How This American Got The Japanese Government to Fund His Startup – enTouch

Two of the most persistent and damaging myths about Japan are that it is hard to start a company here and that it is hard to do business as a foreigner. Well, those are not complete myths. Both of those things are indeed difficult, but no harder than they are in any other country.

Today Marty Roberts explains not only how he started and rapidly grew a successful startup here in Japan, but how he got the Japanese government to pay for it.

To contain health care costs, the Japanese government is pushing doctors to prescribe more generic drugs, and that is forcing the pharmaceutical industry to change they way they do business or to go out of business. Marty saw an opportunity in this shift, and his company has quickly grown to be the leader in its space.

Marty also offers some very practical advice for anyone thinking of leaving a senior management role to start a startup.

It’s a great discussion, and I think you’ll enjoy it.

Show Notes

How pharma sales is broken in Japan Why work is about to get a lot harder for Japan’s Doctors How Japan plans on cutting medical costs in the future Why enTouch needed services to sell software How to negotiate non-compete agreements with your current employer Getting funding from the Japanese government Why you don't want to invest in technology early How enTouch will survive the next phase of market distortion What needs to change about childcare in Japan

Links from the Founder

Find out more about enTouch

Follow them on Facebook or LinkedIn

Friend Marty on Facebook Connect with him on LinkedIn

[shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript Disrupting Japan Episode 95.

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs.

I’m Tim Romero and thanks for joining me.

Work is about to get a whole lot harder for doctors in Japan. Japan’s rapidly aging population combined with a pressure to decrease costs in the National Health Insurance program means that doctors and well, all parts of Japan’s health care industry are going to have to do a lot more with a lot less.

Of course disruptive innovation in health care is rare and frankly, that’s a good thing. Most advances in health care are steady if unpredictable incremental innovation, and we’re going to be looking at one of those today. Japan’s pharmaceutical companies are under pressure not just from the drugs going off patent but the Japanese government’s plans to drastically increase the percentage of generic drugs being prescribed by Japanese doctors. This means a lot less money flowing to pharma and Japanese pharma companies are scrambling to cut cost and remain competitive.

Marty Roberts saw a startup opportunity here and he founded enTouch which provides what the industry calls remote detailing services. Now, this basically means explaining drugs to doctors online rather than face-to-face meetings but as you might expect, there’s a lot more to it than that and Marty soon discovered that it required a very specific Japanese twist to make this technology work here in Japan. Marty also provides some very sober advice for you if you are thinking of leaving a large company position to start your own startup. But you know, Marty tells this story much better than I can.

So let’s hear from our sponsor and get right to the interview.

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[Interview]

Tim: So I’m sitting here with Marty Roberts of enTouch. A company that lets pharma reps more efficiently connect with doctors. I know that’s a really broad description, so can you explain a bit better what enTouch does?

Marty: You did a pretty good job there, Tim. EnTouch is focused on helping pharmaceutical companies communicate better with doctors so that doctors know about newest medicines, newest trends in health care so that they can treat their patients better. Pharmaceutical companies spend huge amount of money, like $20 billion a year promoting drugs to doctors in Japan and they do it with these really high price sales reps or they’re called MRs, medical reps. They’re always trying to catch the doctors in the hallway in the hospital and explaining to them the new medicine and we try to flip it around and let the doctor request online for more explanation.

Tim: You were describing it to me earlier and it sounded like this unbelievably inefficient process where these reps would just basically camp out in the hospital hoping to catch a doctor as he passes by.

Marty: Yes. And that’s exactly what it is. If you take a large pharma company in Japan, they tend to hire anywhere in the neighborhood of 1,000 or 1,500 or even 2,000 MRs to no fault of their own but they spend, I would say, the vast majority of their time waiting. The problem is that doctors don’t have time so the traditional pharma model has been we’ll just keep pushing the information and we’re going to get some time with you in the hallway for two minutes. But even when they catch the doctor, even if they get them for that two minutes, the doctor is already thinking about his next patient, he didn’t really request that information.

