Abbott – The Big Bad Wolf
It seems as though the management at Abbott Diabetes Care is so concerned that their Navigator Continuous Blood Glucose Management System won’t be approved by the FDA in the near future that it’s necessary to sue a competitor that doesn’t even have a product in the market. This past Tuesday Abbott (NYSE:ABT) filed a patent infringement action against DexCom (NASDAQ:DXCM). Abbott is basically claiming DexCom stole their idea and did not independently develop their continuous system which is currently awaiting FDA approval.
The fact of the matter is Abbott made a major strategic blunder by asking the FDA to approve the Navigator as replacement for conventional finger sticks. At the American Diabetes Association (ADA) show this June, Diabetic Investor spoke with researchers who had compared the Navigator to Medtronic/MiniMed’s (NYSE:MDT) continuous system. While they felt both products worked well and provided accurate readings, neither believed the Navigator would be approved as a stand alone device. Just last week MiniMed’s Guardian RT continuous management system was approved last week. In reality MiniMed has taken the lead in continuous management as they have trained the FDA on the subject. Instead of making the FDA go outside the box, something they rarely do, MiniMed has taken a step by step approach helping the FDA become comfortable with the device. MiniMed knows that once comfortable the FDA will approve a future device as a replacement for conventional finger stick meters. That day however is not here yet and quite frankly Abbott should have known this. Instead, they were so eager to be first to market with a replacement claim they lost track of how the process works with the FDA.
The Navigator has now been before for the FDA for over a year and half. According to sources inside the company it will be at least another year to 18 months before the Navigator receives approval. After canceling an appearance before an FDA panel, the company is conducting further studies to gather more data.
In the end this really much to do about nothing as the potential market size for any continuous device is quite small. For some reason which eludes Diabetic Investor many believe that continuous glucose management will be embraced by the diabetes community. Nothing could be further from the truth. The average number of glucose tests per day is less than 2, even though the ADA recommends a patient with diabetes test four times each day. As Diabetic Investor has reported several times the most frequent testers are insulin pump patients who on average test 7 times each day. Even inside that market it is unlikely that a continuous system would be popular. Until patients see a correlation between their test results and their treatment regimen they will not test as often as they should. It is difficult to imagine any non-insulin using patient wanting 200 data points each day. Even those patients on insulin where dosing decisions are made based on readings and expected food intake, 200 data points are excessive.
The companies developing continuous system retort that the data can be shared with patient’s physician, helping the physician and patient design an effective treatment regimen. An admirable goal however no one seems to know who will pay for the physician’s time for analyzing the data. Even if the data is downloaded to a software package, the data by itself only gives the physician a partial picture of what’s truly going on. To fully understand a patient’s glucose numbers the physician also needs to know what the patient ate, when, activity that day, etc. The glucose reading is just on piece of a complex puzzle. Having more glucose data points are meaningless without this information. That would be like placing a patient on intensive insulin therapy after a glucose reading of 400 (80 to 120 is considered normal). Add in the fact that the patient had recently eaten a chocolate bar and the 400 reading is viewed quite differently.
About the only company that truly understands this market is MiniMed. They realize that the market for a continuous system is relatively small. To MiniMed the system is part of their long term strategy in developing a closed loop insulin delivery system. Beyond that any sales would be a bonus.
Before they start picking on a company that doesn’t even have a product yet, Abbott should concentrate on the increasingly competitive blood glucose monitoring market. Even if Navigator had gained approval as a replacement device it would not catapult them past market leaders LifeScan and Roche. The fact that Abbott doesn’t seem to realize this makes one wonder if they understand the market at all.