Read the Conversation
EF: Do you see 2023 as a year of challenges or opportunities?
RJ: We are seeing a balance of opportunities and challenges in 2023. Our team is trying to find those challenges and transform them into opportunities to give effect to our vision and mission “we help create, improve and prolong lives”. In general, 2023 is a year of opportunities, despite the environmental and political challenges. Mexico and Brazil have not been too affected by these challenges, as they are the driving economies of Latin America. These economies are stable and driving most of the opportunity right now.
We have an innovative portfolio where we are pursuing penetration through market access and awareness of the conditions. The other part of our business is based on cardiometabolic diseases. It is a golden standard treatment that we innovated many years ago in Europe. The demand continues to drive growth in the big Latin American economies. This is more of an opportunity than a challenge as we go forward. We have been working for many years on market access, trying to widen the bottleneck on market access for those innovative products that we bring forward, mainly in oncology and neurology. In many countries, we are capitalizing on improving market access environments.
EF: You moved from China to Latin America. What was your mission when you took on this role in Latin America?
RJ: I have lived and worked in many countries. Along the way, I tried (without much success) to learn other languages, but more importantly, find the right way to truly ‘connect’ with my people and external stakeholders. Making efforts to understand the culture was key in each place I lived in.
My move from China to Latin America was quite eye-opening. These two regions are vastly different and quite complex. Latin America has additional complexity in how the healthcare systems work country by country. In addition, this region faces political instability and economic challenges.
Before my arrival, Merck LATAM was doing well, achieving double-digit growth year after year. My objective was to capitalize on the historical perspective in terms of driving business. We are driving a campaign to communicate a vision that is centered around how we are serving a patient's needs and the actual underlying demand of the Latin American region. My philosophy is that if we are capable of serving patients in a very efficient way and all our colleagues here in Latin America are doing the same way, we should continue to be focused on what the patient needs and expand the patient base. Then ultimately, we are doing a very healthy business development. That is what we are doing. The focus clearly lies on the patient's needs.
The base business of diabetes, cardiovascular disease, and thyroid disease is 65 percent of everything we are doing. We provide the gold standard of treatment for those conditions. Some of these are imported, and some are locally produced. We are capitalizing on near-shoring given the fact that some economies in Latin America are on the rise, and people's standards are rising in a way that results in lifestyle changes. Unfortunately, these lifestyle changes open up a lot of demand for products for cardiometabolic disease.
On the other hand, the products that we bring along are innovative and sometimes in a relatively narrow therapeutic area. Even when they are in that niche, we want to serve the patient in the best possible way. Firstly, the patients and doctors need to be aware they are ill. Awareness of diseases is very important.
We are also active in the fertility field. We provide recombinant hormones to support the fertility and IVF industries. We are market leaders there. Seeing a doctor at the right moment and referrals to the IVF centers is crucial for a successful treatment and ‘take home baby rates’. Awareness, market access, and getting the right level of market penetration are at the core of our mission in Latin America.
EF: What is the strategic significance of Latin America to Merck? How do you attract resources to LATAM?
RJ: We have about 700 million people in this part of the world out of 7 billion people globally. That is the main significance of LATAM for Merck. That is the patient base, especially in the disease profiles where we are active because it's about the magnitude of the population. We serve 20 million patients on a daily basis. Our communication with headquarters centers around the volume of our patient base. That evolves into a discussion about nearshoring. We already have manufacturing sites in Uruguay, Mexico and Brazil, of significant importance to us in the entire global network.
Our headquarters understand the importance of LATAM. We are the fastest-growing region in the world. China is facing some difficulties right now. Their economy is not going the way we would like to see it. And so far, our penetration in North America is limited to specialty biotech products only. Europe has a complex market access situation. Our growth this year coming majorly for Asia Pacific, Middle East, Africa, and LATAM.
We are also improving from a clinical development perspective. We used to be very focused when it came to development in North America and Europe. Right now, clinical work has become much more global in clinical studies. Currently, we have representation in all the major clinical trials in Latin America, specifically in Argentina, Mexico, and Brazil. This underlines our intention for the future because you can always develop your products in Europe or North America and then eventually start exporting them to other parts of the world. In reality, I think we took it one step further, and we are heavily connected with the medical community in LATAM.
I'm the interim general manager of Chile, and it's important that I also get the feel of the culture and the difference between the Latin American cultures. Every time we get to connect with key opinion leaders like top professors in neurology, in multiple sclerosis for instance, or specific parts of oncology, we get to talk to those who are heavily involved in clinical studies and the development of these products.
EF: How do you assess the acceptance of innovation and the willingness of your teams to adopt new technology for research and development?
