Investing in Private Pharma | George Zorich, Pharmacist, CEO at ZEDpharma, Inc.

Speech to text:

Mike Koelzer, Host:

George, for those who haven't come across you online, introduce yourself and tell our listeners what we're going to talk about today. My name 

George Zorich, ZEDPharma: is George Zorich. I'm a pharmacist. I am the CEO for Zed Pharma, Inc. Over a 35 year career in day-to-day operations. I've been on the big pharma side, distribution models, startups, generics, generic specialty vaccines.

The last half of my career, I spent running companies for private equity firms as president or CEO. So we would acquire a company, build it up and sell it today. I just do board work, do a lot of volunteer work and in occasional M and a deal. And we do that through. Today, Mike, I'd like to talk about the future of pharmacy, where pharmacies are going both as a profession, but for all those students that are in it today, where they might go in the future and specifically the pharmaceutical market.

One thing 

Mike Koelzer, Host: That I think would be kind of cool with what I read about your later part of your career here is jumping into companies and then jumping out. And I think like I would like to jump in and then jump out before anybody could blame me for anything. You said you went in for private equity, but they were pharmacy related.

So what does that mean? It was a private equity firm that got into pharmacy. And then you were the right connection 

George Zorich, ZEDPharma: for that. What happened was a private equity firm contacted me and said, we're forming a fund. We're raising $400 million. We have private equity. In other words, 150 people all contributed in allotment of cash, Latin men of equity.

And we want to go out and buy health care companies. Hmm. This group, we're a bunch of ex Baxter and Cardinal people. So they understood healthcare distribution, which is in a way, a little bit rare in private equity. A lot more times you might get business oriented people from Harvard, Wharton, uh, and, and they're just managing a bunch of cash.

These were operationally heavy individuals who understood Baxter's model Ivy solutions typically, and, uh, Cardinal, which was distribution of pharmaceuticals from A to B. And so they wanted someone in the pharmacy. And so the connection was as simple as you've done pharma. We're not really that experienced in it, but we want to start buying pharmaceutical companies.

Will you help us with the due diligence? And we, you then come onboard. 

Mike Koelzer, Host: It sounds to me like they were in the healthcare field, but not drilled down enough for one of them to do the things that you're doing. 

George Zorich, ZEDPharma: You know, it really helps if you're going to acquire an injectable pharmaceutical company to really have been around the block and understand that space with IV sets solutions, Ivy bags, uh, if you're just shipping product as Cardinal did, you know, 20 plus years ago, the injectable space can be a little daunting.

So it really does help to bring in some talent at that point and they thought I could help them. 

Mike Koelzer, Host: So how did they come across you at the time when they're looking for this, did you have your shingle out to be doing some of this stuff or were you tied up somewhere? 

George Zorich, ZEDPharma: No, I, you know, I, I just came off a successful sale of a company called giv where I was president general injectables and vaccines.

And we're the largest distributor of vaccines to physician offices in the U S market. In addition, we also had one of the three flu shots as a proprietary exclusive. In the U S market. So we had a 150 person call center and the technology was state-of-the-art. They really did a great job of calling on all these doctors, and selling vaccines.

So we sold that to a company called Henry shine, and that's when I kinda got on the radar screen of the private equity 

Mike Koelzer, Host: firm. 

George Zorich, ZEDPharma: When you go into that business, there were probably VPs and marketing people and all that, that thought they maybe could be in your position. And all of a sudden here comes big George, big George, the know-it-all who comes in when these guys have been there, their whole life coming from the outside.

Is that tough for anybody? 

I think it could be Mike, but in reality, here's what happens. It's typically a small pharmaceutical company and the original founder and owner. I Want to take some money off the table. Gotcha. That's 

Mike Koelzer, Host: why you're there in the [00:05:00] first 

George Zorich, ZEDPharma: place. They want to cash out to some degree.

They've worked their whole life and they have this really nice company, but they don't necessarily have an exit strategy. So private equity firms are going to come along, write them a check for 70 or 80% of the agreed upon valuation. And the idea is that the founder CEO is going to stay on board for maybe a year, but either way that remaining 20 or 30% in five years should be a bigger paycheck for him than the first check that the private equity firm road forum.

So five years later, you know, he might get a check for a hundred million and, and, but in five years, That minority share should also be worth about a hundred million too. So it's a nice exit for that person, allowing them to go into the sunset with a little bit of cash in the bank, stay involved with the company on the board and then get another check in about five years.

So it really does work out pretty well for founders, founders/owners of healthcare companies. It's not like a hostile 

Mike Koelzer, Host: takeover. If they had a better option, they might have done that. The reason they're dealing with the private equity firm and likes of view is because that was their best option. And most of the leadership likely feels that way.

George Zorich, ZEDPharma: It's a very friendly acquisition. Sure. Some people may have thought I should have been the person in charge, in the lead. Uh, but in reality, they also know. That this private equity firm is going to put 30, 50, 70 million into the company and infuse capital that normally that original founder owner would not have the ability to do so.

It allows one to put rocket fuel in a growth situation. It's a good company. The core's good. The management team is solid. There may have to be a few tweaks here and there to add talent, but the rocket fuel of capital can really grow that company quickly. And the connections and expertise of the private equity firm.

Mike Koelzer, Host: Sometimes in my pharmacy career, I've had anxiety about just different stuff, you know, maybe just performance in the pharmacy or my career or something. And I always thought that. Pretty decent spot to be in, would be to come into a company and try to write a company that was like failing because then the pressure would be off of me.

I'd come in with a company that's going down and if it keeps going down, it's like, well, I tried my best, but if I turned it around, I'd be the savior it's like in the movies, you know, where they get these actresses that are really pretty, you know, they're pretty, you know, but they bring him in and they, their hair messy and they have big glasses on and they're not dressed very well.

You know, the plot at the end of the movie, they're going to turn into beauties, you know, do you ever have that desire of the Cinderella story or is coming in with a lot of money and being pretty sure of that equity building? Let's say five fold. Are you ever tempted to go 

George Zorich, ZEDPharma: the other way? No, because the private equity model is, is pretty good and it's pretty solid.

