EPISODE 11: RAHUL MODI, FOUNDER & CEO, ENVISION

Episode’s transcript

Julio Martinez: 0:05

Welcome to the loud time medtech leaders podcast. This is a weekly conversation with med tech leaders who have succeeded in Latin America today. Our guest is[inaudible] Modi, founder and CEO of ambition. Hey, Raul is great to have you here today.

Rahul Modi: 0:22

Long time in the making. Thank you for having me, Julio. I'm excited to be here.

Julio Martinez: 0:28

Awesome.[inaudible] welcome to the show. Well, uh, listeners,[inaudible] is a health tech optimist, serial entrepreneur and biomedical engineer. He is the founder and CEO of envision a B2B marketplace for Mobile Diagnostics and care essentials for all. Was it director and founding member at eye Nettra and MIT media lab is pinout recognized worldwide for pioneering smartphone powered refractions to serve the 4.5 billion individuals in need of vision correction. I need Trump. He contributed to the development of four products from inception and he honed their go to market strategy and architected a successful platform for global growth. Thanks for this. Thousands of units were bought, sold and shipped to eyecare professionals in over 90 countries within a span of 36 months. So quite an impressive track record our rail, and really, really honored to have you here and I'm sure listeners will get a lot from this episode of the podcast.

Rahul Modi: 1:35

Well, I appreciate your kind introduction, Julio, and let's hope we can distribute some interesting morsels of wisdom for our listeners.

Julio Martinez: 1:43

That's exactly the idea. All right, so let's start with your journey to Latin America or, or how do you get involved with the region?

Rahul Modi: 1:52

Absolutely. It was my tenure at eye Nettra that truly kicked off this journey. Julio, uh, first and foremost, there was an innate predisposition from day one to serve Latin America because a significant percentage of our company's DNA and talent pool actually hailed from this region, namely from Brazil. Furthermore, the very ethos of the company is to extend the reach of care by leveraging mobile technology. I think we finally cemented our decision during the GTM planning phases, which is when the opportunity and need in Latin America became obvious. More specifically, it was our efforts and the customer discovery activities, studying the macro socioeconomics, conducting ethnographic research and eventual market segmentation that really ultimately supported our decision to embark on. This chair and pull you also add that to, although the platform war for a smartphone operating systems was still ongoing at the time of the smartphone itself had already become a ubiquitous instrument in everyday life. So much of the early quant and qual data obtained in the states, in India during the iterative phases of prog development, um, seem to really agree with our thesis that we have a place in both developed and developing markets if sequenced properly.

Julio Martinez: 3:10

But again, interesting. All right, let's start with some high level discussions here. Role. Do you see a major trend in Latin America that is relevant to our discussion today in terms of the commercialization of medical devices in the region?

Rahul Modi: 3:28

Certainly I think Latin America is a compelling destination and it's really becoming, you know, the land of opportunity, um, for both clinical trials and commercialization. Julio, it's said that the countries of Latin America collectively represent the third largest economy and healthcare spending is on the rise. So, you know, I want to believe this holds true across many med tech industries. Now keep in mind there is also a large aging population and maybe you know it's not the same predicament as Japan, but the four major non communicable diseases are certainly a culprit here and a contributing factor. So naturally this must translate to a favorable environment for clinical trials too. They'll, you know, that's not really my area of expertise in Latin America. I think big changes to use decades Old Regulatory Framework where the MDR will replace the current MDD, should open many doors in the areas of clinicals. Now in my industry, promise exists in a popular citation that says 80% of visual impairment is treatable or preventable and the global vision care and I were market is growing at a CJR of more than three and 8% respectively with expected values to reach north of 74 billion in 265 billion respectively over the next five years. And I think around 3 billion plus is attributed to the equipment market alone. Now in Latin America, you know, hundreds of millions of people in need of corrective lenses, right? And there's also this inequality in the distribution of patients to provide a ratios juxtaposed by a surgeon connectivity and med tech innovation. So you can imagine a Leo that the white space is just tremendous with unbounded growth potential and just to keep things in check and be honest for our listeners and maybe temper expectations, it's seldom crystal clear in the trenches. Right. The irony and challenge in all of this is Latin America is the behemoth market. As you know, Julio and making gross generalizations about market behavior usually doesn't hold water on a country to country basis across each and every industry. Devil is usually in the details. Once your tams and sams are deconstructed and as an entrepreneur you often find yourself grappling with this ambiguity. So I often joke career consultants love to offer insights, but let's hop on the line and go for a ride and don't bother bringing your excel spreadsheets and PowerPoint presentations. Execute is everything.

