Established by Dr. Kichul Cha, InBody stands out as a captivating success story from South Korea, evolving into a globally recognized body composition analyzer company widely used in sports centers worldwide. With a robust foundation of over two decades of accumulated data, CEO Rami Lee is now motivated by the aspiration to provide support to doctors, influence medical research, and take additional steps in advancing healthcare progress.

INBODY’S CEO RAMI LEE

RAMI LEE | INBODY’S CEO

South Korea is currently facing a unique demographic situation, as it has become the first country in the world to witness its fertility rate plummet below 1.0. This trend has significant implications for the medical industry. While this demographic challenge may appear daunting, it also presents a distinctive opportunity for the Korean medical and pharmaceutical sector. What challenges and opportunities does Korea's unprecedented demographic scenario offer to medical companies?

In my perspective, the declining fertility rate and the increasing elderly population should be considered as distinct phenomena. The prevalence of a higher elderly population is a global phenomenon. However, Korea boasts a remarkable medical insurance system, overseen by the government. Approximately 15 years ago, the government dedicated considerable efforts to curbing diseases among the elderly, given the substantial financial burden this posed. Consequently, numerous government-owned public healthcare centers invested in projects aimed at providing care for individuals with conditions such as dialysis and other chronic diseases, preventing the exacerbation of their conditions.

These care centers offered training to patients and ensured they maintained a proper diet. Subsequently, they needed to assess the effectiveness of their efforts. They couldn't merely wait for results. This led to the adoption of InBody, a body composition analysis tool, primarily focusing on reducing body fat. The concept of muscle mass was not yet considered at that time. When I joined the company 20 years ago, even in Korea, significant efforts were made to educate people on health, but it wasn't sufficient. Understanding the percentage of body fat emerged as a pivotal aspect. This is what we have been emphasizing. And in recent years, discussions at various congresses, both in Korea and abroad, transitioned to encompass not only body fat but also fat-free mass, representing the amount of muscle.

The interest in fat-free mass continued to grow, with a subsequent focus on the movement of bodily fluids. Allow me to provide a more detailed explanation of this evolution. As a company, we have firsthand experience of the significance of preventive medicine and its synergy with government support. Without the government's emphasis on preventive medicine, we might not have had the opportunity to explore this market. Due to the government's financial investments in preventive medicine and the implementation of projects in rural areas, focusing on individuals in their 50s and 60s, who were encouraged to adopt proper dietary habits and engage in physical exercise while undergoing body composition assessments, we have reaped the benefits of this endeavor. Such experiences have reinforced our belief in the vital need for preventive medicine.

The emphasis on prevention, as opposed to treatment, is not exclusive to Korea. The Japanese government is dedicating significant resources to advance preventive medicine. Moreover, countries in Europe, such as Italy, and even the United States, contend with a substantial proportion of elderly citizens.

That is indeed accurate, these days it is getting better though. However, these countries are not as focused on preventive medicine. I had the opportunity to live in Europe for four years and during that time, I noticed a stark contrast.

When I called the hospital my family was assigned to because my children had a cold, they would inquire about the severity of their illness and often advised us to call back after monitoring the condition for another week. This approach doesn't quite align with preventive care; it appears that the hospitals there primarily respond when a health issue has already arisen.

In contrast, South Korea offers a vastly different scenario. Numerous hospitals are conveniently located near my home, and I have the freedom to choose which one to visit. Korean medical companies and manufacturers are highly competitive, and this competitiveness extends not only to manufacturers but also to the hospitals themselves.

Furthermore, South Korea holds a prominent position as an IT powerhouse. This means that people actively search and evaluate hospitals based on various factors, such as equipment availability, staff kindness, service quality, and medical devices. Patients can access information and make informed decisions about which hospital to patronize. Consequently, medical centers are compelled to continually enhance their services to maintain their competitiveness. This drive for improvement also spurs manufacturers to innovate since the market is highly competitive. Without ongoing advancement, it's challenging to thrive in this environment.