And here's why. You won't find many PE firms investing today in a company that has less than 5 million of operating profit today. So what does that tell you? It's already a good company. That's making profit and they figured out how to make profit. What they're missing is how to get to the next level, or they might be missing a good source of capital.

And so to take a company that really is capable of growing rapidly and efficiently with the right amount of capital and the right people in place. That's much easier to do than the one that you're referring to Mike, where it's kind of a disaster and you're trying to be the savior and come in and save it.

There's a reason why it's a disaster, and it's usually a bad strategy. Uh, they have people that don't have the appropriate talent in all the given departments or areas. And it's really, uh, it's a tough sledding. In many cases, it's 

Mike Koelzer, Host: not going to be a picnic. You're going to have a lot of stuff. That's a problem.

And the odds of turning it around are not going to be great. We know there's no such thing in business as a sure-fire thing. You know, you look at a lot of stuff. You look at Facebook stock in the last, you know, couple of weeks, that kind of thing. I know you would never fail at this, but let's say somebody was in your position coming in.

Where could things go wrong? Could they go wrong if you came in or is it [00:10:00] like sure-fire? 

George Zorich, ZEDPharma: I always felt, and I told the PE firm with the first company, we acquired a company called, uh, say backs. And the plant was in Montreal, Canada. And I said that for the, our strategy, our us strategy, if we executed three different strategies flawlessly, we could win on any single one of them. There are a variety of ways of winning in that market.

Now that was also 22 years ago. The oral solids market, the injectable market, they've all gotten much, much tougher, and it's a little bit harder every five-year period to, to think that can happen. Can it fail? And how would it fail? Can it fail? Yeah, it's usually bad strategy, bad capital allocation.

They'll be able to raise money. They'll be able to get money from friends and family, uh, bank loans, line of credits, but they don't allocate the capital well, and it goes down a rabbit hole. They invested in the wrong things. So one thing that can be common is people get ahead of their growth plan, their growth phase, and.

And it's easy to think, wow, our sales are up 50% quarter over quarter. They're really going. We're going to go crazy and invest that we're taking out this big loan. We're going to over leverage ourselves and they get over their skis too quickly. And that's why it helps having a financial partner or a capital partner or a PE backer.

You know, you have a little bit of leeway. You have a little bit of ability to make a few mistakes, uh, but you definitely have to make decisions and move things forward. Keep the chains moving. What 

Mike Koelzer, Host: was the crappy part of your job? And you're like, crap, I got to do this today. Or I gotta do this this week.

What would 

George Zorich, ZEDPharma: that be? I think the toughest part was always the first year and because it was a constant headache there the first year in any of these companies is just not that much fun. It's issue after issue. HR issues, strategy issues, pipeline issues. The first year is a headache but the last year, as the pipeline is, is getting in place acquisitions have been made.

You've got the right talent, the sales are there. The growth is there. And suddenly the rich get richer, more deals start coming. Your way more companies are interested in you. All the buying groups want to deal with you, you know, your national accounts people. So, uh, it's funny how it works that way, but the first year was always a headache and I knew it would be, what does 

Mike Koelzer, Host: your day look like in the first year?

I take it. You're not remote this year there. And what would be like a long day on those kinds of days? Are you like sunup to sundown and beyond, 

George Zorich, ZEDPharma: you know, it required? It does. It requires long days and, and many in the, in that type of position. No one it's like that. There is, there's a lot of stress.

Uh, there's a lot of travel. There are a lot of dinners. I always said, Mike, that if it wasn't for breakfast, coffee, breakfast, lunch, dinner cocktails, and an occasional round of golf, I probably never would have done a deal in my whole career where it is. So it's a networking world and networking. I know COVID has made it more of a zoom kind of thing.

Networking has nothing to do with zoom and, and in a zoom world, you won't get the deals done that you could in a regular world. And that's the world I liked. And I really enjoyed it, and I loved the networking part. Now I love people. So if I had to go to Milan for a dinner, I actually loved it, but it does take a toll on a person after a while.

Mike Koelzer, Host: It's interesting to me how the rollercoaster of what's allowed, like COVID allowed for marketing firms and different things to zoom in and maybe save some travel and things like that. But then eventually either by necessity or by desire, the people that zoom, it's going to start up the in-person stuff again, because they're going to get a leg up on things like that.

Mike, 

George Zorich, ZEDPharma: I just read an article today in Becker's where they're talking about the young, uh, you know, generation Z kids who in the last couple of years finished up college remotely and then went to the workforce and they feel so isolated and the anxiety and depression are high. And, uh, and this article had to do with, with the fact that it helps to have some structure in the workforce [00:15:00] and especially for new employees to be.

Feel like you're part of a team and it's hard to be part of a team on zoom, even if you have a zoom cocktail hour. So I think that that has become a problem. I'll look forward to the time when of course people can be remote in the office one or two days a week, but I think it works best in a corporate model.

When you have people in the office too, and building that team, 

Mike Koelzer, Host: my brother leases out business real estate in Chicago, and he put an article out. He just sent it from some other source, but it was pretty interesting. Some things you don't think about, like it said that at least from this guy's angle, he was saying the reasons why.

Business real estate may not go down. People want to work three days a week. The problem is it's the same three days, you know, it's Tuesday, Wednesday, and Thursday. And they talk now about how, since people have been home, they've experienced more spreading out and not being in a cubicle. So the average worker now needs some more space, you know, and the list went on about these things and maybe people don't want to be as close anymore because of communicable diseases.

So now that spreads it out. So, you know, you don't know what's going to happen. Um, you don't, you can't predict all these things where that's all going to go. But, um, I don't think zooming is necessary. 

George Zorich, ZEDPharma: It's not the way I'd want to run a business yet. I do know that, you know, if you have a professional group working that has remote time and allows the employees flexibility in their life and a work-life balance.

Yeah. I think it's all great. Uh, the only caveat to that. You know, if I'm in charge of a company, I don't really care what you do. It's just, you'd better get results. It still comes down to that. George, did 

Mike Koelzer, Host: you have private 

George Zorich, ZEDPharma: jets? No. No. Well, you said Milan over in Europe, right? Yeah. That private jet was the American airlines, private jet, the private equity firm, the founders of the private equity firm, typically road.

