All living things from protozoa to humans, spend their
lives in search of sustenance and relationships. These relationships are
as simplistic as the union of amoebic life forms which are based on genetic
codes and enzyme propelled coupling, to more complex motives and drives
exhibited by people and nations. Common to all, however, is the attempt
to attract one group, repel another and penetrate a third. Whether in
love, war or business, our endeavors require a complex set of cerebral
planning activities, called strategic thinking, and a set of operational
plans, called tactics.
Strategic thinking and tactics are necessary when
attempting to penetrate domestic markets, and are a fact of life when
participating in the global marketplace. The businessman, entrepreneur,
investor and innovator used to rely upon hearsay, industrial media, popular
media, colleagues and customers to formulate his entry strategy and survival
in the commercial arena. Since information was a valuable commodity that
was not necessarily shared, it became a vital resource in the race to
commercial survival and supremacy.
I was pondering these profound pearls of wisdom while
meandering among the potholes in the streets of Nes Ziona's Weizman Science
Park. Was I being obsessive about the letter P? Is there an intersection
between perpetrating a protein product in Pakistan and the penetration
of Israeli biotechnology know-how in Asia and the Pacific Rim?
As any self-respecting bacteria, Jewish single or
new venture product knows, penetration begins with a search for identity.
While not promoting Freudian analysis or spiked, gel-imbued hairdos, all
markets require clear definitions: Who is the new player; what is being
offered; who will benefit from it; and will people pay for it? With these
thoughts I reached Building 13 and my meeting with Nachum.
He was familiar with my work in transferring technologies
and forming strategic alliances in Central and Southeast Asia. He was
eager to show me his spotless, well- organized laboratory with impressive,
computer-controlled fermenters, an array of printers, plotters, centrifuges,
synthesizers, scales and a host of bubbling beakers. In a little vial,
he proudly displayed the finished product - a lyophilized form of Interferon
Alpha looking very much like the packaged table salt served in the economy
section meals on British Airways. With a bit of fantasy thinking (very
common in our country), I could envisage both of us traipsing the streets
of Jakarta, Petaling Jaya Xiamen and Karachi offering the miracle cytokine
to the masses.
Our strategy had to start with the product's attributes
and benefits. In clinical trials worldwide, this drug had proven results
in treating a range of afflictions, including genital warts, cerebral
palsy, AIDS-related complexes and a variety of carcinomas. Since the drug
was not new, but rather a 'me too' formulation, our first strategic decision
had to focus on the uniqueness of our product and the other 3 P's. Did
we have a brand name that was unique or carried a particular recognition
factor? Were we able to deliver faster or cheaper? Did we possess distribution
factors that gave us an advantage? In other words, did we possess a competitive
advantage that others would find difficult to emulate?
Perhaps our uniqueness was our risk vs. benefit analysis.
The confluence of rivers of high earnings and low spending is a rare sight
on any continent unless buttressed by high-risk banks. Consequently, perhaps
our competitive advantage with this Israeli recombinant protein lay in
our willingness to endure political, economic, commercial, financial and
social risks in pursuit of Third World markets with our advanced, cutting-edge
products.
Our next strategic step was deciding which of our
four potential markets - China, Pakistan, Malaysia and Indonesia - held
the best hope for successful commercial penetration. To this end, we conducted
an environmental assessment of the four that would also serve as an invaluable
tool in the formulation of initial strategy.
We began by looking at their economic environment
- population size, openness to pharmaceutical imports, purchasing power
of local currencies, rate of change and direction of growth. This information
is not readily available for all countries, but there is a variety of
sources - UN publications, the Central Intelligence Agency, the US Department
of Commerce national trade data base, Israel-Asia Chamber of Commerce,
Israel Export Institute and country-specific websites to name a few -
where one can turn to for data on countries like the ones we were targeting.
This led us to focus on each country's level of development,
including defining its standard of living, population density, absolute
and relative levels of income distribution, wealth and demographics. International
journals of geography and demographics were particularly helpful, as were
data banks of the World Bank and regional development banks, such as the
Asia Development Bank based in Manila, the Philippines. Some countries
even publish detailed statistics about their infrastructure, growth and
commercial potential, most notably Singapore and Malaysia. Additional
sources of information include Price Waterhouse Country Profiles, HSBC
and the pricey Economist Intelligence Country Reports and Dialog databases.
We were getting closer to the object of our lust and
could almost smell the Bacitracin antiseptic as we queried our databases
and colleagues in the medical establishment. We were particularly interested
in the health and medical environments: What was the level of biotechnology
development? What was the level of training of physicians in using recombinant
protein products? Did the medical establishment have the ability to integrate
new treatment modalities? What were the disease-specific incidence rates?
What were the alternative treatments for the diseases we had targeted?
