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Podcast Transcript
Bill : Hi and welcome to the next episode of Belly to Belly. It is great to have you here with us today. So today we’re actually going to spend a little bit of time in the life sciences space and we’re joined by Mark Lesselroth from BioPort USA. Welcome, Mark.
Mark : Thanks for having me, Bill.
Bill : It’s great. So the title of this conversation is around the myth versus reality of life sciences companies entering the US market. We certainly want to kind of dive into that conversation. And just as a for context here, our listeners are both companies, b2b companies that are looking to enter the US market plus also a variety of Trade Representatives that are helping and support organizations that are helping these companies come into the US. Just for a moment before we hop into that really interesting conversation. It’d be great to know more about you and about Bioport. Do you mind just kind of giving us a little thumbnail of your background and also what you’re what you’re doing today with bio port USA.
Mark : Absolutely. So first of all, I want to thank you. I appreciate this opportunity. You know, anytime I have the chance to spread the word so to speak, or spread the gospel, if you may. It’s a wonderful thing. So I am the president and CEO BioPort USA. Which was established in April of 2018. And the impetus behind it was, I wanted to identify innovative life science technologies, be a biotech medtech pharma in vitro diagnostics for around the world that could really improve our healthcare system. I know it sounds somewhat altruistic, but I’ve been around the world for a number of years. I was originally born in Germany, and lived throughout lived almost 15 years throughout my life in Germany. So both as a child as a student and then work there and as a result I you know, I not only learned the language, thanks to mom, who’s German but is also experiencing a lot of different cultures, not just the German culture. I was traveling a lot and I was exposed to a lot and and I recognize that while I love the United States, I think it really is a great country, that there are some amazing things happening outside and, you know, I don’t know how much longer I’ll live but I thought with the remaining years here, I want to do something good and, you know, find a way to introduce this technology just to make it easier on patients and make it easier on health care providers.
Bill : That’s really cool and amazing. So oh, you know, I guess I’d start with our thesis here, which is the myth versus reality so I guess what, what’s the sort of paradigm that where you see companies that are life science companies are coming into the US? What are the myths that they’re is sort of holding closer or embracing that are challenging
Mark : I’m glad you asked. I think one of the number one miss is that they know the US market. After all, we are a Western nation. Many of the International life science companies speak English. Many of them have traveled here either for pleasure or business. Some of may even studied here and work here. And so you know, the thought of well, if I went out to business here, how hard can it be? versus you know, China for example, I’ve met many people who think oh my god, I don’t speak the language. I don’t understand the culture. I definitely need help. There’s no way I can do this on my own. And with us, they think no problem. We can do it. And frankly, nothing further could be from the truth. They really don’t understand the US market in terms of how we make decisions, whether it comes to buying something, selecting something, the nuances associated with the regulatory process, they sure as heck don’t understand our reimbursement system, because most of them come from a country that offers universal health care. So that’s a big one in terms of a mess.
Bill : That makes a lot of sense. So yeah, I would venture to say that many people in the US don’t understand the reimbursement system. So the idea that someone from outside the US would understand it would be difficult. So when companies, you know have these challenges where they maybe don’t understand this the sales process or the regulatory system, what challenges does it create for them? Well, how does that handicap them?
Mark : Well, you know, it’s problematic because if they think they know the system, and then they go through and go about doing business as they’re used to in their home country, many of them will invariably fail. You know, they think it’s good enough to, let’s say, exhibit at a trade show and industry trade show, find a sales rep or distributor, sign an agreement and pay we’re off to the races, and nothing further could be from the truth and that holds true for American companies as well. But I think American companies for the most part, know better. Now those companies that are more successful United States are the ones that understand what you need to do in terms of developing a sales strategy, what you need to do to support a distributor how important your brand is in terms of influencing the purchasing decision. These are all concepts that for the most part are extremely foreign to the international life science community. And so many of them either fail outright or they do not achieve the success that they had anticipated. Because they weren’t prepared to adapt and adopt the US way of doing business.
Bill : So, in sort of thinking about that, which would you say then that yeah, when you think about the biggest mistakes that companies make are related to understanding the sales process and the reimbursement and regulatory process as they’re coming in?
