Franchising the Pharmaceutical Industry | Barry Patel, PharmD, Galt Pharma

This transcript was generated automatically. Its accuracy may vary.

[00:00:12] Mike Koelzer, Host: Barry, for those that haven't come across you online, introduce yourself and tell our listeners what we're talking about today. 

[00:00:20] Barry Patel: My name is Barry Patel. I'm the CEO and co founder of Galt Companies, which is Galt Pharmaceuticals plus Galt Franchise Systems. And today we're going to talk about how we built a small pharma company, unlike big pharma, and really built that foundation on working with pharmacies and also working on the principles of entrepreneurism, have franchised the model of pharmaceutical market, pharmaceutical sales by entrepreneurs, 

[00:00:48] Mike Koelzer, Host: Barry, when I come across your website I'm picking out a few products that came to my mind from when I was younger in the business than Nargizek and Doral and things like that. And I'm guessing that your company has either bought the product or bought the name.

And I was saying maybe that's a little bit different than some of the bigger pharmacy companies, but a lot of them have bought products and shifted and merged and things like that. 

[00:01:16] Barry Patel: You're exactly right. Heard of those before. So our model is a little bit different today to bring a brand new product to market, it costs about a billion dollars, 15 years and so forth. But as pharmacists, we understand there are many products out there that were used back in the 70s, 80s, 90s. What happens in the pharma industry , you're not marketing a product, turns generic, then physicians are going to forget about it and they're going to the next shinier toy. In fact, that's what happened with the opioid, right? One of the products we picked up, Norgesic, is obviously non opioid, non controlled, had great value, and patients treat it quite a bit. We make sure that there is brand name value So Norgesic is well known. It's got a high recall with healthcare providers. So if we were to go to the market Orfineter and Aspirin Caffeine, it's crazy.

So you still have to have that name attached. Same thing with Dural. Because honestly, there's going to be a shortage of more products in the near future once products become generic, especially the new ones, forget about them.

Manufacturers not sustainable for them to keep manufacturing 'em. So you'll slowly see products sort of going away and FDA fees are still there. stringent requirements. But the bigger thing, honestly also the middlemen, are requiring rebates of smaller generics.

And so just not sustainable. There are many more products, so what we've done is build some algorithms, clinically, to identify some of those products and bring them back to market we're not gonna bring me to products at a different strength or different formulation. It's gotta have some clear advantages to a patient key categories that have a lot of churn.

 That's how we really identify our products. 

[00:02:56] Mike Koelzer, Host: Barry, I've lost touch with these because as you say, when the generic comes out, people kind of forget about the brand name. And maybe there's a little bit of a dormant period in people's minds. And then I see them pop up on your site. were these drugs that they actually stopped making the brand name for a while?

Or were these drugs that maybe the brand name company that I'm thinking you bought them from was just at a lower production of them? And then you got them. And then another question was when you do get them, Are you then taking in the manufacturing of that, or do you kind of farm that out?

Or does the original company still have those on their conveyor belt?

[00:03:38] Barry Patel: So a lot of the time, those companies that own them first, they shelve them and it's a business decision because they've got other products that are a lot better and they want to focus their efforts there. once they shelve them, they'll keep the brand name companies. And then once they turn generic, they'll even stop making the brand.

 That brand didn't get promoted anymore, so generic products slowly went down. So sometimes they do go totally off the market. So Norgesic actually was an example of that. The last tablet was in 2013-2014. We acquired Anda 2017. Took us two years to bring it to market.

We still had to do some rigorous testing on the product because it hadn't been manufactured in five years. That's one of those cases. With the case of Doral and with Orovig, our two other products, they actually were still being made and they were still on the market. You can, in the pharma industry, continue on those supply chain relationships, and it's a lot easier just to take those over.

We did one of the products, with Orvik, a double tablet , and it's a little bit difficult to make. But with the others, we don't have our own FDA manufacturing facilities. Farming out, just like a lot of companies do, it's a lot easier, simpler, and efficient. 

[00:04:45] Mike Koelzer, Host: mentioned Barry, some rules of thumb: name brand recognition and this and that. Are there others that you haven't covered? I'm guessing there's some focus groups you have to talk to some people and see if they remember this and see if it's worth digging into that again and so on.