They have it. Yeah. They wrote in private. I was just an operating PO, you know, I mean, I'm running, running a company for them and I'm, I'm a PR 

Mike Koelzer, Host: I know that in your LinkedIn, you sold a few of these and there was a boatload of revenue that came in from the sale. That's the goal of the PE firms they want to sell after five years or something like that.

What typically is the goal of these companies besides making money? Of course, the 

George Zorich, ZEDPharma: goal is to get three to four times a return on invested capital. And if they do that in 5, 6, 7 years, it's been a good investment and they want to get out then. Yeah. So if you invest, if you invest 50 million in a small plant and you, you add another 50 million in investment capital, that if you can sell the company for 400 million, five years later, yeah.

That's a great deal. And we're fortunate with that in that we, the first one sold for 480 million plus an earn-out, the second one sold for 550 million plus an earn-out. And so when they get those kinds of multiples, everyone's. 

Mike Koelzer, Host: You're talking about PE. Now these are like going into companies that are already moving, but then at some point you got out of the ones that were already companies.

Why did you go from PE to venture? What was the impetus for that just by chance sort of, or did you have a reason where you wanted to go venture more than PE? 

George Zorich, ZEDPharma: No. The main reason was theory. The original owner of giv back 25 years ago, RJ Kirk brought me into giv and gave me the opportunity to be president there.

Twenty-five years ago, I was able to grow the business forum and successfully sell it to Henry Schein. We stayed in touch and he reached out to me because he was the majority investor in a company called Intrexon, which was specializing in synthetic biology. So he wanted me. To get involved with this new startup company, use his company as a partner and take it from there.

And I thought that sounded really interesting, innovative, and RJ was an old friend of mine. So that's really why he brought me back. You know, it's kinda like, you know, bringing in a relief pitcher, you know, maybe a washed up relief pitcher, you know, just for a couple of innings, venture capital, much higher risk.

And it doesn't have that PE model where they expect you to have operating profit of $5 million. Plus this is a case where it's a high risk synthetic biology model. That's trying to find a [00:20:00] and manufacture a rare protein for a rare disease called Friedrich's ataxia. So you get venture capital money willing to put it in.

And what they're hoping to do is get maybe three out of 10 to hit private equity wants all of them do. Or nine out of 10, but it's also less risky. 

Mike Koelzer, Host: Three out of 10 companies to hit not products in the company, 

George Zorich, ZEDPharma: three out of 10 of the companies to sell effectively for venture capital. And those are, those are home runs because venture capital, if they put in 10 million, they'll get back such a gigantic check that they can play those odds.

So they're playing the odds like major league baseball. If you bat 300, you might be in the hall of fame someday for venture capital. If you hit on three, a year investments out of 10 you're in the hall of fame, private equity needs a little higher percentage because they don't get the returns on invested capital.

Mike Koelzer, Host: That's really interesting because I read sometimes not necessarily in pharmacy, but I'll be reading, you know, some things online and they'll say this company was, you know, venture capital and it failed and this, and then I'm like, oh, those are stupid moves and so on. But it's not, it's a 300 average.

You're looking for. 

George Zorich, ZEDPharma: Right, because think about it in this case, it was using cutting edge, synthetic biology. It's very buck Rogers. It's very high risk and it takes a long time. So venture capital deserves those returns. Those hefty returns on the few that make it because a lot of them fail. 

Mike Koelzer, Host: Where are you in this regard with this company?

Are you still with them? No. They 

George Zorich, ZEDPharma: sold to PTL and wasn't successful. It was successful. There we go. It was successful because they got to a point, not that they got to market, but they got to a point where another company wanted to acquire that. They thought it was de-risked and that they could have a good chance of getting that through the FDA and to the market.

So it was one of those interim acquisitions. And that was at a point also Mike, where I had made a decision in life. I was 59 and my parents were. I was going down to Dallas every third week, I was going to our offices in the Washington DC area one week a month. And I was going to visit our investors in new, mainly in New York one week out of every month as my, uh, mother had had a stroke.

And my, uh, stepfather who had raised me was, you know, really suffering from Alzheimer's. I kind of woke up in a hotel room in Gainesville, Florida. One day when we were meeting with a research team there and I kinda just went, what am I doing? Yeah, I've had a lot more success than I thought I would. I've made more money than I thought I would.

These are high stress positions. I've got to make an assessment in life. And if I want to live to be 85, am I going down the right path? Right? Or do I need to cut this off at some point and try and. Live a healthier lifestyle. I had a board meeting within three months. We had a, you know, a succession plan and things were moving in the right direction, but I just decided to go get out, do volunteer work for my own company and do board work.

Mike Koelzer, Host: When I hear about a board job, that sounds like a cush job. You fly in, you get the lunch spread out there. Maybe they come around and ask you what you want for dessert and things like that. Tell me about the board 

George Zorich, ZEDPharma: jobs. Yeah, I think the board jobs are fun. You can never get them when you have five years experience in the business.

Yeah. I would never have had a board position if I hadn't had some success in the 35 years. Right. So, uh, I think they're really fun positions. And, and the breakfast buffet or lunch buffets, not as great as you think it is. Let's be real. Let's be real 

Mike Koelzer, Host: here. Let me back up. All right. Here's what I know about the board and tell me where I'm wrong.

You have the experience. They ask you to be on the board. You get paid for this. You show up once a month at the headquarters, you stay there for a night or two. They vote on stuff. And the stuff that you're voting on is not the intricacies of the business so much, but it's more about the direction the CEO should take, or the owner then.

Has to listen to the board because in the corporate structure, the board has so much say, and you then spend a couple days a month doing that. And then you read about stuff when the next meeting is coming up. Am [00:25:00] I way off, is that to Hollywood or w how close is that? 

George Zorich, ZEDPharma: Well, the board meetings are more quarterly.

Oh, quarterly GoDaddy. That's more common, but early on in a company, they might have monthly operating type review meetings. So you get a little bit more in the weeds in those situations, there is a packet of material that comes out. There are calls in between where, when issues come up, you get on those calls.

