foundation , like doing the right thing .

Julio Martinez: 26:37

Excellent, Dennis . Well that concludes our episode today . Thank you so much for accepting our invitation to speak today in the Lata MedTech Leaders podcast. And I look forward to a follow-up conversation with you sometime in the future.

Denis Jacob: 26:53

Sounds good. Thank you very much, Julio . It was a pleasure talking to you. Alright ,

Julio Martinez: 26:56

Bye-Bye. Take care . Thank you.