Korean society is discerning, partly due to their extensive access to information. Moreover, the level of education in Korea is notably high, though some might argue that it is perhaps overly extensive. Approximately 90% of the population holds bachelor's degrees, making them well-informed. At times, they may even believe they possess superior knowledge compared to medical professionals. This dynamic further accelerates the pace of development for advanced medical equipment by manufacturers.

In France, the combination of a privileged medical healthcare system and extensive preventive measures incurs significant costs. In contrast, Korea has become a popular destination for dental tourism, attracting many individuals from other Asian countries due to its affordability. How do you envision this healthcare system's future? Can Korea, with its super-aging population, maintain the same healthcare system while remaining efficient?

This is why a greater emphasis on prevention is imperative. Prevention holds paramount importance. Interestingly, the COVID-19 pandemic, rather than the aging population, has raised awareness about the significance of preventive measures, creating a unique opportunity for us. Post-pandemic, Western countries have realized that their healthcare systems fall short in adequately educating citizens on self-care. They were startled when patients arrived at hospitals without a clear understanding of how to care for their health. As a result, Western countries have been contemplating solutions, and what they've recognized is the vital importance of muscle mass. At the beginning of the last year, I attended ASPEN, the American Society for Parenteral and Enteral Nutrition, where a keynote speaker, a doctor, highlighted that just three years ago, even medical professionals didn't pay much attention to people's muscle mass. Today, the discourse revolves around sarcopenia, emphasizing the crucial role of muscle in patient care. However, traditional methods for assessing muscle mass, such as CT, etc., are costly and cumbersome. This limitation presents an opportunity for us. In contrast, the InBody BIA machine is user-friendly and swift. While CT scans might offer superior accuracy, they are not practical for routine use. This creates substantial growth potential within the medical field.

You mentioned the competitive nature of the Korean market, where individuals compare hospitals and equipment extensively, thereby driving manufacturers to excel. Nevertheless, critics claim that South Korea relies on foreign technologies for certain equipment. InBody, however, stands as a unique international success story, making significant inroads into the American market and establishing itself as a de-facto standard for body composition analyzers. As a Korean company, what do you attribute your international success to? Why has InBody been so successful?

It is accurate that some Korean doctors still favor foreign manufacturers and may overlook Korean products. In this context, our success in Japan has been instrumental in building our credibility. Achieving success in the Japanese medical sector has greatly bolstered our reputation. Once people recognize this achievement, it becomes easier to gain acceptance in the Korean market. We have garnered recognition and endorsements from Japanese doctors, which have proven to be a substantial asset.

Understanding the intricacies of the InBody business is vital. It goes beyond being a mere body composition analyzer. The device offers a multitude of applications, catering to diverse demographics ranging from children to the elderly. Athletes and ICU patients alike benefit from the same device, as it pertains to health and the body's composition. Health is universally valued, making InBody a versatile tool with the potential to penetrate various markets. For instance, the ICU and athlete markets are vastly distinct but can both benefit from the technology.

You mentioned that you have healthcare professional products for hospitals, such as the body water analyzer, as well as household and gym products, like the InBody or the body composition analyzer. By offering both types of equipment, you create a comprehensive ecosystem for individuals to manage their health. How do you envision the future evolution of this system, and what technologies do you foresee to further enhance the market?

In the case of Japan, we initially entered the medical market, whereas in Korea, we initially focused on the fitness market. We have experienced significant development within the non-medical sector. Each country possesses unique market strengths, which has led to mutual learning, given the market's diversity. Initially, we concentrated on the aesthetic market, primarily addressing body fat. Subsequently, we shifted our attention towards muscle mass. With the advent of the COVID-19 pandemic, even medical professionals now recognize the paramount importance of muscle and the need to monitor it.

