Animas Reports

Animas Reports

Yesterday insulin pump maker Animas (NASDAQ:PUMP) reported solid first quarter revenues of $19.3 million an increase of 67% from adjusted net revenues for first quarter 2004. Although the company has run into a series of unfortunate events, product recall and warning letter, sales appear to be accelerating. In particular international revenues represent 18% of total revenue compared to just 8% a year ago.

The real story behind them numbers is how the competitive landscape in the insulin pump market is about to change. According to the company they believe Roche will re-enter the market this summer and newcomer Insulet will launch in August of this year. Kathy Crothall, President and CEO, spent a fair amount of time reviewing the company’s pipeline and R&D efforts. Not surprisingly the company announced plans for an analyst and investor early this summer.

Looking towards the future the company also announced the launch of the IR 1275 would be pushed back from late 2005 or early 2006 to the first half of 2006. The main reason for the delay was attributed to the reallocation of engineering resources. These resources were diverted to refine the company’s quality systems which where mentioned as a problem area in the FDA’s warning letter. We should have more news on their patch pump and integration of Cygnus’s technology after the meeting this summer.

What’s clear from both the company’s comments and the questions asked by the analyst’s is that the insulin pump market is about to become crowded and much more competitive. The real question, which no one bothered to ask, is can the market support all the existing players and those to set to enter or re-enter the market. With Animas partially owned by Johnson and Johnson (NYSE:JNJ), Roche owning Disetronic, Medtronic (NYSE:MDT) owning market leader MiniMed and Smith’s Medical having a relationship with Abbott (NYSE:ABT) consolidation is unlikely. The only true available candidate to be acquired is Insulet. Although the Insulet story is very intriguing it is still the new kid on the block and until they demonstrate market acceptance of their OmniPod system it is unlikely a deal will be done.

Diabetic Investor also believes it is unlikely JNJ will buy Animas in the near future. While an acquisition would definitely help Animas, JNJ typically does not buy any company unless they can be number one or a very close number two. MiniMed maintains their dominate position as the market leader and has taken steps towards correcting problems that occurred after being acquired by Medtronic. The company may not enjoy the reputation it once held prior to the Medtronic acquisition but they are in no danger of losing the top spot. Roche has the resources to effectively compete in the market and although they have been gone from the market, Disetronic still enjoys a favorable reputation with physicians and diabetes educators. Basically what you have here is Roche, Smith’s Medical (makers of the Cozmo), Animas and Insulet competing against each other for the right to be number two behind MiniMed.

If you want to know who wins this very interesting race we highly recommend purchasing our upcoming special report on the insulin pump market. The report will be published May 31st and can be purchased for $14,000. This comprehensive report will examine the market in detail and provide the information you need to determine the winners and losers.

David Kliff
847-634-4646 Fax
224-715-3761 Mobile