[00:05:04] Barry Patel: Honestly, my partner, Wade Smith, he is, if I could call it a pharmacy historian, he remembers the brand name of every generic that's out there. He remembers what the pill looks like, what color it was, what the bottle was. He's really our inside AI, if you want to call it that. But then, yes, we do some testing.

Mainly with pharmacists, to be quite honest, because pharmacists remember dispensing it sometimes more than the physician prescribing. But there are other clinical variables that we wanna put in place, like I said, that have clinical advantages. There has to be additional indications compared to what's already out there or better safety or some other things that go along with that.

And then the third thing is you want it to have exclusivity or single source. So there are generics out there. Have multiple sources. So Torvastat is great. Probably 50 companies making that. Then there are other endings where there may be only one or two or three companies making it, and we'll look for ones where there is only one or two.

And the second one may stop making it. So we'll have some exclusivity there. So even without having the brand or trade name, you still have some exclusivity there where we can sort of at least promote and benefits promotion does take. Money, and that's where our franchising concept comes in to help.

I 

[00:06:27] Mike Koelzer, Host: So Barry, if one of your drugs that you picked up now kind of resurrected and let's say there used to be 10 generic manufacturers of the drug. when it went off patent, let's say 20 years ago, then it went down to five, then down to three, and then down to one, and then you guys resurrected the brand name. In theory, could all those people, those 10 companies that made that generic, say, all right, we're going to make the generic again, or are they blocked somehow?

[00:06:56] Barry Patel: No. In theory, if they own the rights to it and they've made it in the past, they can. However the FDA is going to require formulation studies again. 

[00:07:04] Mike Koelzer, Host: Barry, with this system, is this ongoing? For example right now there's a product that came out and it's going to go through the same cycle. And then in 2033, you guys are going to look at it and do the same thing because There's going to be new old pharmacists, they're going to grow up just like I did.

And they're going to remember, Oh, I remember way back in the year 2018, there used to be this product. Will this cycle just continue?

[00:07:40] Barry Patel: Just as long as brand names go generic, generics stop being promoted, they still have clinical value, they start kind of going away, then yeah it's going to continue on. Have that trade name recognition. It's helpful, right? There are products that you're seeing all day long in hospitals, the shortage of drugs, mostly injectables, and you hear about it more and more on the news, the drug shortage of this, that.

And it's mainly because a manufacturer is stopping making it, not because, oh, we can't find that. and so there's going to be a continued need. I mean, there's a huge issue. You're seeing that biologics are pretty much the only ones that are really receiving promotion and that's why 500 billion would be spent on pharmaceuticals each year.

60 percent of it's on specialty medication, not on the 90 percent that are generic.

[00:08:27] Mike Koelzer, Host: So in theory, or even in practice. There could be a generic that is kind of the same as all the stuff you're doing, but instead of somebody resurrecting it with an old name brand, they might even resurrect it with a new name brand.

[00:08:41] Barry Patel: I think there's some rules around that with the FDA. They'd have to file it as an actual trade name in a different way and so 

[00:08:49] Mike Koelzer, Host: That makes 

[00:08:49] Barry Patel: So

Like I said, the trade name isn't as important as what we feel is really the clinical benefit. Are there any clinical advantages to this over something else?

That's going to also help make sure that the insurance company is going to cover it because patients have been through two or three medications for migraines or for pain or infections, whatever. 

[00:09:11] Mike Koelzer, Host: There might be sometimes I imagine where. Let's say there's a migraine medicine out in generic form and nobody wants to really do much with it yet because the brand name stopped being promoted. Everybody kind of forgets about it. There's all the new stuff going on. It might still be effective, but a good effective part of it too is It might be affordable, right? Because some of these new ones come out and if the generic goes away, cause no one cares about it and the new biologicals are out, you might bring something out that's still effective and it might be more affordable.

[00:09:47] Barry Patel: 100%. Absolutely. I mean, because promotions that go into some of the biologics plus today, are more expensive to make, the price is going to be high. Whereas promote it more efficiently is where our franchise model comes into play where we kind of work with Entrepreneurs to build their territories and also the fact that would be a lot more efficient 

[00:10:08] Mike Koelzer, Host: and I know we're going to talk about your franchises, but in the meantime how many products could Galt itself handle? All of a sudden, some old wise man said, these 10 products are going to be great because there's a new wave of pharmacists coming in and these are the kinds of people that like vinyl records and, kind of nostalgia. How many could you guys handle or even want? Your company has three or four or something. And how many could you take on without stressing you guys too much or stressing the business too much?