Mark : Well, among other things, I mean, I think the other thing that is and we’ll go back to maybe another myth is that look, has developed a wonderful technology. America is the largest healthcare market in the world, which is true. By far I mean, numbers for last year were $3.1 trillion. That’s a big number. All I want is a piece of the pie right? How hard can it be? And they really don’t take into consideration that, you know, maybe I need to do a little homework. Maybe I need to see what the competitive landscape is. Maybe I need to understand, you know, what really is required. Instead of saying, Well, I know I need FDA, because without FDA, I certainly can’t sell anything which is true. And I’ll even there are misconceptions, they think it’s pretty black and white, I can go to the FDA website, you know, read what is required and the truth of the matter is, it’s not that black and white, there’s a lot of gray in terms of how things are even interpreted from a reviewer of the FDA. So unless you have a regulatory person that’s on your staff that understands how the FDA works, and the same thing with the reimbursement person and most of them don’t and I’m talking small to medium sized companies, certainly the large companies, the bronze the Siemens of the world. Absolutely. I mean they understand it well in part because they have Americans on staff, but the rest of the crowd, they really don’t and I think they can find themselves getting into a lot of trouble real quick.
Bill : That’s great, and certainly easy to see the challenges. So let’s maybe shift from being sort of trying to find the challenges and talk more about, you know, sort of an ideal state and, yep, obviously, you’ve worked with companies that are kind of, on all ends of the spectrum. If you would kind of imagine on a continuum. Yeah, there are companies that really go through the process very well and not just have a good plan but also execute it effectively. And then obviously there on the other end there are companies that don’t and fail and bounce out because of that. When you think about the companies that are successful and you know, obviously the multinationals and what not the that you mentioned, but even on the smaller mid market size, the more you know, market entry oriented, what are the things that they do that are, you know, that caused that success? What are the sort of bigger elements that, you know, help them both in terms of plan and execution, get it right
Mark : So, you know, you mentioned planning, a lot of them don’t necessarily have a plan to begin with. So the ones that are successful and I tend to use the metaphor of building a house. I said, you know, whether you’re French German or Chinese or Well, American, I don’t think you’d ever build a house. Without having blueprints because God knows what you’d have if you didn’t. Well, why would you enter a foreign market, the largest healthcare market in the world without having a go to market plan without having a blueprint to have a better understanding? So the more successful companies they do, they have done their homework. They understand where their places in the market, they understand who the competition is. They do understand some of the challenges and pitfalls associated with commercializing their technology. They certainly understand what you know, has to happen from a regulatory standpoint because they’ve done their homework. And because of their size, depending on on the scope of the work that has to be done and the cost associated with it. That’s something else. Most of these companies they totally underestimate how much money it will cost to successfully launch a product into us. So the ones that do it well either have secured the necessary funding and resources so it’s not just funding its personnel, you need enough people to do this, right. And then they you know, they look at what’s the end game. So based on any of the research they will have done, or their homework early on, they’ll recognize that you know what, there’s no way I can do this on my own under my own brand. So I need to identify strategic sales partner and in the biologics side, in particular, because phase three clinical development costs a lot of money. We’re talking one with a lot of zeros behind it, no small to medium sized company can afford it. So in that case, the exit strategy, if you may, is to identify, you know, Johnson and Johnson for example, where they can be in a position to sell their technology or license it to them and say, Hey, you take what we’ve developed, and bring it to the finish line. And, you know, that’s, that’s been the recipe for success, but I will tell you that probably, Gosh, 90 or 95% of the companies that I’ve encountered from around the world don’t do that. They don’t have a plan. They don’t have a go to market plan. They don’t have a commercialization plan. They underestimate how much it really costs. And you know, in the end, they sometimes have a mess on their hands. So and the problem is that by the time they reach a consultant who might be able to help them out maybe too late. You know, the other thing that I will share with you that I think is important for your listeners is for Europeans in particular and that’s who I deal with for the most part they are so fixated on their technology. And granted, you know, they’re the Swiss the Germans, my gosh, they can make this wonderful technology. But you know, getting FDA approval is just the first step. And God forbid, you know, there isn’t really a need for the product in the marketplace. The greatest hurdle that my clients face, in my humble opinion, is the American physician. Why? Because they’re set in their ways of doing things. They’re certainly open to innovation. But if it ain’t broke, why fix it? And so you know, if they the international life science community has to know ahead of time, how is my product going to add value? How’s it going to help the patient? Oh, and how’s it going to lower cost? The whole concept of money, and how much or how big a role it plays in our healthcare system, let alone in our economy is again something that I would say, the entire international life science community has no real or can’t really fully comprehend how important it is. Just because it’s not something that they encounter in their own culture.
