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Conversation highlights:
- B. Braun established a regional headquarters in Saudi Arabia as part of a gradual expansion strategy to complement distributor capabilities with in-house clinical and technical expertise.
- The Gulf region's openness to innovation and technology adoption creates opportunities to implement advanced business models and the latest technologies at an early stage.
- A hybrid partnership model with distributors leverages their extensive reach and infrastructure investments while B. Braun provides specialized technical expertise and clinical support.
- Data infrastructure remains fragmented across the region, with many hospitals having software solutions but lacking properly structured databases to generate useful insights.
- The shift from public to private healthcare is driving demand for new business models that help hospitals transition from capital expenditures to operational expenditure structures.
- Future talent requirements span diverse skill sets, from hands-on clinical expertise to data-driven analytics and strategic hospital management consulting capabilities.
EF: When you were appointed as managing director, what mission did you set for yourself, and what are your current priorities?
TB: The initiative began about 4 to 5 years ago as part of our evaluation of Saudi Arabia’s regional headquarters program. We wanted to establish a second legal entity in the region, having started our first one 11 years ago in Dubai. With Saudi Arabia being the largest market in the region and extremely important beyond the region, the decision was made to open a regional headquarters.
The main intention was to create a platform to incorporate our own specialists in the country and region, adding value that our distributors might not have to the same extent. We complement each other: we take on more of the clinical, technical, and in-depth roles, while the distributor handles the commercial and operational activities. Additionally, we're bringing different parts of the company closer together. Historically, we worked with different distributors in a rather independent manner. Now we're using this entity as a platform to better utilize synergies within our portfolio.
Being a fully family-owned company, we typically do things in steps and phases. We may not go in on the same scale as stock-listed companies, but we do things sustainably and build them up gradually. The last few years have been quite successful in this regard, and we'll continue this journey, gradually evaluating further fields where we can complement our distributors and adding value for hospitals and healthcare systems.
EF: What is the strategic significance of the Gulf region, and why is investment being directed to Saudi Arabia over other markets?
TB: The Gulf countries show a level of development and openness for innovation and technology that's on a different level than the remaining Middle East and Africa region. Compared to our home base in Europe, we see many similarities and opportunities to implement things that may have happened in Europe a few years earlier, particularly advanced business models and our latest technologies.
We have certain technologies we can implement here in the Gulf countries in a rather initial phase. For example, in IT integration of infusion pumps into hospital networks, we've had people who initially started in regional roles here transfer into global marketing to implement the same technology in other countries. This region's openness to technology puts it right at the forefront.
We're also seeing a wave of potential outsourcing and privatization coming up in areas like our dialysis business. We want to evaluate with our distributors what our role can be in more advanced, comprehensive, sustainable long-term business models. Similar opportunities exist in surgical instrument reprocessing, which has happened extensively in European countries and the US, but not yet in this part of the world.
EF: How has your relationship with distributors evolved, and what do you look for in these partners?
TB: Historically, distributors took over everything from A to Z: marketing, sales, logistics, operations, and finance. As markets become more advanced, we've identified areas where bringing in our own technical experts allows us to go into greater detail.
At the same time, distributors that are extremely successful in the region have built up infrastructure that wouldn't be feasible for us alone. Take a company like Muscat Pharmacy in Oman, which has a stock of 10s of millions across pharma and medical technology, or a company like Sedeer Medical in Qatar with around 200 people in their medical distribution network for a country of around 3 million people. These investments give different economies of scale that we could never achieve independently.
Working with distributors also enables us to reach different levels and bundles, since they're not limited to our portfolio. They can complement our products with products from other companies to build unique solutions for hospitals. We have certain areas where they're definitely better positioned to fulfill tasks than we are, and other areas where we're better positioned. The challenge we tackle together is identifying which markets and circumstances warrant deeper engagement, versus where leaving it fully to the distributor is the best approach.
EF: How do you see the data infrastructure in the region, and what's needed to better leverage data for patient benefit?
TB: The first challenge is that the data infrastructure is quite fragmented. If you look at surgical equipment reprocessing for operating theaters across the region, there may be two or three software providers, and at most five to ten hospitals have implemented it properly. Many hospitals have software solutions in place, but because the database wasn't set up properly initially, the data they generate is of limited value.
The biggest challenge we face is obtaining clean, proper data, and achieving that will be a long-term task. In other areas, like the ICU, the data might be better structured and software better integrated, but the sensitivity of the data is greater, so hospitals' openness to sharing is more limited.
We're in this unfortunate situation where, on the one hand, the data isn't good, and, on the other hand, openness to sharing critical data is limited in certain areas. Many people in hospitals want to jump from very basic levels of data management to high levels of digitalization and automation, which is difficult to achieve in one step. We do have positive examples, such as the integration of infusion pumps into hospital systems that enable efficiency gains, but the path forward remains long.
EF: Given the digital evolution and changing business environment, what kind of people do you need and look for?
TB: We have very different tasks that need different kinds of people. On one side, we need people willing to go hands-on in operating theaters, CSSDs, ICUs, and dialysis units, with clinical and technical expertise, to help people on site with their daily work.
At the same time, we need people with a more data-driven, futuristic mindset who can generate and analyze data to create a positive impact for hospitals, advising them on how to improve processes and purchasing approaches.
A completely different aspect is that we need people capable of communicating with different levels of the hospital, such as management, purchasing, and finance, who have distinct interests. The topic there would be how we can help shift models from capital expenditure to operational expenditure to streamline hospital expenditures, with income streams from treating patients.
There isn't one type of person we're looking for. We look for a diverse range of people, and this diversity of backgrounds and expertise will lead to good results through teamwork.
EF: Is there anything else you'd like to discuss or any final message?
TB: Looking at the market, one point I want to stress is that, as part of privatization, we can really see a shift toward capital-expenditure-to-operational-expenditure models. In a private hospital or healthcare facility, the drive to be efficient, profitable, and cost-effective is completely different from that in the government sector.
If you look 10 to 15 years back, basically all Gulf countries were heavily relying on the public healthcare sector, which typically means higher inefficiencies than private centers, where budget isn't the top priority. This shift in market dynamics forces companies to consider how they can help hospitals shift from capital expenditures to operational expenditures while delivering high-level patient care in a cost-effective manner that aligns with their balance sheets.
I think that's a crucial task, and all companies are trying to find suitable ways. To some extent, everyone has found potential ideas, but adjusting business models to these changes in the market environment is another major challenge in the coming years, which will take time.