[00:10:40] Barry Patel: We're in three different markets: sleep pain, and oral infection. as long as they're within certain baskets and therapeutic categories, you can scale.

So that way you can say for example, a pain doctor, okay, I've five medications that you could potentially want. 

And so you can scale the right way. 

[00:10:59] Mike Koelzer, Host: Barry, how all of us pharmacies, we always bitch about the PBMs. Is there anything in your company? What do you think is so unfair with these big manufacturers, and this isn't right that they get to do this and we get to do that, or Is it all a bonus?

Is it all Hey, the bigger they are, the more nimble we are.

[00:11:26] Barry Patel: I mean, Pharma has had to play with PBM, they've sort of made them dependent on it. If you want a formula, if you want access, you have to go through us.

And it sort of hurts the smaller companies. So if in that sense, the other way around but as far as what they're doing. I mean, I started out my career with a big farm in Merck. And so not that they're doing anything that isn't right. They're bringing great products to market, but they've had to, work in an environment created by the PBM's

so 

until that gets fixed, which I think is too far, unless the whole thing has to be reversed, and it's going to be an issue.

[00:12:04] Mike Koelzer, Host: Barry, how'd you get into this? I mean, most people. In pharmacy school, I know at least I'm not thinking that someday I'm going to own a name brand. How did this come about? This thought even.

[00:12:18] Barry Patel: You know what if you had asked me that when I graduated, I wouldn't have thought that either. Cause I was leaning more on the research side. I got into it. Clinical research, internships, went straight into pharma, and then more of a medical affair role. But then my entrepreneurism took over in the late 90s.

Started a company in the outcomes research world where we collect data from medical records and basically made that analyzed and educated healthcare providers show them comparative effects research back in the day and out there prescribing guidelines. And so that was valuable for Pharma Companies to sponsor, but also insurance companies to make formulas.

So I kind of got a good global view of the pharma industry, healthcare providers, and how decisions get made. And once I successfully was able to sell that company, worked out my employment agreement , then teamed up with Wade, who is a pharma veteran. So it was the in and outs. And so we got together and I. 

Brought more of my clinical and A.I. Background with that and then had the pharma . It was great because when you own a product, you're actually owning an asset. That's what he's taught me and that's what it is. When at the service company, which my past company was much more of a service company, you're constantly pitching for the next project.

That project was over six months, a research project. Okay, now I go get another one. And I was sales, head of sales for Epic. So it wasn't as scalable , however, as farmer products are. So that's where I really thought about getting much more potential.

[00:13:51] Mike Koelzer, Host: hear about people that are finally hoping to get a brand name, whether it's a tennis shoe or, and it's usually an older brand name. I've seen it before. Just never in pharmacy, 

What do you imagine the most dead product would be? being a little bit figurative here, but coming across it in a library and you say, Oh, this was a big product back in the seventies. You can't find it. You don't even know who has the patent there's no building.

 It hasn't been touched. And there's maybe some 90 year old lady that has the rights to it. That's got one foot in the grave. I mean, is it ever that? Is a product ever that dead or are you always dealing with something a little bit that has more to it?

[00:14:40] Barry Patel: Yeah. So Mike, that's where the clinical part comes in that you want to make sure that there's still value to that product. There are some that just are dead and they need to stay dead. 

[00:14:49] Mike Koelzer, Host: if it's totally dead, there's probably no value or else somebody would have done something with it.

[00:14:54] Barry Patel: Maybe because there's always some value, but there are some that are just so outdated. So think about some of the diuretics that, in the 70s and 80s, to manage blood pressure. There are no ACE inhibitors or even ARBs. Out there back in those days. And so now there are a lot more better medications, so no sense in bringing some of those categories back, but let's take an example, right?

THere was a product For gout. It was kind of going downhill because there are other products out there. But all of a sudden, a company studied for prevention of Heart attacks, a lower dose, anti inflammatory effects, and voila, there are products that have other values. So another piece when we're evaluating products. are there other values that have been identified? 

[00:15:40] Mike Koelzer, Host: What's the worst part of your week right now in your job? What hour or two do you not like during the week?