RJ: Firstly, we need to consider two things: the medical community and the government's willingness to pay. The willingness to pay is still relatively low. There is an improving level of health technology assessment happening in different countries. Some of them are well organized, while others are not yet so. We are making improvements when it comes to that. On the medical community side, doctors are coming on board relatively easily, especially at the very top of the science community pyramid. I think market access and the way the healthcare systems are being organized are probably still the most challenging parts. However, we are seeing improvement.
Our discussions with CONITEC in Brazil are different right now than they were three years ago. The same can be said for Argentina and Mexico. Our discussions with IMSS are vastly different than they were two years ago. There is a progression toward their ability and their willingness to pay for the right value. Is it at the level we want it to be? Probably not. There is still a little bit of progress to be made.
As the biopharmaceutical industry, we need to provide real value. We need to come up with real, innovative products for the unmet medical needs out there. As long as we do that, our ability to convince is much greater than if we have marginally better products, and that's something that we need to take into our responsibility.
As members of Fifarma, we are also trying to see if there is an above-country approach to regulatory affairs and market access. We need to continue having these discussions with major stakeholders. Right now, we are scattered, so we have an interesting opportunity there. There is not enough consistency in the approach that is being designed.
EF: How do you assess the sustainability of healthcare systems, and how can we work together to ensure that they are prosperous for years to come?
RJ: A healthy or sustainable healthcare system can only be supported by a healthy and sustainable economy. Since we don't necessarily have a sustainable economy in every country in Latin America, we run into the issues we are seeing. I think the main driver here is economic stability, and there we see an opportunity. Roughly 30% of lithium production comes from Latin America. This is an economic diamond that we need to leverage in Latin American countries. In some countries, we do it very successfully. Chile's mining industry is thriving. The Brazilian economy is benefiting from the issues happening in agriculture in Ukraine, for instance.
Taking that into account, "How can we make those economies more sustainable?" The Mexican economy is becoming more stable. I think governments should focus on the stability of their economies, and the healthcare system will eventually follow because patient demand and needs are only going to increase, and the volume of the contribution to the total GDP is only going to increase because we're still under-indexed across Latin America.
Latin America is rich in resources, and we need to find a way to capitalize on and monetize those resources, which will translate into a stable political system that will translate into a very strong and healthy healthcare system. For example, the Colombian regulatory system lags behind because it's time-consuming. Everything is slower than we would expect, but the design of the healthcare system is not bad. It would work better if we could speed up certain things and find the right balance between the actual demand and the cost.
Politicians may think that the healthcare system is about building hospitals, but nowadays, it's not about more brick-and-mortar hospital buildings. It is about how we organize things and how we fund ambulatory care, for instance. Ambulatory care is one of the biggest opportunities out there. If we are capable of treating patients in clinics, we can free up a lot of money for innovative healthcare solutions.
EF: If you had to design an ideal road map to the future and base it on three key pillars for healthy healthcare systems, what would they be?
RJ: I have already mentioned them earlier. We need to continue transforming at the industry level. It's not only about pharmaceuticals and biopharmaceuticals but also med-tech and anything related to medical systems. We need to be able to continue to express the need for a healthy economy, and that will eventually drive our future. The trend toward a healthier economy also has downsides. People's lifestyles are going to change in a negative way. For instance, we are launching an obesity product across Latin America. Previously, we never thought about obesity; we were dealing with diabetes, but all of a sudden, obesity is becoming a pandemic in the region. This is probably a result of economic growth.
If I were responsible for the care of every patient in Latin America, I would think that economic growth and the right understanding of the disease are known across the supply and value chains. That's what it comes down to in the end. Economic and political stability are still the driving forces. The geopolitical situation in the world is currently in favor of Latin America’s development.
EF: How would you like to be remembered as a leader in 10 years?
RJ: I want to be remembered for the way we transformed our organization. I'm not here to establish new ground rules. I'm here to listen and to understand what the actual situation is and what the future perspective is. Based on those two things—what we've learned from the past and what we've learned from our own talent and people—what is the right way forward? I've done that in Russia and China, and I will also do it in Latin America.
It's about ‘how’ to lead this transformation. We know what needs to be transformed. I want to be remembered for organizing our way of working and making an impact on patients' lives.
EF: Do you have any final messages for our readers, or is there anything that you would have liked to touch?
RJ: Latin America is a complex region, and in Merck, we are curious and innovative minds addressing this complexity and dedicated to enhancing human progress. We work in three business sectors, and healthcare is just one of them. In general, we are driving science and technology across the board. Merck has over 350 years of family history. We are touching every life out there and making an impact on the world.