Julio Martinez: 6:03

Absolutely. Yeah, I agree with the comments. Certainly Latin America is a up and coming markets, especially with what's going on with the EMDR. And of course we have some chronic decisions that are really, really prevalent in the region and the valley is gonna. I mean these two factors are driving the growth of the market. So let's get a little deeper arrival in the discussion here. So let's speak about practical experience, commercializing medical devices in Latin America. I love to hear your thoughts and recommended best practices, but this area in general, so in what countries have you been involved in Latin America row?

Rahul Modi: 6:47

I have hands on experience working with Argentina, Brazil, Columbia, Chile, Mexico and Peru. Uh, some markets frankly fared better than others for us, but we amassed many insights and valuable learnings along the way. And I'm sure there are several countries in the region where I had no direct contact that are still using our products simply thanks to their low risk, nature, portability and access to the secondary markets.

Julio Martinez: 7:12

But the countries that you mentioned are the top countries in the region, probably 80% or more of the sales of medical devices individually in these countries. And certainly Brazilian itself is a huge market, so if you gain experience in Brazil that is very, very valuable for listeners. Anyway, so let's get the discussion. Your towers, the to market strategy or market access strategy that you had in your previous company. I Tra, do you have a proactive and well thought out strategy where you created the market access plan for each country you are planning to enter in Latin America or do you have an opportunistic or reactive approach where you're just waiting for the distributor to contact you?

Rahul Modi: 7:53

Be Proactive and not reactive is a valuable adage but things don't always go as planned. So our strategy, visa vi market rollout and penetration was fairly robust at a high level, but I think we were quite green in our ability to prioritize which targets to go after first in this region at a country level. Prior to entering Latin America, we launched our device business with the direct preorder campaign actually, which quickly turned into an owner's game of playing catch up. I'm trying to juggle supplier relations during our first manufacturing run while tactfully managing customer satisfaction in parallel. And this was a grueling lesson for us that said, we were also fortunate to receive plenty of inbound interest early from distributors in key markets, including Latin America.

Julio Martinez: 8:41

Okay. So in your opinion, how do you find a distributor in Latin America? Where are your tips or best practices?

Rahul Modi: 8:51

Sure. I think our strength was navigating trade shows, uh, which are a fantastic opportunity to vet distributors and for that matter, really find them in the first place in the vision care space. Any serious player from Latin America will surely be in attendance at the major expos and conferences taking place in the states. And even on a budget. Walking the floor is a worthwhile exercise. Just make sure to do your homework beforehand. So we orchestrated frugal marketing campaigns to raise awareness and the dynamic nature of these trade shows, although exhausting at times, promotes plenty of healthy collisions. And you'll really discover which distributors are actively seeking novel solutions to diversify their inventory if still unsure at that stage. So you can request a references as the next step and even visit their facilities if feasible. But for me, due diligence is a slightly different approach for distributors than let's say sourcing a supplier for manufacturing. I'm, I'm far more interested in meeting their teams. So it's really all about building relationships and empathy is the game, Julio, right? It's important to recognize and address their concerns as well. And understand that risk is a two sided coin here. One more token of wisdom might have in qualifying distributors is don't be myopic and only tempted by those who offer a large po out the gate, right? Instead I'd weigh how much of a priority they're willing to really place on your products over the longterm. You know, you can ask yourself questions like, where do I fit in their portfolio? Is your product complimentary or an innovative standout compared to their other offerings? Or is it just another skew next to 10 similar products? Why does this distributor want to join forces with you versus your competitor to begin with? And is their team savvy enough to offer comprehensive demos and the post sale support that really lives up to your standards? So I think these sobering questions will pay dividends down the stretch. I would say my final thought is to avoid offering countrywide exclusivity, especially for larger countries. Right? I'm usually competition breeds performance, I like to say. So for us we found joy with smaller to midsize distributors who demonstrated commitment and passion for our products while still offering adequate prior experience.