[00:15:47] Barry Patel: Supply chain has been an issue here post COVID 

we have to pay higher fees, distribution fees and so forth. That's why our model is such that Almost 90 percent of our business now is shipped directly to independent pharmacies. We've got the largest PL in the country that does that for us. So we don't touch any product. 

Independent pharmacy sets up an account on our e commerce website, order, just like they're ordering from Amazon, 

[00:16:12] Mike Koelzer, Host: years ago, this was 20 years ago, we'd buy direct from Merck. I don't know if a lot of pharmacies do that now, but we used to always time it, the Merck guy would come by.

You'd get 2 percent discount lower than even the wholesalers and you had all these light green and white bottles on your shelf, and you'd always plan it this way. So now you mentioned that some people buy direct from you. You cut out the middleman of the wholesaler. 

So that might give a little bit of a discount to the pharmacy. How does that play out with the PBM? I imagine if the PBM covers it, that's probably an issue. And then secondly, if the PBM does pay for it. In this case, the pharmacy might be buying a little bit better than somebody else would if they're going through a wholesaler, so there might be a little bit more of a spread there I imagine.

[00:17:02] Barry Patel: Yeah, that's exactly right. And that's why we established our direct buy program. Merck, I think, was one of the only companies that did a direct buy selling, like Merck and Upjohn or something, I forget who it was, like two of them.

But our reasons are different just because we have control of the product and we can support them as well as, like you said, provide it the right discount. Pharmacy benefit manager is going to reimburse based upon the reference pricing based on the contracts. If they're part of a PSAO, it might different 

and there's so many factors. So we don't control that. We don't know what they make, but all we know is that we can. Sell it to them cheaper than they could buy it. or at least same price, but without, Discounts , that's one way to really help the pharmacy community especially in this day of negative reimbursements they have Products that can help them

[00:17:56] Mike Koelzer, Host: And you got all these discounts going everywhere else, it's nice to have pharmacies in there as well. And you do have a price to compare it to because the wholesalers. I imagine they carry some of your product, but most of your customers are going direct.

[00:18:11] Barry Patel: with 90 percent going direct We're slowly cutting all of our products out of the wholesaler. 

[00:18:17] Mike Koelzer, Host: And how does that work with the PBMs? If you have a new product come out, new in quotes, one of the newer, older products is that something that. Your company has to try to get on their formulas, or is that something that kind of naturally happens in the industry when a new brand name comes out?

How does that work?

[00:18:38] Barry Patel: Honestly, Mike, if you're not a 3 or 5 generic That's the only thing PBM's are really covering. They're restricting everything anyway so we just really take what we can get from the coverage, and it's because there are pharmacy benefit managers that value products for just in a certain category. For example, Humira.

Humira has been a top selling drug for the last 10 years, but every one of those patients gets a prescription for Humira. They have to go through a prior authorization process and have layered the clinical information sent and necessity and that they try all the other rheumatoid arthritis or psoriasis drugs.

Yes, maybe our providers have to go through a few groups sometimes and so there is a little bit of work for them to get it approved. That's why we work with Physicians. 

[00:19:27] Mike Koelzer, Host: Even though it's a national product, it's kind of like more of a fit for. Certain doctors and patients and so on, when they know more about it, the more knowledge is better for them.

[00:19:37] Barry Patel: and they're providing extra value to their patients. a doctor, a neurologist, tried so many different things and they want to give something to their patient. Finally this will work for you and it is working, so do what it takes to keep you on it. So that's where insurance can't say, okay, we're going to deny this.

[00:19:53] Mike Koelzer, Host: All right. So Barry, looking at your website and so on, we alluded to it earlier, tell me about how this whole franchise system works out.

[00:20:00] Barry Patel: Sure. The franchise concept obviously has been around for years. It's never been applied to pharmaceuticals. Similar to a McDonald's or a Subway or a hotel or a fitness gym in that sense, but what we are franchising is first of all, the exclusive rights market our products.

 Within their territory , we help support the education in those specific territories. We have 500 territories. Across the U. S., 500 to 700, 000 population in each 500 health care provider prescribers and so demographics and different types of prescribers are split up.

 We provide prescribing data to show what they're currently prescribing in the pain category, sleep category, or in the oral anti infective category, and they are able to evaluate, then they pay us a franchise fee . the training process of how they can succeed as their own pharma company without having all the hassles of being a pharma company in terms of regulatory safety manufacturing and supply chain.