Bill : Yeah, but that certainly makes sense is you know, it’s funny as you were talking, I was thinking about a friend of mine who he has built several successful life science companies and accident, his most recent exit was about $139 million exit. And so their first two steps in building a company and they do this it’s every three or four years, they get the band together and they and they and they go through the routine but his processes is really simple is first they pulled the team together that and they identify potential acquirers in a life science space, and they find out what those acquirers have an appetite for, you know, something that that acquirer is building, that these guys can build something complementary to in some way, and then they go out and build that something and, and, and sell it and and they’ve done this over and over and over again. And it’s amazing to me that more people don’t do that model. They, as you said, most in most folks who are innovators and inventors tend to be very product centric instead of customer centric and these guys kind of take it one step further and that their their, their customer who they envision as their customers, the acquirer. So they’re talking to all that sort of thing,
Mark : which, I mean, absolutely. What you described is, I’ll say a very American thought process, which is the right thought process by the way, you know, what, what is the end game? Are you going to sell your business or even to license your technology? You know, what’s your exit strategy? And again, most European companies, especially the medical device side, I dare say they are so focused on developing a solution that can help mankind which there’s nothing wrong with that. On the contrary, but then you have to look at it through an economic lens and say, Well, is there a business there? You know, I mean, I had one client, who will remain confidential, phenomenal technology. It’s based on artificial intelligence. He spoke quite good English. His mother was American. He spent time in the States. I mean, he really was felt he was on top of his game. And as we were talking to physicians in the United States, while they were fascinated with the technology and thought, wow, this really could be a game changer. Each and every one of them kept indicating Yeah. But you know, I can’t get reimbursed for it. So I can’t I can’t use it until there’s a reimbursement code. And then it turns out that his technology is so innovative. There is no what’s called a predicate device. So there’s no existing CPT code that they could easily incorporate into what’s called their healthcare economic strategy. Thus, you know, working on a reimbursement strategy, that he would have to get a new one. And, you know, we said it’ll take him between 18 and 24 months, never saw it coming and took his timeline for commercializing in the United States and pushed out by a minimum of two years. So not knowing these things. So you know, what your friend did is you know, does is very smart. You know, the other thing that I think is smart about it, and I’ve seen it happen, just the opposite is he is going out and asking asking or identifying what does the market need? Many of the companies I’ve encountered overseas will develop a wonderful solution for which there’s no problem. You know, so again, they get so caught up in the science of it sometimes like well, this is great, you know, and, you know, I want to go on the record and say this, I think, to some extent, European governments do a disservice to their entrepreneurs because they certainly want to spawn innovation, and they want to support them and they do so with grants, you know, 50,000 euros here. 250,000 there. It’s not chump change. And they almost gives them a false sense of success because they’re nurturing these guys’ ideas. You know, they’re half a million euros into this. And it turns out that what they have, you know, maybe a great science experiment, but it’s really not going to impact at least not the US healthcare system. Now, what you know, and I dare say that if, if these organizations also had a better sense of, what does the market require were in what direction are we going into, and then how do we develop a solution for that? Like your friend did? Now you’re talking potential for more success?