Julio Martinez: 11:12

You're bringing up a very good points. Well in Latin America you find very fragmented markets within every country. In other words you have for example a Colombia, my home country you have like five different countries or regions within Columbia. So it's just difficult to have a shooter that has nationwide coverage because you also have some geographical restrictions in many countries in Latin America between regions. So you have cultural differences, major, very strong cultural differences and it's just difficult to find a shooter can't cover a and can interact culturally among all of these regions. So a, it's wise to have in a country like Columbia for example, have a shooter in every region to cover the whole country. Cause people like to do business with like minded individuals. You know, people who speak the same dialect and things of that nature. Spot on. Julio. Great Advice. All right, so did you have a hands off management approach where you just sold products to the shooter and let it do the rest on its own or do you have a hybrid approach where you had a local clinical sales agent or even a local office, our country manager to support the work or the shooter?

Rahul Modi: 12:38

Well, we gave our distributors ample breathing room tackle Nate and operator. We kept a pulse and supported them from afar. Routinely we would offer training refreshers and periodically check in or furnish mark on materials for them. While we did experiment with offices in both NYC and Mumbai at various phases, we ultimately just couldn't justify doing the same in Latin America given our resources. So it wasn't a hybrid strategy in the sense of having boots on the ground or opening a local office. But we did our very best to support our friends in Latin America remotely, which of course is more practical these days, right. With the advent of video conferencing, whatsapp and so on. Additionally on the product side, Julio, you know the beauty of mobile app development is we can push software updates from afar. Now if you have the means to open a satellite office or even have one or two employees there, all the better. Certainly I'm a strategy I can prescribe too, but just set the bar high from day one and establish cogent and lucid communication with your distributors.

Julio Martinez: 13:42

Absolutely. Absolutely. Yeah. Another strategy that companies have guesses, a third strategy role is to have somebody in Miami, they can travel easily to the major countries in Latin America from that location. It's just because if you have a company in California and headquarters in California and you're shooters in Peru or Argentina, I mean it's a the time differences, the geographical distance, it just makes it a little difficult, so just letting the shooter on its own, it's probably not always the best. So a lot of companies have something in the middle. I mean having an office for, of course it's expensive in every major country in that Deacon America or trained to manage their business from California, especially when you don't speak the language Spanish or Portuguese case or Brazil. Having personally kind of in the middle of the action in Miami is also an option for many companies. And that person usually is a Spanish speaking person who has experience in medical device sales in North America. So he can easily travel and have the pulse of the distributors and either whenever they need them and be proactive and visit distributors every so often. So they feel that they have the support of the manufacturer always.

Rahul Modi: 14:59

That's great advice. And we're also seeing more models and places like Miami where you have master distributors, right, who can have greater reach over larger geographical areas and be that more local interface as you described. So couldn't agree more.

Julio Martinez: 15:14

Alright, let's move along here.[inaudible] let's switch gears a little bit. Now we know in a regulatory approvals and market clearance is a big hurdle for many companies, so I love to expand upon your experiences here. Were you involved in this aspect where all getting market clearance in major markets in Latin America?

Rahul Modi: 15:36

Yes. Will Yo, I like to say context is key, so let's start by establishing that dinette trows products are a low risk, noninvasive, don't emit radiation or energy in there technically nondiagnostic so we're really talking about a class one framework here. Very early on I did receive some class two or three experience briefly. However, this was largely limited to DHF activities. You know, building my QMS chops and learning to work within design controls and a CGM ps. I was not yet exposed at that stage to the process of obtaining international approvals or interfacing with regulatory bodies for market clearance. So just as the FDA plans to update its medical device regs pertaining to 21 CFR eight 20 and finally harmonize with ISO 1345 I think it's worth noting that many agencies in Latin America are also refactoring their own requirements. Hopefully this will reduce compliance burdens for emerging technologies and smaller companies. For us. ISO 1345 actually took a bit of a backseat, which in turn became a stumbling block as a hindered our progress with a few international markets outside of Latin America.