Tim: True. He’s distracted. It’s a horrible system for everyone.

Marty: In Japan, there’s about 29 sales people for every 100 doctors; whereas in America, if I recall, there’s about 9 sales people for every 100 doctors. In the UK, only 2 sales people, 2 MRs covering 100 doctors. The ratio of MRs to doctors in Japan is nuts.

Tim: EnTouch fundamentally is replacing that one-on-one camping out and the hospital interaction with a web-based interaction the doctor schedules in advance?

Marty: I wouldn’t use the word replacing. I would use the word augmenting.

Tim: Okay. Augmenting.

Marty: Because there’s some really large forces going on right now. You have a super aging population which is putting more and more pressure on doctors because the number of doctors isn’t rising in response to that. They have a higher case load, more chronic diseases, less time to talk with a sales person. At the same time, the pharma companies, right now generics, generics are non-branded medications, they make up about 60% of prescribing right now and the government has targeted at 80% by the year 2020.

Tim: Is that as a cost-saving measure?

Marty: As a cost-saving metric, because with the aging population, we need to save cost as a society. One way they can do that is basically encourage the prescriptions of generics and push down the branded medicines. In response to that, the pharma companies are trying to find ways to reduce their sales and marketing cost which is mainly their sales force.

Tim: Are the doctors enTouch’s customers or are they the pharma’s customers?

Marty: No. We have our own team of ex-MRs. We call the medical partners but they’re all licensed accredited MRs. I mentioned before that pharmas basically offering early retirement packages so I reached out to some recruiters I knew who helped me at my old company and said, “Hey, can you find some of these guys so I can interview them or ask them these questions?” Basically, what we ended up finding was that the people taking early retirement packages, there was two groups, there was the guys very close to retirement age anyways so they get two to three years salary to walk away. I would do it too. Those guys are awesome because they know all the doctors, they know all the secretaries, they know everyone’s schedule. And then the other group were the late 20s, early to mid-30s females who left MRs, who left to have a child. Given the way that the culture of working as a MR in Japan, it’s very difficult for those female MRs to return back full-time because they have child care considerations, et cetera. That’s really who we targeted to bring in.

Tim: Actually, listen, before we dig too much into the details of the company and the market, let’s back up a bit and talk about you a little bit. So you’ve actually got quite a bit of history in this industry. You’ve got a PhD in clinical psychology and you were president and representative director of Cegedim here in Japan. That company did market research and relationship management for pharma as well, right?

Marty: Right. It’s actually a bit of a strange story. When I was finishing my doctorate, I started working at Forest Laboratories, a pharma company, in their marketing market research division and I was quickly headhunted away by a French company called Cegedim to build their patient data business in the United States. To take patient data records and build intelligence out of it that could help pharmaceutical companies better target their drugs. It was a French company so the boss would be flying in from Paris. I lived in Brooklyn. He would be staying in Manhattan. Our office was in New Jersey so I would drive in my little car and pick him up every morning when he was in the U.S., take him to the office and drop him back up. We became really good friends, talked a lot about video games. At one point he’s just like, “What do you want to do?” I’ve been living in New York City then for 12 years and I was like, “I just want to get the hell out of New York.”

Tim: Really? I love New York City.

Marty: It’s a great place but man, after a while, I have to go try something new.

Tim: Okay. I could see that.

Marty: So he says, “What do you want to do?” I said, “I don’t know. I want to move?” He says, “Where?” I said, “I don’t know.” I gave him a list of countries. I was like, “I’ll go to France. I’ll go to Germany. I’ll go to India. I’ll go to Japan.” He was like, “Japan,” and that was basically settled.

Tim: I need someone in Japan, you’re going.

Marty: He was like, “I need someone in Japan. You’ll go.” So I sold everything and took two bags and got in the plane to come to Japan. And then at the Japan office,