Bill : Absolutely. And I actually share one other quick thing with you so that maybe an idea for some of the economic development and trade people who are listening there’s a hospital in Boston, which mark you know, probably well, which is called Brigham and Women’s Hospital. It’s a Harvard University’s teaching hospital. But for years, I don’t think they’re doing it anymore. But for years, they did an event once a quarter called pilot Shark Tank and you know, obviously, most pitch events which this was a pitch event, most pitch events have investors as a panel and the investors may comment and score and and in some cases get involved in the companies in at Brigham and Women’s Hospital. It wasn’t investors, it was physicians that were the judges. And they did two things that I thought were remarkable. One is the whole point of this event was for the physicians to see new technology and actually the winner or winners there and it wasn’t a limit to the number of winners but it really dependent on the quality of the the solutions was that they would be piloted within the physician’s practice. And so, you know, you think of it from the company standpoint, it’s validation, it’s revenue, it’s testimonial. It’s feedback, it’s all sorts of really great, great feedback, but that I thought the brilliance of the event was actually the second half of it was the physicians talking about what’s keeping them awake at night. And so yeah, these were really neat. And, you know, we see a few of them that we can use today, but let’s talk about, you know, where the greatest impact and what types of things that whether it’s reimbursement issues, whether it’s the practicality of something or the demand for something in the practice, but getting Yeah, that I it’s always interesting to see how far away in most markets the sense of demand is from innovation, and there’s just a huge gap in most cases. So I think there are a lot of opportunities to uncover very much more significantly, what demand is and certainly it’s the it’s the obligation of every founder to to understand demand before they build anything.
Mark : Right. And I think the other disconnect, again, that I’ve experienced coming from the European side is they rightfully I should say they rightfully so look at their invention from both a healthcare providers perspective, but also a patient perspective. And unfortunately, I think in the US, you know, the ultimate decision of what’s going to be used and how it’s going to be used, you know, certainly falls in the hand of the physicians perspective. So what might keep a physician up at night, you know, is perhaps more personal driven, process driven, but not necessarily patient centric? And so, you know, somebody in Germany or France or Italy will have developed something to be really cool for the patient. And it’s not that we don’t you know, the physician doesn’t care. But he or she isn’t necessarily thinking about it through that lens. And so you know, there and then also lies part of the problem to say, hey, we’ve got this really great new widget. You know, looky here. The other thing I need to share with your audience because I think it’s really important because I’ve seen this happened as well, where someone actually has a game changer. I mean, you look at this, you know, wow, this fits the American model. But unfortunately, a lot of international so it’s not just European life science companies are extremely risk averse. So they’re, you know, and they can be intimidated. America’s the largest market, you know, the land of milk and honey, so to speak on endless opportunities. But then, you know, how do we actually take advantage of it? How do we take on the 800 pound gorilla? Because we can and so you know, there also isn’t a fault. And I think that if you mentioned something else about your friend, which I totally agree with the team, so if they then you know, had a little foresight or trust and say, You know what, we may not be able to do it, but let’s hire an American team. Let’s hire an American CEO and American VP of sales, who not only has the gumption, but may have the Rolodex and the connection that can take their technology and obviously also has you know, experience with getting FDA approval and well to me that you know, that’s the perfect combination. If you’re too risk averse to do it yourself. Find the right partners, put the team together, you know, let them take it to market, and then it’s still under your brand name, by the way, as opposed to giving up oodles of money by licensing and putting a licensing agreement together with a large med tech or pharma company.
Bill : Yeah, that makes total sense. Well, let’s kind of get this down to a fine point. So yeah, if you had sort of three recommendations for life science companies coming into the US what what would be kind of the top of that list?
Mark : I definitely think the number one thing that they should do is, you know, do some market research, do your homework, understand the marketplace and where your technology fits in. You know, I mean, it just you have to know that because it’s built, you know, have a blueprint, you’re building a house for God’s sakes. I think that would be number one on the list.
Bill : All right. And how about number two?
Mark : Well, when you have the blueprint, you know, they can go ahead and develop a go to market plan, right so you’ve done your research. Now you’re going to develop your commercialization strategy. And it is a commercialization strategy. It’s not something you’re talking about. You’re literally writing it down on a sheet of paper. Not unlike, you know, I’m sure that you’ve met people or even yourself when you start your own business. Theoretically, you’re supposed to put a business plan together, you know, and there are different components of the business plan, including financial and marketing and human resources and how you’re going to grow. Well, not unlike the business plan. You put a commercialization plan together so that you know what to expect and also anticipated costs associated with it, so that you can plan for it. That would be the second step.
Bill : Perfect. And how about number three?