Julio Martinez: 16:57

Okay, great. So let's dig deeper by country to discuss any tapes or any traps, trouble it when obtaining regulatory approvals. What about Mexico?

Rahul Modi: 17:06

Yeah, I think Mexico is a good place to start. In our discussion here. I believe Mexico is the second largest medical device market in Latin America after Brazil. So if your device has already been approved in the u s and Canada and Japan, I believe you may qualify for an equivalency review, which unfortunately does not guarantee a faster approval per se, but it does apply less paperwork. I'm also aware that coal for pre, you know the agency there has expanded their list of exempt products in recent years, but simultaneously they've also updated the classification for certain IBDs and US requirements may have increased in some areas and then reduced in others. Now, despite a combined GDP exceeding three point 2 trillion with Mexico and Brazil combined, I think you'll agree with this wheel and perhaps something we learned the hard way as a resource constraint startup. Historically, both of these markets and Latin America feature a complex regulatory environment and typically they're more cost prohibitive and tend to be lethargic in their timelines. Put in gentle words. Yeah, I agree. All right. What about Brazil? What do you have to say about it? So it seems the tides are turning today. I think Brazil, historically they've had a complex system in place where in the past they had the cadastral route for the lower class one class two devices and then you had the registrar route for the class three and then four devices. I recall, you know, three to four years back, a statistic that Brazilian regulators rejected nearly half of all registration applications for a class of higher risk devices. And that said rejection rate was up almost 15% from the year prior. But Julio, I'm hearing these days that at visa Brazil's agency is finally issuing on notification pathway, which provides streamlined market access for lower risk devices and bypasses many of these former requirements. Um, so at the time, you know, we were told not to hold our breath, this was a few years ago. If these changes do go in effect this year, I think that's excellent news. Indeed. I'm an, I hear that the documentation requirements will be similar to the existing class one pathway, but you get to avoid all of the deeper technical reviews. So they'll have some kind of notification within a month or so after the agency, you know, receives the submission and, and fees. Okay. Very good. All right. What about Columbia? Yeah. Looking back, I probably hang my hat in Columbia to mainly avoid many of these speed bumps. So Columbia has nearly 50 million residents and is a very attractive market. Their agency, as you know in Vima has implemented a four tiered classification system that's very similar I believe to the EU of yesteryears and in Vima automatically approves class one and two way applications and generates a certificate. And just over a week so you can almost begin selling immediately. And then I think within 90 days for some of the other classes, they'll get back to you, of course agency will still review on the app and respond to any questions and then have some requirements set forth. Time frame has really a truncated and I think that overall just the timelines could be expedited with registrations valid for a decade, if not mistaken. So you know, once in FEMA does receive your, it tends to get renewed a lot quicker. Now as a cautionary tale, Julio foreign medical device manufacturers that don't have a physical location in Columbia or Brazil must appoint a local registration holder or importer of record. Now if you choose your distributor as your importer of record, um, you'll only be limited to that one distributor in the region and transferring is a complete headache. So it's advisable to choose a third party logistics operator or independent legal rep if you can. And you know, otherwise your distributor may claim ownership. Great points. Well, yes, exactly right. All right, what about Peru? Sure. So the Peruvian government has rolled out a laundry list of updates over the years. I'm including an initiative to reduce approval timeframes by approximately 30 days. So with faster reviews, I think they've also simplified the process and reduce the burden of requirements. But I think they also have a lot less. So Peru has also reduced a lot of their manufacturing flowchart requirements and other documents such as clinical trial reports in lieu of the raw data. So I think Peru is a promising place to look at. But another good bet to really grease the wheels is Argentina in my opinion. I think Argentina is slightly less populous than Columbia, but it outputs more than two x the GDP. And Matt, the Argentinian medical device regulator will accept a cfs or CFG. I'm blessed by the FDA. So you know, that makes life a lot easier. Now, Argentina is a member of Merkel sewer and I think they've used requirements for class one dossier as well a while back. So I think all these things in consideration, um, Argentina and Peru should definitely be on the map. Yes. All right. That's one a chili. Sure. I think Chili is another country where frankly we missed the boat in a way. Um, I engaged in early diligence with one or two parties but was not patient and didn't invest the proper time to source a fit distributor there. Chile is one of the more dynamic economies in the region and they actually have uh, a friendly import climate. Um, that doesn't require a sanitary registration in most instances or perhaps they have a voluntary submission. So, um, I think with the free trade agreements put in place more than a decade ago and just the environment of importation, I think it's a very friendly place to look at and do. Keep in mind, you know, there is another things that will drum up the fees. But my thing, chili is an interesting region without a doubt. I would say Julio has a capsule summary Search for the path of least resistance beginning this journey and don't try to boil the ocean at once. Right. Ranks can be a black box due to the language barriers, cultural nuances and the bureaucracy. Yet, you might occasionally hear a nightmare story or two o' folks wrestling with approvals for years or being a victim of resource depletion due to the cost recovery model of some developing countries. But here's the plug a reputated cro like yours, Julio can facilitate in a big way and really assist in navigating the waters. So ask for help and remember to always use a third party registration hold there.