I decided to pay a visit to the famous band Grateful
Med and its fearless leader, Lonesome Doc. Both are residents of the National
Library of Medicine in Bethesda, Maryland. Knowing that not everyone has
the time to visit and peruse the 18 million articles and books available,
one can access them on the Web for a fee. In an arrangement with affiliated
libraries, reprints of the articles and books may be purchased in most
countries. The library is a treasure trove of information in almost every
published language. Through an expert system of information retrieval,
we searched for data under the headings of health, sickness, medicine,
pharmaceuticals, treatment and disease, and discovered that China had
built up a vast cytokine production capability but still lacks an effective
quality assurance methodology that has led to numerous customer complaints.
As the smell of Nasi Padang wafted in our nostrils,
our level of interest increased. There's nothing like spending weekends
in the artistic, rice paddy-surrounded town of Ubud on the island of Bali,
although, in all fairness, we had not ruled out lovely Lahore in the Punjab
of Pakistan. Or, certainly not before checking out the political environment
there. Not everyone has the opportunity to visit Lahore, with its rich
history and current Mujahadin terrorists/guests from the wars of Afghanistan.
Discreet inquiries with friends in the Pakistani army made it clear that
they had also made plans to spend their retirement in Chicago. That brought
us down to Malayasia and Indonesia.
The best place to assess the political environment
of a proposed market is the media, and in the case of these two countries,
particularly the foreign media. With my previous associate in Malaysia,
former deputy prime minister Anwar Ibrahim, currently serving time in
prison, and my former partner, Mirzan Mahathir, a member of the first
family that's still in firm control of the country, it was not an auspicious
time to bring Israeli biotech to Kuala Lampur.
By default, therefore, we focused on the 13,000-island
Indonesian archipelago. Under President Suharto, who ruled the country
for 32 years without opposition, Indonesia had edged out Pakistan and
Nigeria as the world's most corrupt nation. Who were we to argue with
success? I had spent a year in Java, Timor and Bali, and was well acquainted
with the policies that promoted free trade in pharmaceutical products
- a positive attitude to foreign investments and joint ventures as well
as regulators who could be 'persuaded' to accelerate bureaucratic procedures.
The most valuable information came from friends, particularly
ethnic 'overseas' Chinese, who, as minorities, frequently provide the
economic backbone for most Asian countries. Often described as the 'Jews
of Asia', their intense battle to survive, coupled with their transnational
networks, offer discreet and valuable information, contacts and strategic
alliances.
It was time to don my disguise and search for my friend
Martin, who would fill in the blanks of my knowledge of the political
environment I would encounter in the world's largest Moslem nation. Martin,
his wife, children and extended Chinese family of parents and siblings,
live in the family compound abutting the workshops and stores that the
family operated in Denpasssar, the largest city in this Java Sea paradise.
As the eldest of four children, Martin had become CEO of the family conglomerate.
Building on Australian education, Chinese culture, Indonesian survival
skills and Malayan charm, he had created a mini-empire with expertise
in geothermal energy, commercial construction, marine diesels, textiles,
lumber, railroad infrastructure and automotive spare parts and accessories.
Wearing my London Fog raincoat and Maui Jim sunglasses,
I waited unobtrusively at the Warung 99 Pizza Restaurant in Kuta Beach.
Ayu, my pretty Balinese waitress, plied me with Anker Beer so that when
Martin arrived, I would have formulated my queries in an orderly manner.
All my rehearsals notwithstanding, Martin had already prepared his strategic
plan, one that was suitable to ventures requiring political assent - namely
all ventures in Indonesia.
"We will meet the governor of Bali for a drink
at the Benca Yacht Club this afternoon and the minister of logistics in
Jakarta on Monday", he said. His authoritative tone and body language
indicated that this was already a done deal. While inserting the meetings
into my calendar, Martin mentioned that JM Pharmaceuticals, one of his
clients, would be ideal in serving as our Indonesian partners.
"What about the legal issues," I asked.
"We need someone who understands the Indonesian commercial system
but is from outside the country, perhaps Baker & McKenzie of Singapore."
I knew this was only a formality, since the decisions would be carried
out in the political milieu. This expectation was based on the Asian reality,
where government, finance and commerce are intimate bedfellows - a reality
that was the primary cause of the 1998 collapse of the Asian Miracle.
We continued with the list of political and medical operatives that would
be necessary to implement our commercial vision and mission.
This was certainly going to be a long journey on a
road less traveled. We still had to take out the chart forms and map the
markets, segments, competitors and roles of a host of fellow travelers,
i.e., suppliers, employees, distributors, promoters and financiers.
It is clear that the ownership of information is not
enough in the complex world we live in. In the Internet age, date is available
to all with a PC, information is accessible to the literate and commercial
intelligence can be purchased. But analysis, synthesis and strategic choice
are the purview of the thinker and risk-taking entrepreneur.