We've got all that taken care of. 

[00:21:02] Mike Koelzer, Host: Oh, now That's really interesting. And the people who are doing this, the, is it derogatory to call them sales reps or can I still call them that?

[00:21:12] Barry Patel: no, I mean, I think they're fine with it. 

[00:21:14] Mike Koelzer, Host: They're fine. As long as they're pulling in some money, they don't care.

Right? 

[00:21:19] Barry Patel: Society, you do have to be careful about what you label people these days. But yeah, sales, I think is still an okay word.

[00:21:25] Mike Koelzer, Host: They can take it. The people that are doing that, I imagine once they've crossed that bridge that they're not getting paid 80 percent from one of the big manufacturers and this is a little thing on the side.

 Are they leaving their other full-time gig?

[00:21:43] Barry Patel: The ones that are signing up and coming franchisees are those that have sold in the past, have relationships and they have either been laid off or sick and tired of it. They're high performing sales folks, but have not. been valued financially, whereas we provide an uncapped, revenue potential, So that's one thing that's appealing 

 so they do, full time or if they are still in the industry, they'll hire somebody under them day to day selling and run their company that way. they may be executive or different level, and have some folks The other types independent pharmacy owners are franchise owners 

 The first franchisees were independent pharmacy owners and still continued to be good franchisees for us because they know healthcare. They know the products. A lot have marketing reps already out promoting their pharmacy and services. so they'll just get them trained up on the product and as long as they promote according to our regulatory guideline, our marketing materials and we are very stringent on that by the way.

So regardless if you're a sales rep or a pharmacy owner that has hired a rep, they have to go through our training and get certified. And then we have a third type that are just investors, entrepreneur. They like the concept of owning a small pharma company in their community, and they want somebody else to.

Manage it. And they'll bring on a management company or some professional, 

[00:23:11] Mike Koelzer, Host: Would you picture somebody, whoever they are, whether they own it or whether they work for somebody who owns it, or whether they hired a sales team or something? Would you imagine, though, that one person could keep busy with that one product? That would be their full time job. Would that be something that happens or do you think that would be like, Oh no, that's only this many hours a week, Mike, you'd have to have other stuff too.

[00:23:42] Barry Patel: Absolutely. They could make a living and a really good living on just one product. We have three of them, by the way, even if they just sold one of our three and created that system where you have about 15, 20 accounts, visit them weekly, kind of like you're a fixture in that office.

work with all the staff and do what it takes to constantly remind them that they can do it with one product. Those that are working with all three products, especially primary care, are a great target. We have a sleep drug which has clinical advantages.

We have the pain drug, obviously. We have an oral infection. They can hit all three drugs at once, so if you've got a few of those good offsets, getting different prescriptions.

[00:24:19] Mike Koelzer, Host: That's really interesting. So what are some numbers with this? And I guess those numbers would be how many franchisees do you have under some of these products?

[00:24:33] Barry Patel: so , we've got 500 territories across the U. S. broken up by population, graphics, prescribers, and currently have 59 territories that are sold. There's about 28 owners. , So there are, multiple territories territories that are owned, 

[00:24:50] Mike Koelzer, Host: I'm sure you've done something with this, if you have a territory out in the Rocky Mountains, there might be 85 year old doctor And his cabin, our territory is based on numbers of people 

and I imagine if there's an area that's not as dense that the price goes down or something like that. How do you divide that up?

[00:25:09] Barry Patel: So they are. Pretty much equally divided by number of as well as population ends up being about 750, 000 based on that. And then we'll look at a mix of other things and the types of prescribers as well as insurance coverage and so forth. And so when it comes to the price, the price is the same, the franchise fee, but we may add if they want to buy two or three and we want to bundle them together.

Because of some of the differences it will produce.

[00:25:37] Mike Koelzer, Host: And typically is the same person. Owning the three products in the area, or do you have somewhere somebody owns one and someone else owns the other two?

[00:25:48] Barry Patel: No, that's the idea of this once you buy the territory, you get rights to all three products. And even better, any future product that GALT brings out. So you have a 10 year franchise agreement, so anything else, option after 10 years 

[00:26:03] Mike Koelzer, Host: what has the breakdown been as far as sales reps themselves, those who just own it, those who might own a pharmacy, and so on?