And, and for that, you know, you get, you know, usually get stock. If it's a publicly traded company, you get cash, uh, annual. And it's typically 50 to 75,000, but it comes with a lot of work. And, and so it does sound glamorous, but it really does come with a lot of work and responsibility with the publicly traded company with a private company.

It typically is all stock, you know, you're, you're hoping the company improves. You're hoping the board is always on a friendly basis with the CEO and there's a great relationship. And that overall, you all agree on what the best strategy is going forward. So it should be a very collegial atmosphere.

It should not be adversarial and, and your goals should be aligned. And, and hopefully in those cases, you know, you build up the company itself and whatever stock you have, you know, there's, you know, uh, some sort of financial. Some sort of liquidity event, 

Mike Koelzer, Host: Let's say a company where the owner is a CEO. Do they ever set boards up and they're kind of recommending boards?

I mean, would you set a board up if you own the company to help you, or is it always like a balance of power? 

George Zorich, ZEDPharma: Usually the board comes in after a financial partner comes in. So a PE firm came in, got ya. You're going to set up a board, you go public, you have to because of the governance issues. So, um, but many sole proprietors, founding partners, you know, one deal we had with, with, uh, there was a company, uh, a person who I really like.

He's just such a great guy in the industry. He had a generic distributor and, um, he is probably the third largest generic distributor in the country, mainly selling to independent drug stores. And he. Sold his company for 180 million to McKesson. Wow. So we did that deal through Zed pharma. He never had a board up until that point.

And even though that was a pretty large company, he managed it himself and he did not need that board. And I think that's common for the entrepreneur independent owner, whether it's a $5 million company or a $200 million company, they don't necessarily want to have to deal with a board they're used to making decisions and they make a lot of right decisions.

Why do they even want that? It's only when you get a financial partner that you're probably going to get one. And then you 

Mike Koelzer, Host: mentioned Zed pharma. Tell me about that. 

George Zorich, ZEDPharma: It's as simple as saying it's a consulting company. So what I did was I formed this company to assist. Company founders and owners with exit strategies or to find a capital partner.

Sometimes others just wanted to get to that next level of business, that evasive next level, that they just couldn't really penetrate. So Zed pharma helps them with any, any, and all of those areas. So I formed it just because people were coming to me and saying, Hey, George, you did that several times.

Could you help me? And so sometimes I invested in the company, sometimes not, and really I've only done it in a reactive manner. Zed pharma is set up only in a reactive manner when people call me, I'm not looking for business, but we have had successful exits totaling 550 million so far for the. So, um, you know, I, I, I think it's added some value.

Uh, I've enjoyed working with these companies and the, and the entrepreneurs. And, uh, yeah, I think it's been mutually beneficial, 

Mike Koelzer, Host: George, these people that got into the private equity stuff, and you said there was like 150 of these people are these people that they've got their own personal money and they want to invest and they think they're going to do better than the stock market.

And they're still, maybe in the workforce, however, that is a leadership force or something. Is that close 

George Zorich, ZEDPharma: it, you know, there is a segment that's high net worth individuals, but surprisingly many private equity funds will. Pension funds as one of their, their biggest LPs or limited partners. That's [00:30:00] one of the 1 51 pension funds might be one of the 100 or 150.

I got ya. Let's say it's a $400 million fund. You have a hundred limited partners and they on average put in 4 million. Gotcha. You might get a bunch of high net worth individuals just putting in 1 million, but you might get the, uh, Michigan state teacher's fund putting in 10. So it's really all about diversification.

Gotcha. So all those funds are going to be heavy into equities and bonds and treasuries, but they might have a little slice of the pie where they say, Hey, we're willing to put a couple of percent in private equity. It does have risk, but it's a pretty much controlled risk. And considering the rest of our allocation.

For the pension fund. It makes sense. So that's why you get PE firms. If they do well, they tend to get a lot of these repeat customers in fund one and then fund to fund to fund ones. Very successful. You get everyone anything up for fun too. So you go from 400 million to 500 million in the fund or 600 million to 800 million.

Cause everyone's outgoing, Hey, put me in for more. You guys were good in fund one, right? It beats just putting it in, in general, it's going to outperform a mutual fund. And many other types of investments. 

Mike Koelzer, Host: So if I'm in a mutual fund, let's say my retirement mutual fund, there's a chance that some of the percent is in a private equity fund.

I don't even look at the damn thing out of the mutual fund. There's some Microsoft and apple, a few percent of all this stuff, and it goes on forever, but is one of those line items, a PE thing 

George Zorich, ZEDPharma: it could be, but you know, if it's a mutual fund, like a Vanguard fund, it's probably just, you know, mainly equities.

So you're going to have all the blue chip stocks and, you know, they'll tweak them based on, on their internal analysts and what they recommend, uh, based on all the research they do. But in general, it's a lot of, it's just a nice diversified bunch of blue chip stocks or high yielding dividends. Uh, I mean, you know, it depends on what kind of fund you're in, but it's, it's all meant to be lower rate.

Mike Koelzer, Host: We've been talking about all the rich people that get to invest their money, but let's say that someone's coming from the opposite end. They're coming up as an 18 year old. And they're hearing this about pharmacies. It seems to be a lot of money in health and pharmacy. Does that 18-year-old take a path though through pharmacy school or do they work around pharmacy school and come into the industry?

Somehow 

George Zorich, ZEDPharma: I still think pharmacy is one of the best springboard degrees that one can get. So it rates up there to me with engineering, business finance or finance, accounting, and pharmacy, I think can be a springboard to a lot. I don't know if you know it or not Mike, but I wrote a book called entrepreneurs in pharmacy and other leaders, and I highlight 10 entrepreneurs and I also highlight 33 leaders that took a job.

Totally did. Then hospitals or retail that were pharmacists, they're all pharmacists, the entrepreneurs built up great businesses and the leaders were not in retail or hospital yet. They did all sorts of things in life. Joe ran Azizi became the number two guy at DEA who better to have a DEA than a pharmacist.

