Read the Conversation
EF: How does the Eurolab team operate?
LDT: Gabe is a front runner and entrepreneur in generics medicine, in 1991 there was very little generic medicine as all the products were under patent, Gabe owned a chain of pharmacists and decided to get into generic medicine. He started a small company called GS Pharmaceuticals in 1991 of which he was the sole owner and then he brought in other shareholders and expanded and was eventually bought by Aspen. He has the particular gift of foresight to see the market and know where it is going but he is not an operations person, so he sees the gap and then we strategize and I take the ideas and I make it happen.
EF: What operational challenges does an entrepreneur in pharma need to address today?
LDT: The biggest challenge right now is that there are many generic competitors in the market, and the first thought is to drop price, that with a better price the product will sell, but this is not how this market works. We haven’t had a national health system up until now; we have had a separate tender system where people compete, and we have a big private market sector which is where the bulk of the pharma companies have employed their resources. In UK, for example, there is a reverse situation: the National Health and a very small private sector. Here, it is not at all about dropping the price to get into the market, it is about the relationship we have with the practitioners, the target market. Doctors still have a very strong say on what products get used in the market, their opinion is still very highly valued, which is not the case for hospital and government employees who do what the system dictates. Doctors will have a say in what they prescribe, they can choose the brand of the product with no substitutions, they build up trust in products and trust in people and when they build up trust in people, it is because they are confident in the product. This makes us different because where there are big national health systems, product sales revolve around prices. In our case, operationally as a new company, we cornered a niche market and we built relationships of trust with the right people, and we have sustainability of the stock, which is important because a cancer patient has prescribed medicine, and does not want to change the medication mid-treatment. This is also the case with psychotic, diabetic and epileptic medications, where the patients don’t like to change their medications mainly because side effects can be huge, and they are well controlled on that. When a patient is well controlled on a product, start playing with their levels is horrible, and the patients hate doing that. And so does the doctor, because he is aware of the stress on the patient and the family, so there is a reluctance to change a brand of medication. We have always ensured that we have in between 12 and 18 months’ worth of stock in stock and this is a big deal for the doctors and for the government as well as it means accessibility for their patients. The patients don’t even have to travel to a big hospital to get access to the medication, especially if the patient is on oncology, TB or HIV medication. If a patient is doing well on a particular regime, they would want to keep the outcome. Everybody wants to see outcomes, the doctors, the patients, the families everybody wants outcomes on an emotional level as well as cancer, HIV and TB pose big emotional questions.
EF: Could you define what access means to you?
LDT: Access and quality are the two biggest issues for Eurolab. We deal in quality: we never launch products that don’t have EU approval and that haven’t been launched in one of the big countries around the world. Our facilities in America are all FDA approved, they have MHRA and EU approval, and this is important for us because it means the product has been launched, that they have experience with the product and doctors have better confidence in the product. Access is also about clearly being available to everybody in the market and we have brought in new technology to the market, patients used to have to travel overseas to get Gamma treatment for their brain tumors, but now we have brought the first gamma into South Africa. Patients had to send their tissue samples overseas to get gene sequencing done to see if the medicines being prescribed were effective, we have just validated the first gene sequencing machine in our onco-lab and patients can get that done now locally at a third of the price, and that also is accessibility. As part of giving back to our patients, we do pro-bono work making these wonderful technologies available and accessible. For example, we pay the air tickets and a night’s accommodation for the patient and doctor to go to Milpock where the Gamma machine is located and where the patients get treated. We have invested close to 100 million in the ASU facility which is properly licensed and very well staffed, with Gavin running the facility. With his experience in the government sector, he has opened doors for us in the public sector to share all the new things we want to bring as well as making chemotherapy treatments accessible to everybody. We are also working with the Sheba Hospital which is one of the largest research hospitals in Tel Aviv; Gavin, Irvin and myself are on the board of Friends of Sheba in South Africa and we can get patients in need of second or third opinions -in cases where they have been given no hope here in South Africa- we get them to Israel where top professors and Ph.D. researchers in Sheba Hospital review their cases.The Israelis have developed some amazing technology, and with Sheba, we are now introducing the first cervical screening device because in the rest of the world, breast cancer is the biggest killer but in Africa, the biggest killer is cervical cancer. I was in Israel two months ago and discovered this amazing device which is completely non-invasive and the patient will come to any rural clinic or hospital and have the speculum inserted and no pathology is involved. The device looks like a cellphone and has a super enlarged camera lens which allows taking a picture of the cervix and with artificial intelligence and the downloaded pictures the result is immediate and the lady is told if she is clear or if there is a problem, if its stage one or stage two of cervical cancer which can be immediately decided with the lady right there and then and all the necessary referrals can be done, it is treated on the spot. Even before the diagnosis with screening and awareness, we go all the way to full treatments radiation and chemotherapy, and making it all accessible to our patients.
EF: What is the spectrum of oncology treatments you have here?