[00:26:13] Barry Patel: I'd say half of our owners are independent pharmacies. Because again, they understand it, they're more bullish on prescription, . And then the other, 50%, are probably owner operated sales reps ex reps that want to kind of get in the business.

And then sort of investors

[00:26:27] Mike Koelzer, Host: part of me says yeah, these people are selling it, but they have a vested interest in this, it's like, , are they putting the best out there, but it's any business, any sales person is trying to push their product. I mean, they're not lying about it, but they're trying to put their best foot forward. And so whether it's working for some corporation that you have no idea what the owners are doing, or whether it's somebody local who owns it. Yeah, they're going to put their best foot forward, and pharmacists are so good at this, of thinking like not talking money, like there's something wrong with money and profit and ownership and things like that, but what better person to buy from or be sold from, the owner or some New York corporation hedge fund kind of thing.

[00:27:20] Barry Patel: That's right. So that is something that teaches our franchisees to put out there that we're a small business. I'm local. I'm going to respond to needs here. And the main thing is, and this is core is you put patient first, always put the patient first and the profits will follow. We always know that here, money will follow, but Our drugs are great, but they're not for everybody. So you can't look at it, you can't drive it like a salesperson trying to hit a bonus next quarter, next year. If you're looking at it for a long term relationship with a good healthcare provider office and building that relationship there will be future products.

Then that's how we Really help our owners train,

[00:27:59] Mike Koelzer, Host: Yeah, it's interesting you mentioned that about saying that we're locally owned and so on. So that's not something that you're trying to hide or play down or anything like that.

[00:28:11] Barry Patel: We actually played it up. They use that to their benefit that, oh, they're a smaller company, I'm a small business, check out my, my website here or whatever. It's real. They could see that, wow, that person's just like me and we'll actually target those kinds of healthcare providers that are not part of health systems, but are still sort of surviving themselves as an independent practitioner.

Or a smaller specialty, or so forth. They get it. They know that that is something they understand, the smallness of it .

[00:28:44] Mike Koelzer, Host: Barry, I'm trying to figure out how I would feel and I know it's just something inside of me that if I went, if I was like selling something and it's an odd thing inside of me. Let's say I own my pharmacy, which I do. and let's say I own one of these products. If I go to the doctor and I say, Hey, I'm part time sales guy, and I'm part time pharmacy owner, I'd like to get out in the field and things like this. It seems strange to me if I was pushing my own product that I owned, it seems more strange to me than if I was hired by one of the big manufacturers and I was trying to press their product. I don't know why. That seems odd at all to me because both companies I've got a financial interest in, whether I own the company or not, I think it's just that weird guilt of pharmacists that we don't, we think everybody should come before us and, we think we should get screwed by everybody and if there's anything left, then we can screw someone else, but you know, it's just a weird feeling that pharmacists have.

[00:29:57] Barry Patel: No, you're right. It's been years and years as a profession because we're always at a grocery store or a pharmacy or an independent pharmacy and don't ask for anything more. And then when it comes to making a profit or at least promoting something, yeah, there is that.

We hear that all the time that I don't like to be a salesperson. I'm like, okay, but yet they'll, they still will market their store, bringing foot traffic. They'll still go out to the aisle and show them which supplement is better for memory versus not. They'll still promote a compound that they make, which may not actually have FDA approval.

Chronicle Study. How is this any different? In fact, there's a lot of data on the products that they were promoting and they should be ethically only for patients that are going to benefit and that's obviously the whole reason they got into pharmacies to make sure patients got the right medication, right dose, right time.

And so the thing about the beauty about this franchise model is that prescription doesn't even have to go to their pharmacy. It could be sent to The pharmacy down the street, their independent pharmacy, they could be helping them out because they will make a little bit more than probably, other products, but also they'll still gain the other part.

So if they feel kind of dirty about sending prescriptions to their own pharmacy they can do that. Or we have National Central Hub Pharmacy that could send prescriptions there. 

[00:31:22] Mike Koelzer, Host: It's interesting because out of all the things that people sell, what product is more black and white or has more research or more regulation than a drug like this? I mean, there's a million things that any business can sell. And if I said, which product is probably black and white, that you're not selling directly to a little old lady, you're selling it to a well trained and educated physician, If you want a product that you own, that's at arm's length , kind of, it would be a product like this with the FDA in the middle of it, with the AMA or physicians in the middle of it, PBMs in the middle of it.