So the list, you know, can go, goes, goes on and on. I think it's a springboard degree. Here's the caveat though. When I graduated from the University of Wisconsin in 1978, it was $250 a quarter for room and board, my freshman year and 275 for tuition. So for 1,550, I could go to college at the University of Wisconsin and go towards a pharmacy degree.

I could make that in the summertime. Yeah. Today. And I'm on the board of visitors at the, or I was on the board of visitors at the university of Wisconsin. The students today are paying 20% net of inflation, 26 times that amount. So net of inflation, 26 times more expensive than the degree I got. So my only caveat is you better have a good game plan.

Hopefully it's two years. Pre-pharmacy four years in the school of pharmacy. You get your form D and you move on if it's four years plus four. And then you're thinking about a residency, Dave Zills, who's a past ASAP president, a real futuristic [00:35:00] thinking pharmacist. He was our chairman of the board of visitors.

He kept track of residents with a two year residency and the average resident and a grad from that program had 130,000 of debt on average. That's a big number. It's one thing to have the debt after. Hey, I got my Pharm D degree. Now I'm going to do a two year residency. And although you had paid a little bit, I mean, you're, the debt just keeps accumulating because you're not getting paid enough, you know, or, or a lot.

So the debt load that those students had is astronomical. And, uh, so that's, that's my concern. I think it's, uh, a great degree to do anything in healthcare and definitely in pharma, definitely in a hospital, but I'm not too sure if we need Pharm DS for everybody, and then have them work at CVS and log.

Mike Koelzer, Host: My dad was a pharmacist. And back then it was four years, you know, and mine was five years. And that makes a lot of sense thinking then to go into either nothing or MBA or law or something like that. I ain't no world traveler jars, but someone told me that over in Europe, they don't do this repeat of junior and senior year of high school.

In other words, they don't do the math again. They don't do the liberal arts, you know, English and all that stuff. And I'm thinking, why is that? That you're repeating junior and senior year. So if I were in charge, I'd find a way to get rid of that in the U S. If you think about it, pharm D let's take off those first two years of pharm D then it's a four year program, correct?

Take off those two years and make a community pharmacy, uh, two, two and a half year program. Not 

George Zorich, ZEDPharma: six. Yeah, I think there is something to that, what you're saying, Mike, and, and, and I think a big part is. Where is the profession going? We have over 300,000 licensed pharmacists, 155,000 are defined as working in a chain.

And where are those people going to be in 10 years? And I don't necessarily have an answer, but I do think Roz brewer at Walgreens, the CEO, Karen Lynch, CEO at CVS is not seeing the pharmacist as their salvation. I think they're seeing it as a useful healthcare worker. That's highly paid. And how can we get a better technician to pharmacy ratio?

How can we get more artificial intelligence there? And quite frankly, how can we get more primary care? And they're not thinking of pharmacists as a primary care part of it, which is very kind of sad to me that we've come this far. Yet even CVS and Walgreens don't seem to have that in their plans. 

Mike Koelzer, Host: They care as much about the pharmacist as Amazon, et cetera, cares about truck drivers, right?

Our delivery drivers with the self-driving trucks and the drones. Yeah. It's the same thing. They don't see that as part of the business, they see it as basically an expensive current way that it funnels the product out. 

George Zorich, ZEDPharma: I could not agree with you more Mike. And, one of the reasons I wrote that book was that our Dean turned us down one day and said, ACPE, the accrediting body for the 140 plus schools of pharmacy, now says that we have to teach entrepreneurship.

So I sort of, what are we going to do about it? Long story short. I said, okay, I'll write a book a year from now. I'll sign copies for the board of visitors. I'll have it done in a year. Let's start an elective class or a club on entrepreneurship and we'll have a shark tank. And what we'll do is fund two scholarships with royalties from the book.

So we've done that. I mean, I just had a class last Friday up in Wisconsin at the university of Wisconsin, and we have this great group of kids who are in the entrepreneurship group and moving towards shark tank. Here's my point. We need to get more entrepreneurial pharmacists out there because whether we have a lightened degree, that's going more towards retail or a pharm D degree, that's going more on the clinical side in hospital.

We really need to start teaching these students more about entrepreneurship. Yeah, because hanging a shingle might be the salvation of the industry and of the profession, just like it was 50 years ago, 70 years ago when independent store owners were the entrepreneurs. And those were the true entrepreneurs of the day.

We need to get back in some way, shape and form for getting PBMs and DIR for a while. But getting back to hay and shingles and getting more entrepreneurial [00:40:00] thinking in these students, let them set up businesses 

Mike Koelzer, Host: agreed. And the problem with that is you might have somebody with that entrepreneurial spirit, but boy, you tack on a few more years of education and then, you know, 130 grand on top of that.

And that's not good for the entrepreneurial spirit when someone's coming in that far behind. 

George Zorich, ZEDPharma: It's yeah, borderline devastating and a non-starter. I mean, it's really hard, I can't fathom. If I go back to the late seventies, having that burden of debt and then trying to go out and actually buy a car and buy a house and raise a family or start a family.

And I mean, it just puts such a burden on these students coming out and, and quite frankly, I blame the university. I think it's not anything more than once again, cause I've run all the numbers net of inflation. It's 26 times more expensive. Then when I was at school and got my degree in the seventies.

So how do you explain it? And when I asked that question of Becky Blank, our chancellor, she did a lot of fumbling and stumbling and mumbling for 30 seconds till she kind of remembered her talking points, but there's no real good answer for the students. Are getting the short end of the stick. 

Mike Koelzer, Host: She didn't tell you it was in the, uh, new mural gymnasium that they bring all the students through to sell the college on the first day.

George Zorich, ZEDPharma: It's so funny. You said that. Cause she did say that she actually did. I'm actually blown away that you use that as an example. That is one of the things she said, because she said we had to have this gigantic rock climbing facility to compete with Missouri. Yes. What I found funny because Missouri is not even in our conference, but to her, that was a Midwest school and she used it as an example.

And, and so when you said that it's like, oh my God, I can't believe you guessed it. 

