By Guest Writer David Kliff, Publisher, Diabetic Investor
As 2018 begins, my attention turns toward a look back at the year gone by and ahead to the year that’s starting. As always, my New Year will begin in that beautiful city by the bay at the JP Morgan Healthcare Conference. This is a conference I suspect will be one of the more interesting, and since I’ve attended nearly 20, that’s saying something. Lots is going on behind the scenes in our wacky world, and given the nature of JPM I suspect the veil of secrecy will be lifted.
Looking backward, 2017 has seen its fair share of wackiness, but to me the biggest story came from the insulin pump market — and not just because we are now down to just three players, soon to be two. This market represents much of what we talk about day in and day out: that diabetes is big business, and that the management of diabetes can be adversely impacted by this fact.
Here is a quick summary of some of the more notable events in this market:
- Medtronic officially launches the 670G, a product that was hailed as an “artificial pancreas.” As I anticipated, this launch hasn’t been a smooth one, with some problems created by Medtronic, others by Mother Nature. The Empire will eventually fix the various issues and get ready for the next company, most likely Tandem, to implode.
- Johnson and Johnson demonstrated something I didn’t think was possible–that it’s better to get nothing than something. After years of losing money, the company concluded that it was time to sell Animas, but the sale process had so many problems that they calculated that it was better to shut down this unit than to sell it.
- Although Tandem was already in trouble in the pump market, JNJ’s decision to close Animas and give these patients to Medtronic sealed their fate. It was long believed that JNJ would find a buyer, which would then clear the way for Tandem to be sold. Now that Medtronic will effectively control 80%+ of the insulin pump market, potential buyers of Tandem have basically decided to let nature take its course.
- Seeing their core insulin franchises becoming nothing more than a commodity, all the insulin companies–Lilly, Novo Nordisk, and Sanofi–are looking at entering the insulin pump market, with Lilly being the most public about their efforts.
- Insulet, who by default will become Medtronic’s main competition, continues to exceed expectations. The company has fixed many of the issues it faced, but still hasn’t made any real money. The street loves the company, as shares have increased nearly 90% this year, but I see cause for concern going forward. Simply put, the company has taken all the easy steps and now the real hard part begins.
- Two other companies, Dexcom and Abbott, have also been heavily impacted, although neither, at least for now, is directly in the insulin pump market. Dexcom is aligned with Animas (ouch), Tandem (double ouch), and Insulet. Abbott has hitched their wagon to Bigfoot.
- Companion Medical received FDA approval for their InPen smart insulin pen, Sanofi has been aligning themselves with Common Sensing, Bigfoot acquired Timesulin, and many others loom on the horizon, which means the biggest threat to the future of the insulin pump market will become a reality.
All of this happened in one year, which when you think about it is amazing. Yes, there were other notable stories, but none that structurally changed the landscape of an entire market. Diabetes drugs, even with the approval of Semaglutide, continue to commoditize. While there was lots of hype, nothing truly substantial happened in the interconnected diabetes management (IDM) space other than OneDrop trying to pass themselves off as a real diabetes company when they aren’t. No other market has been shaken to its core like the insulin pump market.
Now a few predictions for 2018:
- This is an easy one: Tandem will cease to exist. How this happens I’m not quite sure; there will either be a new owner, or they’ll be resurrected after declaring bankruptcy.
- The CGM market will start as a brawl and end with both Dexcom and Abbott bruised, a little bloodied but still fighting.
- One of the major players in IDM will get acquired, but at a valuation much lower than anticipated.
- The cash rich high-tech players will become even more vocal about their deep dive into our wacky world. And we just might see a major realignment between one of these players and their current partner.
Most of all, I see 2018 as the year of realignment and positioning, the year everyone prepares for battle: a battle which will begin in 2019.
Courtesy of the DiabeticInvestor.com and David Kliff, Editor www.diabeticinvestor.com