Furthermore, the growing elderly population presents a distinct challenge. The issue isn't solely the increasing proportion of elderly individuals, but the fact that, thanks to advancements in pharmaceuticals, many people are no longer succumbing to diseases. This results in a longer lifespan, but with a compromised quality of life. For instance, in the past, a cancer diagnosis often implied a grim prognosis. However, modern treatments and well-established insurance have extended the lives of cancer patients, although they often experience significant muscle loss during treatment. This post-surgery rehabilitation has become crucial in a new market segment. Previously, such a market didn't exist, as most patients did not survive cancer. Conversely, a growing number of patients with conditions like heart failure, cancer, or undergoing dialysis are now living longer, posing challenges to governments and insurance companies. These entities are tasked with providing ongoing care for treated individuals. Hence, post-disease care and rehabilitation are very important. From InBody's perspective, the elderly with diseases represent a valuable demographic, as we can monitor their progress and make necessary adjustments. Additionally, InBody can serve as a preventive medicine tool to continuously monitor muscle mass and body water status.

Moreover, remote monitoring systems have gained importance as the elderly population grows and hospitals face capacity challenges. Our next step involves the development of remote control systems, which we are actively pursuing. These remote systems will enhance the quality of life for patients with heart failure, cancer, or undergoing dialysis, enabling them to travel and consult with their doctors remotely.

This remote system complements your existing portfolio. Could you explain how this integration impacts your developments? How do you incorporate it with your other offerings?

As previously mentioned, the focus of interest is shifting from the muscle mass to body water monitoring. Consequently, beginning this year and based on insights gained in Europe, we are placing greater emphasis on the medical sector and conducting more research. The Korean government also provides substantial funding to support research initiatives. While InBody displays results on a single report, it encompasses over 100 different parameters, each with its own significance. These parameters are interconnected and can be leveraged through big data analysis and artificial intelligence (AI) to predict a patient's susceptibility to certain diseases. Our aim is to establish the link between these parameters and diseases using data analysis.

For example, home dialysis systems are gaining popularity due to factors like cost savings, patient convenience, and limited number of doctors. Many home dialysis devices have been developed in Europe and the U.S. However, a major challenge is how patients can monitor their condition without direct oversight from medical professionals. Dialysis patients need to gauge the excess extracellular water that accumulates. Traditionally, patients have relied on weight measurements, but this approach doesn't differentiate between changes in muscle and fat mass. So we're developing a home body water analyzer for patients called 'BWA on', and we're about to launch it globally. This technology includes an application that stores and transmits data to doctors, creating a new channel for communication between patients and healthcare providers. Doctors can use this data to gain insights into a patient's internal health. We are currently in the process of gathering more data and evidence to confirm the system's accuracy, conducting trials with Korean doctors, and collaborating on research with doctors from Europe and the U.S.

CEO Rami Lee with Inbody's Body Composition Analyzer

The InBody strategy is evolving, not just within the realm of medical devices, but as a healthcare service provider through data. This transition presents a significant challenge. You've amassed over 100 million data points over the years and have started offering solutions such as the residential health solution, facilitating remote monitoring and integration with various communities within your ecosystem. What strategic steps do you still need to take to become a global healthcare service provider, and what challenges are you encountering as you expand your portfolio from devices to services?

The collection of over 100 million data points holds the potential for significant contributions to the medical sector. While many doctors possess extensive patient data, they often lack data from the general population, making it difficult to identify distinguishing or anomalous factors. In contrast, we have amassed a vast amount of data from individuals around the world. This wealth of data allows us to discern patterns in data from normal individuals. When we compare this data with that of our researchers, who specialize in data from sick individuals, we can pinpoint specific parameters that contribute to illnesses. This is the area where we are focusing our development efforts. Furthermore, developments in non-medical fields also influence medical research, as the data enables us to identify new parameters that can aid in predicting potential diseases.

When I hear about your ownership of 100 million data points, it brings artificial intelligence (AI) to mind. AI could help uncover what truly makes people sick and provide valuable insights for researchers. Are you implementing AI in your research?