Mike Koelzer, Host: I thought it was cool. Your stark tank is with an RX, you know? So that's a cool thing. Have you ever seen a real shark? Yes. All right. It always amazes me the people that are there. And I think it has a lot to do with the theatrical because these people go on there and then, you know, the five sit back there and say, tell us about your sales.

And everybody goes through, you know, and they bring up the lions and they say, you don't already have 5 million in sales off your head. And it's like, they always want these companies to be successful. And if I have that much success already, usually in a grassroots company, I'm not going to want the money from the sharks.

Maybe I want their access, you know, to their QVC or whatever these companies do. Let me ask you, George, when you hear an idea from some of these pharmacy entrepreneurs, do you encourage ideas or are you under the mindset that, you know, an idea can be a dime, a dozen, you know, how quickly do you want to see an entrepreneur with a sale?

And sometimes to get those sales, you have to piecemeal things together. You know, you have to have maybe a proof of concept, but go with, you know, a 10th of the product that might be the final product. 

George Zorich, ZEDPharma: I really do believe they need to have a, a F, a focused idea. So, uh, the idea for classes, maybe unlike what's real life and in the classes is meant to take an idea.

And many of these students also work part-time at a retail drug store, the hospital, and a nursing home. So they actually have some. Good observations of what they're seeing as issues in healthcare. And so their ideas kind of reflect that. And, uh, so last Friday was kind of interesting because with one of the students, I had to say, okay, here's a term I use.

I use it in business quite a bit. I just need the time. I don't want to know how to build a watch. And, and your idea of what you're trying to do is a little bit all over the place. So, for next time, let's focus. It sends me emails if you want, we'll fine tune it, but you're kind of like all over the place.

This project has to be an issue that you can define and what your product or services that's going to fix or address. And so we've used that approach and I am really surprised. How smart, innovative and thoughtful these students are really is all [00:45:00] the way back since 2017. Some of the projects are amazing.

One of them was so good in an oncology app for oral oncology products, uh, that would interact between the patient, the physician and the pharmacist to make sure there was adherence and side effects got monitored for these very expensive oral oncology products. And it was so good that the local NBC affiliate picked up on it, did a story on it.

Milwaukee picked it up. And when Milwaukee picked it up, advocate Aurora, which had offices in Milwaukee. I Want to talk to these students. So here was, you know, a group of three students working together on this project and their project was good enough that it actually got Aurora and then Walgreens to set up a meeting now.

Well, as it turned out, all three just ended up going to work after college, they found it to be a great experience. The one thought he was just going to raise capital and go into it. But one realizes at that time, it's like, this is hard. It's hard being in a startup and it's hard being an entrepreneur.

So, uh, you know, go work for 3, 5, 7 years, pay down your debt a little bit, have some fun, get money in the bank. And somewhere down the road, you're going to have another idea, but you'll be ready for it really. This time you'll know how to take that idea and make it into a business, but it might not be right out of school.

Mike Koelzer, Host: Yeah, that's hard because as we talked of that commitment, you got the commitment and the money, even if you took a guy straight out of high school, even them without any debt, they've got to like macaroni and cheese. It, you know, with four or five buddies in an apartment, you know, for four or five years to get something off the ground.

And that certainly doesn't compare to, you know, seven years later in that much debt. And then on top of that, which is hard anyways, to have, uh, an idea and then be the business person to put an idea into practice, really tough. It 

George Zorich, ZEDPharma: is. And it would be nice if we could find a way to accelerate some of this, let's say it's in schools, a pharmacy, number one, let's have it in all schools of pharmacy let's then have national competition.

For all the winners at school. And, and that was the original vision of what we wanted to do with, uh, sharks tank, you know, with the RX S H a R S tank. And, um, and you know, I've been speaking with Scott Kinora at APH and, uh, you know, they just got so many other things on their mind. And, and I think it's true in general that our pharmacy associations are just so distracted.

They're, they're really not doing the things that the rank and file need. So I look at Lucinda Main at AACP and Doug Hoey at NCPA and Scott as a PHA Paula Bramwell, it's ASAP. And yeah, and it's like, you know, what, what we really need is every pharmacist contributing 200 bucks and having a pack for what's needed.

To get things moving in Congress, cause nothing's going to happen without PAC money and lobbyists and influence bills. Won't get written. And, and so we're all trying to hope that this is going to happen in pharmacy, but I think it really is going to take much more lobbying muscle. It's just not going to happen.

Otherwise I've 

Mike Koelzer, Host: had the leaders on from these organizations and they've all seemed to have told me that they're spending money on lobbyists and getting these things done. And so on. Would you disagree with that or do you think just more has to be 

George Zorich, ZEDPharma: added? I think it's like the AMA, you know, there are 30 different organizations underneath AMA rheumatology, orthopedics, internal medicine, family practice, pediatrics.

We almost need that for pharmacy, one central group. And then that way a PHA and NCPA and ACP and all that they can all exist. And they could do their thing, but the umbrella organization at the top has to be all about lobbying for the agreed upon direction. And that direction really might be three or four things, but let's say one of them is PBM reform, a DIR, which gets talked about quite a bit on your podcast.

The idea being though to do it like the AMA AMA cares about big time medical issues at the top. And that's where a lot of lobbying [00:50:00] money goes. And a lot of, a lot of PAC money, American trial lawyers association, you know, there's tons of lawyers in the country and even trial lawyers, but that's the biggest lobbying group for the Democrat party right now.

What's the number two teacher? So, uh, what's, what's big on the Republican side, actually, I don't even know, but, um, pharmacy needs much clearer direction, crystal clear, and it's gotta be an umbrella organization or. I'll just give it to APHL with Scott gunner, he seems to kind of get it a little more and just let everyone become a member of a PHA or an associate member, but you just joined their pack, but that's how it's going to happen.

And, and, and part of it, part of it is, and here's the reason I'm saying it. I got a link for a house subcommittee on DIR in PBM reform. So I, I hit the link and I thought I'm going to listen to this for like two minutes and then go do something more fun. I started listening to it and was very intrigued.