Mark : Number three is really you know, well, the obvious answer is execute but it’s to have a goal know what your goals are, and terms of what is it you’re going to do with this? Are you going to go to market and ultimately sell technology? Are you going to license the technology? Are you going to try to build a business? I think sometimes they just don’t know and there’s I believe there’s a big difference between doing business in the United States in selling your products in the United States. I mean, clearly, there’s a little bit of overlap, but there is mean and there’s much more involved and it’s more costly to do business or to establish a business here, but if you did your homework and you have a plan, then you will reap the rewards, the return on investment will be much much higher than if you decide to just you know, sell your product. But that’s okay. I mean, as long as you know ahead of time, what direction you’re going to take this
Bill : So I have to share the I lived in Texas for two years and and there was a bumper sticker in Texas, that this today probably isn’t that popular a bumper sticker but it said gun control is hitting what you aim at, which makes me very much think of your your relationship to goal setting as Yeah, it’s very difficult to perform well or towards something if you don’t know what it is. So yeah, it totally makes sense. Which is a perfect lead in actually, to kind of our last question, which I think in this context really makes sense is how do we measure results? So yeah, obviously that yeah, the front end we have some goals, but how do companies kind of metric performance and what would you suggest there?
Mark : Well, you know, and there again, I’m pleasantly surprised sometimes and maybe I shouldn’t be because a lot of people I’m dealing with and I do a lot of work with startups because let’s face it, innovation is ultimately coming from new companies. I don’t you know, any of the big boys will admit it. I mean, that’s why they’re constantly looking at you know, what these small innovation or innovative companies are doing. The problem is you’re dealing with either scientists or engineers who are brilliant people, but they’re not necessarily the best business people. And so I’m pleasantly surprised sometimes find that, you know, they don’t have measurements, they don’t have metrics in place to say, you know, how does this look or how do they actually put something in place to measure success in the US market? I mean, the obvious answer is, you know, what’s my return on investment so I put in a certain dollar amount. I have certain goals, sales goals that I’m trying to shoot for. Well, okay, that’s pretty straightforward. But there are other forms of success. You might you know, you might look at hey, I need to identify three strategic partners that I want to be able to do business with over the course of the next 12 months. Or, you know, I want to be able to do business in a certain area. I think that you need to be able to manage your expectations when you set your goals. So that you are able to achieve them on the back end. You know, even a measurement of how long will it take me to get my product introduced into the US market. But I look at it and go Well if everything goes right. It might take two years. And that’s the other thing. The timeline in the healthcare industry is unlike any other vertical market that I’ve ever encountered. It takes time. It takes time in part because you have something called the FDA and then even though on the reimbursement component, so even if you do everything right, to introduce a new technology into the US market will take two years, there’s just no way around it. So what do you do in the meantime, you know, you build little successes and you work on things you do a pilot, you generate interest you generate momentum, you get your key opinion leaders out there. So even that could be a measurement of success, you know, identifying the right key opinion leader and having him or her join your advisory board and have them go out and as I said earlier, you know spread the gospel, because we Americans can be very much influenced by what others have to say, especially people who we put on a pedestal. And so yeah, I mean, look, you can have a tremendous amount of success in this country if you do things right. You need to be allowed to take little risks. You need to be prepared to spend a lot of money and you need to be open minded to appreciate and understand how business gets done in the United States. I refer to this you know, play in the sandbox called, you know, the United States of America and if you do that, then you stand a great probability of achieving monumental success.
Bill : Thanks, that’s fantastic. Yeah, the I like so much of what you said, but the idea of getting some key opinion leaders on board in that run up time seems important strategically, not only for their feedback and evangelizing but also I would think, in every space within healthcare there are only so many, you know, really good Top End key opinion leaders. And with everyone that use you add to your ledger, you take them off the field for somebody else as well. We think it’s tricky competitively. It’s also an important thing to do. But do you have thoughts on that?
