Raul Hernandez, President, Global Sourcing Initiative
Raul Hernandez, president of Global Sourcing Initiative, spoke with Invest: about the company’s growth in the pharmaceutical and biotechnology industries and navigating regulatory changes. He also explained how he prepares for the future, and the importance of staying nimble in an uncertain economic landscape.
What have been the most significant milestones and achievements for Global Sourcing Initiative in the last year?
We work with five different partners in pharmaceutical distribution and biotechnology. These companies are household names and comprise a portfolio of 53 companies that we service in research and development. We’re a Miami-based company, but we have a broad reach nationally and internationally, and we have a broad view of what is happening regarding the trends in biotech and innovation. Adding these big names to our portfolio is a milestone for us, and it shows how much potential there is for growth.
How has the landscape of pharmaceutical sourcing evolved over the years? What are some of the key trends you are observing?
I’ve been working in pharmaceutical distribution and law since 2003. We had a law passed seven years ago called the Drug Supply Chain Security Act (DSCSA). The purpose of the DSCSA was to help ensure the quality and distribution transparency of all drugs. The intent of clarifying distribution had the unintended consequence of limiting smaller companies like ours in being able to access products. There are many costly barriers for companies to operate. That new law has slowly consolidated bigger companies. Companies like ours are suffering because we’re having higher costs, less access, and more challenges to get the things that we need to serve our customers. On the other hand, these challenges and these limitations can help us because we have access to things larger companies aren’t contractually allowed to sell. What might be a disadvantage for one company often turns into a direct advantage for us.
How does the economic landscape, with inflationary pressures and interest rates, impact your operations?
My business focuses on helping grow other businesses, and we don’t require capital to expand. While interest rates and economic uncertainty don’t impact my business directly, I’ve seen how they’ve affected the biotech sector. Drug development in biotech is different from traditional pharma. It’s not like a traditional drug that goes through a standard testing process of FDA approval in four to six years. Biotech focuses on cell and gene therapies that treat rare diseases. These are companies that we help by guiding them through the early process. The studies are expensive and high-risk, and the current investment climate isn’t helping. People aren’t investing the way they did in 2020-2021, and interest rate hikes have dried up funding. Just recently, I was trying to raise money for a new technology and an animal study, but nobody wanted to invest. This uncertainty — politically and economically — is the worst possible environment for activity, and we’re all waiting to see what comes next.
How is your company leveraging technology to better serve your clients and different business ventures?
I recently attended a conference called ASGCT, which is focused on cell and gene therapy. One of the keynotes emphasized that if a business is not leveraging AI, it’s setting an expiration date for itself. In January, we tried using Fiverr for a project. We wanted to do a specific market analysis. Nobody was taking the job, so I offered more money. A colleague recommended ChatGPT. He pulled out his phone, opened the app, tried a few prompts, and I got the analysis in two minutes. I was ready to pay $5,000 and wait three months for the same results. If you give AI a good prompt, it will give you great information, but if you don’t it’s just like an employee: If I don’t give an employee good guidance or direction, they’re not going to do well. AI is the same way. What I don’t get from AI is the hands-on communication with customers. We value having humans engaging with humans.
Looking ahead, what are your top priorities and goals in the next couple of years?
For strategic planning, we use a one-, three-, and five-year model. Over the next 12 months, we ask what we need to do personally and professionally. In the next three years, we ask how we can best position our team to continue to grow and serve our clients. In the next five years, we think of how we can adapt to shifts in the market. We use a SWOT analysis for each of the three time frames so that we are preparing for what’s to come. I’ve noticed that four new federal agency heads are looking to overhaul or eliminate the organizations they oversee. That could drastically affect us because 75% of our business depends on those agencies. In January, I started three new companies to help us pivot if these changes happen. We’re always 12 months, three years, and five years ahead. I feel blessed that I have these opportunities, partners, and market knowledge to know where the opportunities are. When Barack Obama gave way to Donald Trump, and privatizing the VA became a focus, we thought we needed to get away from the government and build our private hospital portfolio. We started to build our footprint and open more accounts in research. In 2016, we only had nine research customers, and now we have 53 with many household names as customers.
It turned out that President Trump’s VA secretary increased the amount that a buyer could spend on a credit card from $3500 to $10,000. This change literally tripled our business overnight. What we saw as a risk became an opportunity. Today, we serve every VA hospital in the United States. We pivot and we prepare for what we think might happen, but when the opportunity opens, we’re going to follow it. If you embrace change, you will never go hungry.