There was a guy named Anthony Chacho from Ohio, kind of like a DIR PBM guy understands it really well, works a lot with Scott at APHL Antonio cha-cha and I was so impressed with him and a few of the speakers, but what struck me, Mike was we had two pharmacists in Congress once buddy Carter. First district of Georgia.

And there's a woman from Tennessee, here's my takeaway fade and get DIR fees. They didn't understand PBM issues. And that became crystal clear to me because I listened to the whole thing and it's like, oh my God, the two pharmacists in Congress who might champion this or might bring this forward, they might even sponsor a bill.

They wouldn't know what to put in it. Now that's not all that bad because lobbyists typically write bills, but we need, we need, that umbrella organization of pharmacies with PAC money, that's got a bunch of money behind it and there. Then they go in, talk to Congress, get buddy Carter on their side. To champion everything.

And that's where the legislation gets written. But, what struck me was two pharmacists in Congress. They didn't understand the issues they tried, but they just, it's a hard thing to understand. 

Mike Koelzer, Host: And that's by design, by the PBMs, I was talking to one of my employees at the pharmacy and we were talking about how some of the states, including Michigan, are now going to pass something about PBM reform.

And one of the things was basically getting rid of some DIR, getting rid of some rebates and things like that slash all of it. I'm not sure, but basically getting rid of it. And we both agreed. We said, well, yeah, but they're going to get it somehow. They're going to sweep it out some other way. But my comment to my employee was yes, but if we can begin to take it away.

At least some of the smoke and mirrors gradually, you know, it's like, all right, the DIR is gone. All right, they're going to take the money here, but we've removed a little piece of confusion because they're professional smoke and mirrors guys, the PBM and the lobbyists, you know, they do that on purpose.

George devil's advocate, you say, has an overall fund. That's like saying all the different church denominations get together and agree on something though. There's no way in hell that's going to happen. I mean, there's, that would never happen. And there's other, other examples of that too.

Could that happen? This overall fund? When I talked to the leaders of these associations, they seemed to be pretty well jibed together. Do you see that as a possibility of having an overarching fund or goal? 

George Zorich, ZEDPharma: Great question. And, and number one. They all have their individual silos and priorities, and I respect that they all make a ton of money, so they're not going to go away and, and, and just say, oh fine.

We'll, we'll just close up shop. And have it go to, you know, one main organization. We wouldn't even want that anyway. So it's fine to have all the different silos, but to answer your question, I do not think they would allow one pack overall because they all have their own individual pack. That is just for their little silo.

So I think it's got to be, I think we have to think broader and it would take too much marketing muscle to form a whole new umbrella. I would actually put my eggs in the APHL [00:55:00] basket, which used to be when I was in school. You know, we had Safa, I don't know if it was around when you were in school, but still.

In ADHA and I would hook on with one organization. So it could be Ash P too. But, I think APH is probably a little closer to representing all the rank and file people. And you can also make an argument. It's Doug Hoey at NCPA. I don't care who wins the battle, but it's gotta be where we can get. We'll look at it this way.

Doug ho he's probably got 20,000 plus independent store owners. Yeah. If they each gave 200 bucks to his pack, that's 4 million a year. I have a feeling he doesn't get that right now. So how do you mobilize a group? That's just by nature. Independent. So they might belong to NCPA, but they're independent thinkers.

They want some. But how are they going to get it? I think it's Scott Connor at APH. I don't even know if he has a pack. I would get just 300,000 people contributing to that pack and blow it away, because think about it. Pharma's got two lobbyists for every member of Congress and bile has one lobbyist for every member of Congress and in the pharmacy organizations and the generic association, you know, they have one here, one there, they just can't make much traction.

You need, you need muscle. It's the only thing they understand is money and muscle and leverage in Congress. 

Mike Koelzer, Host: I had both Doug and Scott on the show recently, not together, but they're doing some cool things together, you know, with some of the reform and stuff. They're sharing funds. 

George Zorich, ZEDPharma: Well, maybe the two of them, maybe they could just have one separate pack.

That's called the pharmacy pharmacy United. And they just go crazy on it, market the hell out of it. And, and really trying to incentivize people, here's our clear cut message. Because usually when I've contributed to packs before, I really had no idea where the money was. Right. So let's define words, going be crystal 

Mike Koelzer, Host: clear, probably gone to those board meetings, smorgasbord.

And we talked about, 

George Zorich, ZEDPharma: Yeah, those breakfast and lunch buffets. You, you talked about, you know, with the, the bad, bad breakfast and lunch. 

Mike Koelzer, Host: I had Scott Newman on from pharmacists United for truth and transparency, uh, a little bit ago and oh, there's 

George Zorich, ZEDPharma: something called pharmacists United. Is it a pack? It's 

Mike Koelzer, Host: not a pack.

It's a group. And it's really focused on independent pharmacies more and they feel kind of a neat void because APJ is not just independent and NCPA is independent, but it's not at the state level. So the PA serves kind of a grassroot function, but Scott was saying. And it's, it's kind of echoing what you said.

Scott was saying that if 80% of independent pharmacists joined NCPA, that the lobbyists for the PBMs would be defeated. In other words, there would be enough money that we could out lobby the PBMs. And you're saying it sounds like something similar. 

George Zorich, ZEDPharma: I think number one, what you just said is absolutely true.

And I'll give you an example. The LA Unified School District has 30,000 teachers. They each pay around a thousand dollars for their union American Federation of teachers or a, uh, national education association, but it's mainly American Federation of teachers. So they pay a thousand dollars. They have about 70% in LA unified that are in the union.

That's $21 million. That goes mainly to political causes at the local state and federal level, 95% goes to the Democrat party. Do you think teachers have a COVID that shows you that whatever the American Federation of Teachers wants, they've been able to get? I'm saying the same thing ought to happen in pharmacies.

Those teachers are much more dedicated than pharmacists are in promoting the causes that would actually help them out in life and in business. So we have to get that mentality and the teachers have shown how powerful they can be collectively and pharmacists. You know, we have those silo organizations and they have, you know, fun meetings and they get to give awards to each other.