Mark : Um, I think care well can make or break you quite nicely, and that’s why I think it’s really important to write care will because again, if how influenced the American can be including the American Hospital, the American doctor, you know, it’s not just the soccer moms so to speak. And so having someone who’s well respected in the community, of their peers is someone who can make this just a huge difference. I’m actually working with a potential client right now. And we’re talking about you know, who could be a good key opinion leader for them. And, you know, turns out that the past presidents of this particular trade association would be excellent, because they were in a leadership role. They were on a national leadership role. They’re respected by their peers. But now they’re retired in terms of that position that they’re still may be active in, in private practice, or they’re maybe doing some research, you know, at a medical school, but they clearly have insight and respect. And I think that that really can make a big difference. If they go on the speaking circuit and start talking about the virtues and value of this particular technology.
Bill : Yeah, no, that totally makes sense. Well, the this has been fantastic Mark, I guess. I want to make sure I give you a chance if there’s anything you feel that needs to be added that would help life sciences companies sort of understand the realities and avoid the myths of US market entry. Is there anything else you feel we need to in this sort of short, sort of Reader’s Digest version of, of a, of a conversation? Is there anything else that we should add?
Mark : You know, I think I want to just emphasize what you shared with me and your listeners, about your friend, I think that if they’re interested in the US market, they need to look at you know, what is important to physicians, doctors, hospitals, Senior Living care facilities, whatever their technology is, and look at how that can make a difference. Or they need to look at the situation at hand. And let me give an example. There is a company again, I can’t reveal their name, but they have developed what I consider to just be an amazing indoor air quality technology, which was recently tested within the COVID-19 environment to be I think, 99.9% of it some absurd number effective in cleaning the air around you. That’s huge in this day and age of COVID. And, you know, they’re thinking about they’re looking at the US mark, they look at the problems, they look at the size. And one of the areas that they think this could make a difference in is because the size of the unit is very, very small is the transportation sector. So can you imagine having this device and every bus and every subway, you know I guess it could be a taxi cab, but you know, larger transportation mechanisms, trains, planes, um, you know, no one’s necessarily thinking about that, but they were and they looked at their technology. They looked at the size of the market. They looked at you know, it’s a problem I mean, how does the New York City subway system function in a time of COVID? Yes, you can have an n 95 mask on but if they want to keep it, you know, going in, it’s full. I don’t know about you, Bill, but I’ve been on a subway where it’s not six feet, it’s not six inches, it’s maybe six millimeters, you know, I mean, I’m touching on what elbow? how safe do I feel, but if I know that there is some type of system inside the train compartment that is cleaning the air as well as as been has been tested now. Absolutely. And I think that’s a great example of someone who has looked at the US market may not have asked someone was keeping you up at night, but was able to determine on their own based on a global pandemic that we’re living in. So I’m hopeful that within the next six months or less, some of your listeners will find themselves in a subway or a bus in Chicago or elsewhere. And this device might be there.
Bill : Wow, that’s great. Yeah, no, it’s remarkable how much different innovation is when there’s actually demand. If you not only end up with something that has product market fit but a much better product because of all the feedback you get iteratively from those from those customers or potential acquirers but good stuff, this is this has been fantastic. Yeah, I think the, you know, when we see technology companies in particular, that the challenge of sort of separating what we can make from what we should make is always a massive challenge. And it’s, yeah, it’s I think it’s a real opportunity to help companies understand that and help them do it better. And certainly the US market is a it’s a unique place to enter. Well, this has been delightful so what we’re going to do, just to our listeners know and so, you know, we’re going to put your information down the bottom here, so people who have more questions which we absolutely encourage that they get a hold of you directly, they can certainly get to us to, to have an introduction, but we’ll make sure they, they know how to get ahold of you. And certainly, we just so appreciate your time today, Mark, and it was a great conversation.
Mark : No, thank you, Bill. I appreciate the opportunity because I’ve come to realize that there are some wonderful companies out there and if I can help educate them just a little bit on the do’s and don’ts, then the likelihood that they’ll be successful is hopefully that much more and that’s what it’s all about. It goes back to, you know, helping innovative life science companies who can make a difference in the US healthcare system, making the US so we can all benefit from it.
Bill : Sounds like a good plan to me. I like that. Well, good. And to our listeners, thank you. Make sure that you like and subscribe so that we can keep you informed of all the great great things that are coming out in podcast here. So thank you again, Mark. Thank you to our listeners. And we’ll see you all real soon.