Julio Martinez: 24:23

Very well said. Yeah, that's true. Alright, uh, let's switch gears a little bit and let's speak about demand generation in detail role where you involved in strategies and tactics to increase demand from the end user and ultimately sales.

Rahul Modi: 24:42

Sure. So now that we've established it was not a traditional hybrid model, akin to a multinational with vast firing power. Um, let's unpack a bit how we fueled end user demand. As a startup company, typically strategy is formed above the shoulders and tactics below. So for a tangible, mobile intriguing product like ours in a sea of Dolan, antiquated equipment that might be better suited in a museum than a trend, the optical shop marketing was really our growth engine. So don't diminish the marketing department's role. Julio, keep in mind your four ps and three Cs. So for us it was paramount to identify where the undervalued attention was, know your customer first and foremost, and then work to raise awareness and awareness can be a two pronged activity that's aimed at both the patient and the provider. I think part and parcel to this effort is discovering your key opinion leaders and more practically speaking, finding your product champions. So build a list and with digital marketing and social media content is your currency. Leveraging these platforms is the tactic to really balance or your inside and outside sales endeavors. Just keep experimenting to see what's working for your organization and it doesn't have to be expensive, right? Stay Frugal or better yet, aim for free where possible. Now, I understand Instagram may not seem ideal for a hematology product or an invasive device, but you might also be surprised. Then finally, I like to say cultural ads may seem nice, but please be careful with your marketing claims and your cost of sale shouldn't outstrip your margins. So just be sure of this and don't fall victim to the growth at all costs mentality. That's so pervasive in VC La la land.

Julio Martinez: 26:36

Okay. Very good. Uh, well what about pricing? Do you feel that the Americans are very price sensitive region?