To be candid, I am somewhat cautious about applying AI directly to patient care, as it involves making assumptions based on equations that are not always clear. Although AI is gaining prominence, and we do have AI projects, the data we collect often reveals information that is quite evident, making the use of AI unnecessary. For instance, with the Body Water Analyzer (BWA), we can differentiate between extracellular water and intracellular water. In the case of patients with conditions like dialysis, heart failure, and cancer, a common phenomenon in their advanced stages is the accumulation of water in the legs. Detecting this symptom early could be highly beneficial. Over 40% of diabetes patients do not perceive diabetes as a disease in itself. Instead, they may eventually experience heart failure or kidney failure requiring hemodialysis. The initial symptom of these diseases worsening is often water retention. Early detection could lead to more manageable treatment. Kidney failure, for instance, is challenging to diagnose because specific symptoms typically do not emerge until kidney function has deteriorated significantly, down to just 10%.

Why aren't InBody devices used in all hospitals worldwide then?

Exactly, that's the challenge we are currently addressing. It's no simple task to change the entire world. I joined this company as a member of the clinical team, not as a salesperson. My role was that of a researcher. I am eager to witness the day when every hospital employs our devices for disease prevention. Even though InBody has the potential to play a pivotal role in this endeavor, the primary hurdle is financial. Doctors acknowledge the effectiveness of InBody, but insurance coverage often does not encompass it. Consequently, even if they wish to employ our technology, they cannot do so due to its lack of insurance coverage, making it financially unviable. This is the core issue we are currently addressing. Historically, our focus has been on selling the devices outright. Despite the absence of insurance coverage, researchers often acquired our devices for research purposes. Our present emphasis and my personal aspiration are geared towards making InBody a reimbursable part of health insurance plans. This development would encourage doctors to utilize our devices. Hospitals often question how to fund treatments that are not covered by insurance. While operating InBody is straightforward, it still requires personnel to manage the device, which incurs costs. This is the reality we are working to change by integrating InBody into the insurance system.

InBody’s approach of establishing 12 international subsidiaries for direct distributor engagement and local sales strategy development has proven highly successful. As an example, more recently, you opened the InBody Oceania corporate office in Australia, extending your international presence even further. Could you please provide more insight into the overarching global strategy you've implemented?

Historically, our primary subsidiaries were situated in the U.S., China, and Japan, while other countries relied on distributors. We observed a disparity between our subsidiaries, which continued to evolve, and distributors who believed their current status was satisfactory. Distributors were reluctant to invest more in a market they perceived as small, if not non-existent. We realized that we needed to start from scratch, create the market, and promote our products to reach various hospitals and individuals, emphasizing the critical importance of our medical devices. Today, it may seem natural for fitness centers to be equipped with InBody devices, but we played a pivotal role in building this market from the ground up. We're not merely occupying an existing market; we're pioneering a completely new one. While it's challenging for a small company like us to expand, we possess the advantage of agility. When we observe a market phenomenon, we swiftly adapt, develop, and release new products. Korean culture, characterized by speed and impatience, further complements this agility. This expeditious approach is one of our strengths as a Korean manufacturer.

In our company, even newcomers can directly reach out to me. This culture has been fostered by our founder, Dr. Cha, who advocated dividing units as much as possible and promoting a horizontal organizational culture. Despite my role as CEO, I spend nearly half of the year traveling abroad personally to identify new markets. The primary drivers of our business are our people and our products. InBody's equipment is of high quality, and we are confident in our ability to enter new markets. Additionally, our colleagues play a pivotal role. Since InBody caters to a completely new market, the strategies for existing markets do not apply.

Last year, Erica Kim, who led InBody's overseas business division, emphasized InBody's strategy of establishing corporate entities in emerging body composition analysis markets, including China, India, and various Southeast Asian countries like Malaysia. In these developing nations, where awareness of body composition analysis is generally low, the strategies that have succeeded in InBody's established markets such as the US, Japan, and Korea may not directly apply. As a company that creates these new markets, how do you adapt your strategy to these developing markets?