LDT: We treat the full spectrum of oncology, all cancers, brain, lung, breast, cervical etc. I have just come back from Cuba with our top medical oncologists. Gavin dealt with the Cuban authorities and embassy, the fact that he worked in the government opened doors for us to make contact with the research the Cubans are doing so Gavin myself and two top medical oncologists traveled to Cuba. They have developed a vaccine for lung cancer which is completely innovative bio-similar biological therapy and we are also looking at going into ethical new therapies for treating lung cancer. Survivals in clinical studies they have done in Roswell Center in the United States have gone from 5 to 16% and these are fabulous outcomes for this product and we are looking at securing it for Africa.
EF: What is the role EUROLAB wants to have in the African healthcare map?
- We are the market leaders in oncological products and in chemotherapy treatment in terms of what we offer. We have close to 60% market share in the products we have launched which speaks to the confidence the doctors and oncologists have in our products.
- Secondly, we would like to treat the whole spectrum hence our investment in screening devices all the way through to radiation and chemotherapy.
- Thirdly, we would really like to make sure that accessibility is carried to all the rural areas and to this end we are looking to partnering with some big investors in setting up cancer centers over Africa, not just South Africa, where patients can come and receive treatments of chemotherapy. Now a lot of these clinics have unsterile conditions and they are not supervised by a professional.
EF: Do you think other sectors of the industry are aware of the complexity involved in running a pharma business?
LDT: Pharma business is difficult in most countries due to its different triggers, South Africa is no exception. Oncology is even more difficult as it has its own triggers and nuances, we have been in the industry for 40 years old and it took time before we got to know the market.
Each market in pharma is also different, general pharma (antibiotics and painkillers), dialysis, oncology, transplants, and so many other different segments, each in itself a unique market segment.
EF: Do you see NHI as a challenge or an opportunity?
LDT: NHI opens up many opportunities. Some stats: there are about 15 thousand chemo treatments a month in a private market which covers about 8 to 9 million people. In the government market, we do 17 thousand treatments and it has 15 million people, so it is a very underdiagnosed market, about 6 times underdiagnosed and undertreated. The first cancer killer in South Africa is cervical cancer which is highly curable but there is not enough being done about it in education or awareness. There are huge opportunities where there is money to specifically help the people who are not on medical insurance, we estimate 800 billion a year are needed to do a proper NHI and only half of that money is available. There are opportunities in oncology for business people, opportunity to make a difference and achieve huge growth, people in South Africa are getting older and cancer is an older people disease so however you look at it there are opportunities.
EF: There is a concept from project management called the iron triangle where vertices of the triangle are good, cheap and fast, but you can only pick two, it can be cheap and fast but it will be low quality, it can be good and cheap but it will take a long time or it can be good and fast but it will be really expensive. Which two variables would you choose for the South African health transformation?
LDT: For South Africa I would pick cheap and good, it has to have quality. In South Africa there is an affordability problem, sometimes people have to choose between going to the pharmacy and buying a loaf of bread. Just in the hierarchy of needs one chooses to feed one’s body first and for this reason EUROLAB has brought the price of medicines down 81% in oncology in total, and some segments we don’t play in have gone up 31%. In our case, we have sacrificed our margin and put the patient first. We understand the psyche of patients that go to pharmacies, if we raise the price 100 rand they won’t pay the difference they will take what they can for the least money. And it is good for us not to be greedy.
EF: There is a lot of talk now of the trend of the triple bottom line, but pharma has been doing this forever managing one of the most complex bottom lines, it seems to be in the DNA of the industry so what advice would you give to other sectors on how to balance their bottom line?
LDT: We have 14 people here at our head office and we are the biggest company in oncology, many of the multi-nets come to us to market their products, I have 4 salespeople on the road and they cover this market very well, the sales results make this obvious. We incentivize our people to do their job and when some of us aren’t here the rest of the team pull harder. We balance each other out.
EF: Any comment on performance or any message you would like to share?
LDT: We are the biggest in oncology at the moment, and we are looking to bring in the ethical products as well as giving a good price to our patients that are our focus. Many of the big pharma companies have brought in new products, and the patients can’t afford them, they have done the clinical trials here and they can’t launch the product because the patients can’t afford it and the private health insurance won’t pay. So in terms of our growth pattern we have been focusing on any new generic molecule, we have every product coming off patent in our pipeline so our product portfolio will expand, our only hiccup is SAHPRA where all the dossiers are, we have expanded everything we could in oncology and our trajectory going forward is in specialty medicine.
EF: In your experience of starting and revitalizing companies with innovative ideas what advice would you give to a young entrepreneur who wants to do the same thing but doesn’t know where to start?
GS: Better start at the bottom, if you don’t start at the bottom of the business you cannot understand it and you have to look at the green cross but you have to analyze the manure that makes for the magic green. A lot of people have good knowledge but no understanding of the industry and what the triggers are. We live by the philosophy that we like to be player, opposition and referee, and that means we like to understand the whole chain and try to own all of it. You have to control your future and must have control over all the things that can make your business flourish, especially turnover, if you can control turnover you are in control and that is how we run our business. We normally compete in innovation, one can compete on price, innovation or quality for sustainable growth and innovation in planning for the future.