Rahul Modi: 26:45

While price sensitivity varies by country in the region, it's still very much a function of product placement and positioning within your given market. More sophisticated and niche technology can command higher prices of course from top tier hospitals and reputated institutions. Conversely, more hackneyed propositions might face competition from Asia or even local companies which will drive down prices. But if there's nothing proprietary or novel, your exposure increases. So I also hear some industries such as Pharma are vulnerable to government tender processes which implement specific guidelines, but maybe that's not a bad thing in the best interests of patients. And finally, currency volatility and the forex climate is yet another hurdle in Latin America. Um, I think manufacturers can implement controls such as map and RRP and their contracts just to eliminate some of this turbulence. You know, at Tai Nettra the utility of our products wasn't unique per say in terms of outputting refraction data. Many devices can do that, but we competed heavily on price and innovative industrial design. So affordability and accessibility was actually our value proposition, um, since traditional equipment costs in order of magnitude more, um, without the added benefits of portability and connectivity, although right. Competition is inevitable and it did come knocking and due course. Sure. All right. Any experience on the reimbursement side of the spectrum? Yeah, I don't have much intel in this arena. I can only imagine that the fragmented landscape with multiple healthcare systems in Latin America adds a layer of complexity there. But perhaps it's most efficient to first target those countries with a single payer system or a centralized public insurer, maybe like eps and Colombia flanked by private plans. So pitching the merits of your product to government bodies might help really shape the healthcare policy there and create a framework that promotes innovation. And then later you can target insurance carriers and hospital networks and the private sector to broaden your reach. I recall spearheading an effort in Mexico to try educating the government stakeholders and employees and the public sector about the importance of regular vision screenings and it was rudimentary and short lived, but the thought of deploying a service model using technology like ours is interesting and may create value with minimal disruption to their workflow. I also know of people trying similar models here in the states by leveraging high footfall settings. Imagine conducting office visits for a big employer, for example. But frankly I'm unsure how scalable this is for a startup. Assuming high cacas and, and even if not labor intensive, more sophisticated telemedicine setups can become capital intensive over time.

Julio Martinez: 29:48

Yeah, sure. Alright. Any input tour tips regarding the imputation process in the region?

Rahul Modi: 29:54

Yes. Be transparent with both your customers and your distributors. Importation fees such as Vats and duties are not insignificant and you should carefully consider them in your pricing strategy. I think higher volumes may offer some savings, right? Due to unit level discounts, but just make sure whomever is on the receiving end is cognizant of these indirect costs and is able to coordinate all the logistics involved. I believe Brazil has simplified the importation process to a degree with a fairly new provision that no longer requires medical devices to undergo inspections at the point of entry, which will save both time and money. So you know, easing importation for foreign manufacturers with a good compliance history should become a trend. Fingers crossed and I do see many of these countries making slow but steady net positive progress here.

Julio Martinez: 30:48

Excellent. Good. All right, so what's your experience with corruption or bribery individually in light of the Foreign Corrupt Practices Act of 1997 1977 I believe. 1977 I'm sorry. Thank you for that.

Rahul Modi: 31:05

So no incidents come to mind, but yes, Dave vigilant and be aware of its implications. Although the FCPA is often associated with public issuers of securities rather than private companies, I think private companies are also susceptible to law enforcement interests. Forgive me if I'm mistaken, but private companies are still subject to the anti-bribery provisions. If not the accounting requirements. So civil and criminal enforcement by the Deo j still applies here and in regions marred by political unrest and unstable socioeconomic climate. These things can and do happen. So just are on the side of caution.

Julio Martinez: 31:46

Yes, that's true. All right, we are close to the end of the show.[inaudible]. Before we sign off today, do you have any final thoughts, morsels of wisdom or other museums for our listeners? What would you say to a small or midsize med tech company that hasn't looked at Latin America or it's just starting to explore the region as a potential market to expand its footprint?

Rahul Modi: 32:12

Even if you fell asleep during this podcast. And must be clear by now that I'm bullish and optimistic about Latin America despite any inherent challenges. So let's end on a more philosophical note, whether you're jumping down the rabbit hole of Med tech innovation and life sciences for the first time or desperately trying to climb out whether a novice or a battle tested veteran. I implored that you not only do in tri, but also pause along your journey to reflect and ask yourself why. Remember to prioritize your happiness. Always. That's where the magic lies. And I don't say this from an ivory tower. This is also a reminder to myself, something I'm working towards and find myself ruminating about often. So don't only pursue what society or family expects of you joining you today is a privilege. Julio, thanks so much for having me and launching this initiative. Let's make sure to stay in touch and I welcome the audience to reach out as well. Excellent. If I will. Yeah. What can the audience French here? Sure. So feel free to email me at Rohal. That's R H U l at envision dot B, z. That's e n v. I s. I. O n. Dot. B. Z. Okay. Very good role. I thank you also for your time, for your contribution to our podcast and I'm sure listeners get a lot out of your wisdom or your experience in Latin America. Thank you so much. Great having you here today. My pleasure. I wish you and your listeners all the best. Ciao. Ciao. Bye.