[00:32:03] Barry Patel: Exactly the decision prescriber is obviously the prescriber, PA, nurse practitioner. And you leave it up to them. All you have to do is educate . As a pharmacist , we're restricted on how we can promote them. So yeah, it's the same, but yet, like I said there could be an unproved supplement that is going to make a 20% margin on what they're happy to sell and that's directly to the patient.

[00:32:27] Mike Koelzer, Host: This is an FDA product through the doctor. So you've already put a few not hurdles, but what would you call it? A few safety steps or processes or something between a typical company and the consumer. Barry, when you started this company, was this part of your model right away, or did this come on later

[00:32:47] Barry Patel: it came on later. So our initial model is our first product with Dural, the sleep drug. And honestly, it was purely to work with independent pharmacies and allow them to see clinical benefits. There's so many patients on Ambien that are literally hooked on Ambien and they're getting crazy side effects.

And so this was a product that the pharmacist could hopefully educate their healthcare providers on that there's an alternative now. So that was our model. We saw that, okay, we've got to have other sales activities, 

 traditional sales activities, Salesforce, marketing, rep sales, call them.

 We didn't want to go out and raise funding through private equity, just become one of them again. We said there's another way we could have partnerships with those. Selling . We have those partnerships. Can we do distributorship or we could franchise it?

There's enough here to franchise because we've already done the proof of concept and have some territories that are successful, with sales reps that we put in. And we're not reinventing the wheel. Pharmaceutical sales have been done for 50, 60, 70 years. Detail reps first came out.

And so it's just. Refining it, 

[00:33:54] Mike Koelzer, Host: I know you didn't recreate the model of. But this franchise thing, it must have been a lot of legal hoops and contract questions and things like that, it seems like you would have had to think like this has never been done really before. And was that a lot of work and did you get stung ever In something where you said, no, no one ever thought about that. We sold this, but we never came across this kind of thing.

[00:34:28] Barry Patel: Yeah you think the pharma industry is highly regulated? Franchising industry is just as, or even more regulated, because you're Selling a business so all of those things go with disclosures and this could fail and this could happen. So all of that we had to learn quickly and build our franchise disclosure documents, 120 pages.

So a prospective franchisee reads those and understands it and the franchise documents are about 30 pages long. lawyers involved obviously in building that and doing that. But I think your point more, we've been in pharma, myself, Wade both of us have been in pharma.

We know it's highly regulated. How do we transfer that important safety and regulatory and saying the right words to a business owner entrepreneur that is profit motivated? How do we make sure we do that? And that's through our training process. We have a very strong training system that trains them on the product, but also on what they can say, can't say.

Our certification process is really rigorous when it comes to that, just like other pharma. And then. Various quality checks . So that was our biggest legal sort of scares, what if that happens?

But then the other part of it is that It's the same thing that happened to Big Pharma. So if there is a rep at Amgen or Lilly or Murr that starts talking off label, then yeah, that rep's gonna get fired or reprimanded or however. In our case, we have the threat in their territorial way.

[00:35:57] Mike Koelzer, Host: And I imagine that legal wise, they're not the, I mean, let's say that I don't want to put these thoughts in your head Jerry, but I'm sure you've

the rules. Don't worry, those are the ones that keep me up at three in the 

Yeah, what happens if all of a sudden you buy one and for some odd reason, there's birth defects and they might have happened in the past, but there was something weird about some legal this or that, and all of a sudden you've got a billion dollar lawsuit on your hands because of something like that.

Who owns the liability? Is that part of the sales, the franchisers and then do they have insurance on it? How does that all work

[00:36:37] Barry Patel: Yeah, so we own that liability. It's our product. We own it. The FDA is going to come to us and say, Hey, this product needs to be removed from the market because of this or, there's been some lawsuit to that. So that goes into the due diligence process of acquiring a product, obviously. And so when they have been on the market for many years, It's easier to sort of check that out as opposed to something that's been out there for a couple of years, one of our biggest line items on our operating budget is our liability insurance, so we have to protect ourselves, but we also protect our franchisees because they're the ones that are going to be, hurt if something like that happened.