But I don't know if they're moving the chains enough and the, my, the hope would be Scott and Doug maybe can get together and have a separate pack. And then agree that both our [01:00:00] memberships, uh, and anyone else can fund it for the better of pharmacy and the profession. I think it's the only way we win my 

Mike Koelzer, Host: wife's a teacher.

The reason teachers have that it's because they have the damn teacher's lounge. They sit there for an hour a day and just bitch and gripe to each other. They've got this job, they work eight to three 30. They've got every holiday off. They've got summers off. And if you tell this to the teacher, they'll say, yeah, but we take work home and it's like, no other profession ever brings stuff home.

Yeah. The point is you can get a lot done if you have the right focused message. Whether it's saying that you've got the worst job in the world on a teacher's schedule, Or, you know, the COVID stuff, you can get a lot done. If you have a unified 

George Zorich, ZEDPharma: voice, definitely you need that unified voice. And, and, you know, I've been at Capitol hill I've I've, uh, I've spoken to members of Congress, uh, as many other people have and, and you know what, they, they react to money in contributions more than anything.

Of course they want to do it. What's good for the better, their constituents and everything else, but they also know they have to be reelected and they're always having their hand out for money. And I think we're missing the, we missed the, the we're missing the parade on that one. Uh, and we have to get smarter about it.

I've had 

Mike Koelzer, Host: 130 some shows. I've never had a fire round, but I've got a fire Ron for you because we covered so many different pathways of pharmacy. We're going to cover the four different paths that we talked about. Basically today, we're going to talk about the associations, the political heads, business heads and education heads.

Here's my question. If you wanted to change the future in the best way for pharmacy, what position would you have in the schools? Would you be a Dean of the best pharmacy school you can think of? Would you be the head Dean of something? Would you be in charge of the school, a pharmacy thing, something like that.

That's one business. Would you be the CEO of. Some pews, pharmacies, educational companies, or something like that. Politics, would you be the president, would you be in charge of the FTC and so on and the associations, would you start an association and be the top kingpin of this thing we were talking about?

Or would you take Scott's position or Doug's position? There is a firearm for those four and you can pick which one you want first, but we're going to cover all four of them 

George Zorich, ZEDPharma: when you're saying, what would I want to be? I think I'd always want to be, like you said, is it a Dean of a school of pharmacy? I think I would always want to be more like a loose demand.

Lucinda Main is at the American academy of colleges of pharmacy. So she works with ACPE to put the curriculum together of what kids are taught. 

Mike Koelzer, Host: If she's not there, that would be the position you would take an education. 

George Zorich, ZEDPharma: Yeah. It would have to be something at a high enough level where you could influence, she would have zoom calls with every one of the deans at any given time or have meetings where all the deans and top faculty attend.

So she's such a big influencer and ACPE, the accrediting body ends up being such a big influencer. That would 

Mike Koelzer, Host: be the position in education. Yeah. How about, how about association? So you could take either Scott or Doug's position, or maybe you'd form a new 

George Zorich, ZEDPharma: one. I would form a new position. That would be the equivalent of the AMA, but for pharmacy.

So it would be a blanket organization where all these groups had a dotted line up to them. They didn't. Scott wouldn't report to me or Paula Bramlett, but I would be at that meeting where all those guys get together every couple of months and talk about things. So they have an organization where they do get together and compare notes, but I think they need an umbrella organization that includes a lobbying group over that 

Mike Koelzer, Host: group.

All right, that's too, we've got the top business position you would take in the world and the top political position you would take in the world to help pharmacy 

George Zorich, ZEDPharma: top business position in pharmacy 

Mike Koelzer, Host: could 

even be the head of Twitter or something you can take over any position you want. 

George Zorich, ZEDPharma: Yeah, 

I would, I would, uh, if I really wanted to help pharmacy, it would be something with, I think either the private sector or government where it's connected to the banking [01:05:00] system and getting better access to capital for pharmacists for pharmacy entrepreneurs And, and finding ways of restructuring debt and, and, uh, figuring out a way of, if they give back to the community, can that debt be forgiven? So in other words, if they, if they do five years of work, uh, at places that need pharmacists you know, can, can their loans be forgiven? 

Mike Koelzer, Host: It's in the business sector, pick a company.

Who are you going to do that with 

George Zorich, ZEDPharma: Citi 

Mike Koelzer, Host: You're the CEO of Citi Yeah.r All right. Well, there's one left politically. What position do you take in the political realm to help pharmacists the most to help pharmacists? Yeah. 

George Zorich, ZEDPharma: President of the United States. You'd be the president. Yeah. And, and part of it is, think about it.

If, if Joe Biden tomorrow said I'm getting together with CMS, And I'm getting together with XYZ groups and we just don't get how important pharmacy could be in primary care and helping reduce healthcare costs D prescribing, uh, getting people healthier in this country and, and pharmacy is going to be a key part of moving forward and being one of our answers to increasing healthcare costs and trying to get less people on medication and get them healthier, working with other fields in medicine.

But, we don't see it. No one seems to get that pharmacy has more value than we think. In other words, we know it, but no one else is really saying that enough. We need the president of the United States Senate and a B in the. 

Mike Koelzer, Host: Well, George, I put you in any of those four positions. I appreciate all you're doing for pharmacy and thanks for your leadership.

George Zorich, ZEDPharma: Well, I really appreciate being on the podcast with you, Mike pleasure meeting. You hope your cold gets better. 

Mike Koelzer, Host: I blame my call. I think it's like a nasal drip kind of thing. My kids I'll cough and my kids, they just yell at me practically. And then with their volume of yelling at me, then I'll say to them, How would you like to feel like you're being waterboarded?

It's not good enough to say, I'm sorry. I have a cold. I got to bring up waterboarding to really make a few and they don't feel it. They don't even know what the hell waterboarding is, but my wife at least feels a little bit sorry for me. That is funny. All right. Well, George boy, thanks for everything. You 

George Zorich, ZEDPharma: do the same with you.

Thanks for this opportunity on your podcast and good luck going forward with your podcast too. I like the whole 

Mike Koelzer, Host: idea. Thanks, George. I look forward to having you on again. Thanks Mike. 

George Zorich, ZEDPharma: Take care. Bye-bye

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