Indeed, we previously attempted to enter the Malaysian market. Many people doubted our ability to create a market for InBody in Malaysia, citing the device's high cost and the country's lesser development compared to Korea. However, when we implemented a strategy similar to what we used in Korea, emphasizing the importance of InBody, we achieved remarkable success in Malaysia. We also encountered a similar scenario in the Netherlands, where we had no strong distributors. Existing distributors there sold only two devices a year, citing the Netherlands' small size and the population's robust health. However, upon my visit and exploration, I identified a substantial market potential. Reapplying our strategy, we experienced dramatic growth. I would characterize our work as more than just sales; it's fundamentally an educational endeavor.

In the past, when cellphones were not as prevalent, doing business was relatively straightforward. However, in today's world of advanced smartphones and significant IT development, we must remain swift, as information dissemination is rapid. This presents both an excellent opportunity for us to educate people more conveniently and a challenge due to our company's size. In response to your earlier question about the challenge of low birth rates in Korea, one significant challenge is finding and hiring talented individuals. There is a scarcity of people willing to venture into unfamiliar markets. Many seek pre-established, fixed plans and an easy life.

What key element will improve your company's image in the future and increase awareness among people?

Interestingly, InBody Headquarters currently doesn't have a dedicated marketing team, which has surprised me as well. Despite this, we have achieved significant milestones. However, I now believe it's time to establish a professional marketing team. We have ventured into various markets, including the medical sector, across different countries and regions, and now we are poised to earnestly expand our business. Despite the perception that we have already succeeded in the U.S. and Japan, I don't quite agree. I would consider our achievements in these markets to be less than 10% of what I view as success. To bolster our efforts, we have established a new office in Philadelphia, solely dedicated to medical research. InBody Co. Ltd.'s new business unit, InBody BWA Inc., has set up its North American medical operations center in Audubon, where it is starting out with a staff of 12. The company expects to employ 20 local employees by the end of the year. We anticipate that the research and our remote monitoring system will support our quest for insurance coverage. This is one of our strategies. Additionally, we have set up overseas subsidiaries because we realized the importance of having individuals with a shared vision and philosophy across the board. This reflects one of our unique organizational strategies, which also aligns with the philosophy of our founder, Dr. Cha.

When I initially joined the company, we had a domestic sales department. Even though I had applied for a role in R&D, I underwent domestic sales to understand the market. Three years later, the company decided to transition the domestic sales department into distributors. While the former sales department personnel are no longer our employees and running our distributors as their business entities, they remain aligned with our philosophy and know precisely how to operate. We spun them off to serve as our domestic market distributors in 11 regions. We don't need to micromanage them; we simply provide the equipment, and they independently handle the business. We share a strong bond, unlike the typical relationship between a headquarters and distributors. However, about eight years later, one distributor's performance began to decline due to complacency. To demonstrate our commitment to excellence, we terminated our business relationship with that distributor. While we provide various benefits, we do not tolerate complacency. As a headquarters, we also stay updated on market dynamics. We considered that we should manage one distributor directly out of the eleven. Therefore, the headquarters now oversees one distributor, while the others continue to excel on their own. This is how we achieved stability in the domestic market.

For the overseas market, we adopt a similar approach. We have numerous distributors, some of whom have become highly successful. Interestingly, as they grow, they increasingly focus on InBody, despite initially offering various equipment.

InBody BWA open ceremony

The success story of InBody Japan is particularly remarkable for two reasons. Firstly, Japanese consumers are renowned for being the most discerning in the world. Secondly, Japan has its own body composition analyzer and body water analyzer manufacturers, rendering the market highly competitive. While it's clear how you entered the market, how have you maintained your position over the years and not been replaced by local brands?

Our product itself is exceptional. This is the primary reason for our success. Even without a dedicated marketing team, our product sells remarkably well. We offer opportunities for people to test the equipment, and after they experience it, we don't need extensive explanations. They immediately understand its superiority. We aim to replicate the same approach in overseas markets. We've consistently sought to hire and train individuals who align with our philosophy, even if they lack prior experience. For instance, in our overseas sales department, there were initially two directors. One of them now heads the Indonesian distributor, while another individual assumed the position. Last year, that individual also spun off as the Thailand distributor. This unique human resources strategy has proven effective for our organization. It may be an unconventional approach, but it has yielded significant benefits. We don't focus on prior experience; instead, we prioritize candidates who possess a willingness to explore new territories and train them. However, this can be challenging.