They still have to carry other professional liability because We can't control. They do something. They're not supposed to harass or whatever they protect that way because Employment law is such that they are not an employee, so we're protected that way. But they themselves are an entity, just like a restaurant, Subway franchise, that franchise has to take care of their own. 

Issues.

[00:37:34] Mike Koelzer, Host: So Barry, what's the next step with products? I imagine you say, Hey, we've covered these three things. Let's maybe cover this disease state and so on. Do you guys just like flipping through the internet? Do you have an official system in place where you're? Going through each drug patent from this year to this year and doing this. Or is it just Hey, we should look into this. We remember this product. Some of the pharmacists told us about this.

[00:38:04] Barry Patel: It's a little bit of all of the above there. 'cause that nostalgic part of it, that last point you talked about. But yes, there is a system now we've known what works there, there are a lot of products we've had to say no to because it didn't meet certain criteria.

So we've kind of formalized it a little bit more. I'm not saying we're applying an AI engine or anything like that. It's more, just our own experience and things like that. Then, like I said, products that have value in other use cases, very important too. 

Doing the studies, the clinical studies, to prove that it would help certain patients with other conditions that would help patients. That's the next level, products are obviously something that's a continuous process. And we get approached by other companies also that are interested in this.

[00:38:46] Mike Koelzer, Host: Seeing if you want to buy something,

[00:38:48] Barry Patel: Yeah, that wasn't the case when we first started. So now that we've gotten some more. Folks out there and some traction and some processes and some structure. It's nice to get our calls returned if we were interested in a product. 

[00:39:01] Mike Koelzer, Host: What do most of your days look like during the week? Barry, are you in meetings? Are you talking to your franchisees? What does your week sort of look like?

[00:39:11] Barry Patel: I'm so grateful and blessed to have an amazing team. Day to day part of it is less. I mean, things just get done. It's magical to me. We've got great operationals, processes, we've got a sales leader, we've got somebody supporting our franchisees. And I love to get out there like I'm in Austin today just because visiting one of our farms, Hub Pharma's franchisee out here.

But it's more on strategy for the next thing within the franchise model, what else can we be doing to help support our franchisee through different avenues like direct consumer telehealth fits within our product. So partnerships such as that, creating some strategic alliance partnerships

 enjoy but I'm still involved in the day to day quite a bit. I'll join calls, but I'll let the team sort of take the lead on majority.

[00:40:00] Mike Koelzer, Host: You're entrepreneurial dreams, Barry. Where does this go now? Five to 10 years. Does this just keep growing? Or do you see yourself with other interests that you also want to tackle in the industry or a different industry? What is your personal projection with your next half dozen years?

[00:40:23] Barry Patel: It's definitely to continue growing that pipeline and franchise model. We fully.

Capture 10 percent of the country. So a dream would be to really grow that model across the country where there's entrepreneurs all running their own mini pharma companies and are able to achieve their dreams, financially as well as satisfaction. They're doing unities so that's what it would be.

And that might ultimately take some investment partners who have held off for so long, wanting to kind of build it, we're profitable. So it's something that now we're getting the interest of investors that want to take this to the next level. So we're open to hear.

How that is done and as long as we can continue to be part of the clinical and the significance of what happens, what types of products and how we work, you know, have no egos. If somebody else wants to come in and help run the company and make it better we're happy to do that.

So that's probably more of the next, one to three year plan. And then beyond that, it's really, how do we scale this to, to make it even bigger?

[00:41:27] Mike Koelzer, Host: Boy, Barry, thanks for joining us. That was really interesting. First of all, I don't usually talk to all independent pharmacists like myself, I know a lot of it and it's kind of boring. And then some of the things I maybe talk to people about, I've got little handle on it, but we want to go into more details. But every once in a while we get something like this where it's something totally different, to think about this, owning the individual franchises of a drug like that.

So really cool stuff. And it's really cool to see where something like this is going to go. Thanks for your time, Barry. And best wishes to you. It's exciting. Keep it going.

[00:42:05] Barry Patel: Thank you so much. Thank you for allowing me to tell our story because it is different and it's hard to sometimes just say in 30 seconds or two minutes. So sometimes it does take a conversation, this is the podcast to do that . So appreciate what you're doing for the profession of pharmacy and bringing awareness to different opportunities, but also for the independent pharmacy world.

I love all of the podcasts that you do. I try to catch up with every one of them. It was really a true honor that we got to be part of one.