Obesity has reached epidemic proportions worldwide. In 2005 the World Health Organization estimated that approximately 1.6 billion adults were overweight and at least 400 million were obese. By 2015, the World Health Organization estimates that 2.3 billion people will be overweight and 700 million will be obese.
Nobody is more aware of the complications and associated illnesses that result from obesity than IntraPace. Founded in 2001, IntraPace utilized a proven technology already in use for cardiac patients to create a breakthrough product to control obesity called abiliti™. This new device, designed to deliver a series of low-energy electrical impulses to the stomach to create a feeling of fullness, was poised to revolutionize traditional approaches to conquering obesity. However, there was still one tremendous hurdle looming in the distance – FDA approval.
In the United States, obtaining FDA approval for a medical device can take years, stretch a company’s time to market and cost hundreds of thousands of dollars. IntraPace wondered if there might be other markets to explore that could help pave the way back to the United States. After careful consideration, IntraPace chose Europe, where medical device approval standards (the mandatory CE or European Conformity mark) were generally shorter. In anticipation of a quicker approval cycle, IntraPace created a European subsidiary and began to employ people to sell the device.
As Gary Castro, IntraPace’s Vice President of Finance and Administration quickly discovered, there were a myriad of challenges and complications U.S. companies face as they begin to do business overseas. “We needed to employ people in Europe to help us market abiliti™, and we knew we didn’t have the knowledge or bandwidth to do it while meeting all the regulations that were required. Every situation created a whole slew of new questions for which we needed answers so much more quickly than we could find them,“ says Castro.
IntraPace had another challenge with VAT reclaim. In the first European clinical trial for abiliti™, IntraPace shipped the devices to Belgium to be distributed to participants and as a result incurred Belgian VAT. “The VAT rules and restrictions are very inflexible. You really need to understand the intricacies of navigating the system and we just didn’t have the time to do that and make the proper filings by the deadline,” says Castro. For IntraPace, that meant more than $30,000 paid for VAT during that first clinical trial was unrecoverable.
Gary contacted High Street Partners on the advice of Silicon Valley Bank and quickly decided that teaming with High Street Partners was the best possible solution for IntraPace. “I knew High Street Partners could provide me with a single point of accountability for everything related to our international operations. They could help our team understand the rules and regulations; provide us with expert counsel and ongoing support. We could bring our focus back to our clinical trials and pursuing CE certification,” says Castro.
High Street Partners’ team of experts went to work quickly to set up a corporate structure for IntraPace that would allow them to comply with regulations spanning multiple countries, including VAT recovery. The HSP Advisory team then worked with Gary to write country specific employment contracts and benefits packages. “I knew cultures differed but I didn’t know how that would translate to compensation or benefits,” says Castro. “High Street Partners was fantastic through this process offering advice and answering all of my questions, no matter how obscure they seemed.”
Once the more urgent tasks were successfully completed, HSP implemented HSP Overseas Direct®, a technology-enabled service bundle that integrates all of the services required to operate internationally on an ongoing basis, including payroll and HR, bookkeeping, tax filing and legal compliance. “Using HSP Overseas Direct is a much more efficient and cost-effective option than hiring local service providers to get us through this process,” says Castro.
Since the partnership began in 2009, HSP has assisted IntraPace in six countries to date. In each country, HSP has initially assisted IntraPace with employment contracts and employee compensation and benefit offerings that comply with local employee regulations. HSP has then implemented HSP Overseas Direct so IntraPace stays compliant with payroll and ongoing financial reporting. Instead of struggling with issues as they come up, IntraPace is able to anticipate what they need in each country and approach it in a proactive way.
What’s next? IntraPace has received the European CE Mark for abiliti™ and has recently shipped its first commercial unit. The company’s goal is to create enough profit to assist in funding a larger clinical trial in the United States. “We could not have progressed through the process as quickly without High Street Partners,” says Castro. “I’ve been thankful to have them on my side.”