I continue to learn and adapt, even today. New information emerges daily. As a CEO, I dedicate time to read research papers to explore how we can develop new equipment for specific applications. This is what motivates me. There is immense potential, and I believe we are only at the beginning of our journey. There are numerous unexplored applications. In the medical sector, we aim to utilize AI to predict how a person's body composition may change in the future if they maintain their current lifestyle and body composition. AI, machine learning, and big data will play key roles. Subsequently, we can offer advice to individuals on necessary changes in their dietary and exercise habits to prevent certain diseases. This represents our direction for future services. Consequently, we are hiring many engineers to work towards these goals.

InBody released a series of innovative products. These include the new body composition analyzer InBody970, the world’s first device to use eight frequencies ranging from 1kHz to ultra-high 3MHz, allowing to provide ever more accurate measurements to critical body parts. Can you run us through what are the key points to your future technology or R&D strategy?

In terms of the devices themselves, I don't believe we need to make significant advancements beyond our current capabilities. The 3MHz measurement might not appear revolutionary, but it signifies our ability to measure accurately below this threshold. Achieving a precise 3MHz measurement involves intricate technology with high accuracy. Measuring isn't as straightforward as it may seem; it involves managing current leakage, reducing noise, and mitigating contact resistance. This technological prowess allows us to protect the accuracy of frequency measurements and impedance. When we claim to safely and accurately measure 3MHz, it implies that we can equally measure 250 kilohertz and 1 MHz with great precision, which holds substantial significance.

Furthermore, with devices like InBody970 and BWA 2.0, we can generate graphs that show individuals where they stand in comparison to others based on extensive data. It offers people not only insights into their own health but also the ability to benchmark themselves against a broader population. From a technological perspective, we are also making strides in equipment management improvements. As our reach extends across the globe, the number of devices increases, resulting in the need for more personnel to provide technical support. This can become a significant cost, which might burden our customers. To mitigate this, we are actively exploring the implementation of remote control and monitoring systems for our devices, allowing us to diagnose and address issues remotely.

If we were to reconvene for an interview in five years, what ambitions or objectives would you like to have achieved at InBody?

My ambition is to have InBody equipment present everywhere, becoming a staple in healthcare. As previously mentioned, I aspire for our devices to play a crucial role in early disease detection, preventing conditions from progressing into severe illnesses. Over the next five years, I hope to see the successful implementation and commercialization of our remote monitoring system. Historically, our business model primarily involved selling the hardware, which, in itself, had limitations. It essentially functioned as a hardware business. My goal is to transition towards a model that combines hardware sales with service subscriptions. In essence, it means a continued income stream from services, transforming our business into a hardware and software enterprise, akin to Apple with its device and application ecosystem. In addition to selling our devices, I aim to provide subscription-based services like a patient monitoring system. Through monthly subscriptions, doctors and patients can maintain a connected relationship. To do this, we are collaborating with medical professionals to demonstrate the effectiveness of early intervention in preventing diseases from progressing to a severe stage.

This represents uncharted territory for me, and the challenge lies in finding individuals who share the same vision and are willing to embrace the challenges of this mission. Nowadays, people tend to shy away from difficult endeavors, preferring an easygoing lifestyle. However, this business requires dedication and a willingness to make sacrifices. It's not a typical nine-to-five job; it demands commitment and vision. This is why we focus on hiring and training young individuals, such as fresh graduates, who possess passion and a shared vision. By doing so, we hope to nurture individuals who can carry the torch, just as I have. I genuinely hope that our company can become a shining example for others in the industry. We don't just rely on experience, and we aren't solely driven by profit; we operate on the foundation of values. I believe this is the key to our success. Our strength lies in hiring the right people. Even though finding the right talent can be challenging, we have achieved all of this with the help of such individuals.