Global Report

Why Prollenium went global before entering the U.S. market

Pharmaceutical firm leveraged Canada's reputation to sell oversears

(Prollenium Medical Technologies)

(Prollenium Medical Technologies)

After spending a dozen years building an export-minded pharmaceutical company that makes products geared at the booming cosmetic surgery industry, Ario Khoshbin has learned that the quintessentially human desire to look a bit better, and a bit younger, knows no geographical boundaries.

Vanity, he observes, has been a bankable global commodity for centuries. In recent years, Prollenium Medical Technologies (which ranked 292nd on the 2013 PROFIT500, and generates 95% of its sales from exports) has built a strong profile with cosmetic surgeons in Europe, Asia and Latin America, as well as in unexpected places, like Iran and Iraq. “You feel like the world is very a small place,” he says. “We’re all really brothers. Most people want the same things in their lives.”

Khoshbin, of course, didn’t build his company—which generates $7 to $10 million in a year in revenues—simply on a foundation of good karma and insights into the human condition.

Soon after he started developing and marketing a product known as a “derma-filler,” made from naturally occurring substances in the human body, cosmetic surgeons use it to eliminate facial wrinkles, Khoshbin began receiving unsolicited orders from all over the world. Canadian pharmaceuticals, he realized, enjoy a strong international reputation because the Health Canada approval carries a lot of credibility with other countries’ pharmaceutical regulators. “It’s easy to get approval if you have Health Canada’s approval.”

Recognizing that it couldn’t rely on unsolicited orders, Prollenium began attending international trade shows and physician-training events to further extend the brand among distributors and end users. The market, Khoshbin notes, is growing very quickly, due to population aging trends, the evolution of cosmetic surgery technologies and the growing popularity of medical tourism.

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As the orders flowed in, Prollenium sales officials began to notice patterns. In some of the most patriarchal regimes—Iran, for example—some women routinely spent thousands of dollars a year on these treatments. The same trend lines could be seen in Saudi Arabia and Afghanistan. The correlation between religiously conservative regimes and sales of these kinds of cosmetic surgery treatments “is something we saw from our global exports.”

Like many exporters, Prollenium depends heavily on its international distributor partners to get its products to market. Khoshbin says the company selects distributors, including other pharmaceutical companies, that can boast expertise in the cosmetics field. But it tends to avoid firms that carry rival products made by much larger firms. Last year, in fact, Prollenium had to discontinue its Canadian distribution arrangement with Valeant after that firm began representing a large, well-capitalized competitor.

The universal problem with distributors, however, is that manufacturers like Prollenium don’t really know much about the end customer; distributors tend to keep that kind of information under wraps.

In the past year, Prollenium has followed a trend used by other pharma companies and developed an online rewards system. Consumers who used the firm’s products can register on Prollenium’s website and generate points that can be redeemed against future purchases. The data, in turn, provides the company with some important insights about its market. The rewards system, Khoshbin says, “gives us direct knowledge of who’s using it.”

Unlike many upstart pharma companies that must turn to the financial markets for expansion dollars, Prollenium’s sales volume provided the cash it needed to finance new research and development, as well as a major capital project.

Indeed, in 2011, Khoshbin completed the next phase of the company’s growth trajectory: the construction of a manufacturing facility in Aurora, Ont., north of Toronto. Early on, the company had outsourced its production requirements to a European firm, which meant Prollenium often found itself importing products, only to ship them out again to off-shore customers.

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The new facility positions the company for what could well be the most transformative chapter in its evolution, which is an expansion into the U.S. Most Canadian exporters begin in the U.S. and then use their experience south of the border as a launching pad for further expansion. Prollenium has taken the opposite approach. “What we’ve tried to do is use the global market as a test stage,” Khoshbin says. “When we go to the States, we’ll be ready.”

This particular game plan, he admits, didn’t come about entirely by choice: the company to date has failed to secure a U.S. Food and Drug Administration green light. Khoshbin says the company is in the process of applying for a device exemption, which will allow it to begin clinical trials in 2015 for its flagship product, Revanesse Ultra. The company built its Aurora manufacturing facility specifically with the U.S. regulatory approval process in mind; the FDA, as part of its sign-off, insists on a detailed facility audit.

Once the company is confident that it is moving toward obtaining an FDA certification, it will embark on a series pre-marketing activities, such as collating clinical evidence from other countries to help promote the product to U.S. cosmetic surgeons. Khoshbin, however, knows that the FDA approval will give Prollenium’s products that much more momentum. “That stamp of approval goes a long way globally.”