Another Insulin Pump Player

Another Insulin Pump Player

Yet another player is getting set to enter the already crowded insulin pump market. NiliMedix, a division of D Medical Industries Ltd. (DMDC.TA), has filed a 510k fast-track application with the FDA to market their disposable insulin pump in the US. With a fast-track application the company should receive a final answer within 90 days.

According to the NiliMedix web site:

The disposable pumps allow several additional advantages:
Pre-filled cartridge
No infusion sets need to be used.
Reduced end-user costs
No need to change batteries

Should the company receive approval they would become the first competitor to Insulet’s OmniPod, which is rapidly gaining acceptance in the insulin pump community. While Diabetic Investor welcomes NiliMedix’s entry into the market, it should be noted that it’s one thing to have an approved product, it’s quite another to actually run an insulin pump company. Should the NiliMedix system receive approval they will have several obstacles to overcome. As Diabetic Investor reported last week Animas, now owned by Johnson and Johnson (NYSE:JNJ), recently introduced their new 2020 pump and Medtronic (NYSE:MDT) has begun marketing their new MiniLink sensor for their Paradigm 722 system. Also watching with great interest is Abbott (NYSE:ABT) who’s Aviator insulin pump has already received FDA approval. The company has yet to decide if they will market the Aviator. It should be noted that Abbott has an agreement with Insulet to combine the OmniPod with their yet to be approved Navigator continuous glucose monitoring system.

Less we not ignore that Roche has re-entered the US market with the Accu-Chek Spirit insulin pump and Smith’s Cozmo has recently be upgraded.

Diabetic Investor suspects that NiliMedix is actively looking for a partner in the US who has the financial and human resources to market the system and handle customer service. This is the real key to whether or not the company has any possible success in this over-crowded market. Although Medtronic has had their ups and downs in the insulin pump market they have been able to maintain a commanding market presence, with an impressive 70% market share. Animas currently occupies the number two spot with about 10% of the market, while the Cozmo holds about 8% of the market. The remaining 12% of the market is split between Roche, Insulet and Soil.

Also looking to enter this market is another Israeli company Medingo, who generated a fair amount of buzz when they updated their web site earlier this year. According to company officials they too will be submitting a 510K to the FDA sometime this year.

Now before everyone gets excited about all this activity in the insulin pump market a little reality check is needed.

I. I. Diabetic Investor is getting really tried of saying this but the insulin pump market is not large enough or growing fast enough to support all the current players or many future players looking to enter the market. For all the hype that’s generated about the insulin pump market it should be noted that the worldwide usage of insulin pumps is less than 500,000 units and the market is growing at less than 10% per year. The US is the largest market for insulin pumps with approximately 300,000 units.
II. II. Besides owning a commanding share of the market, Medtronic also owns the majority of intellectual property for insulin pump technology. The company has already used this IP dominance to effectively cripple sales of the Cozmo and has publicly stated they will be aggressive in enforcing their IP.
III. III. The market is moving towards integrated systems which combine insulin pump and continuous glucose monitoring technologies. Here too, Medtronic is in the lead.
IV. IV. With the success of the OmniPod, Insulet has proved innovative technologies can gain market acceptance. More importantly Insulet has built the infrastructure to market and maintain their system.
V. V. JNJ invested over $500 million to acquire Animas and Roche over $1 billion to acquire Disetronic, both companies have the financial and human capital to compete in a crowded marketplace. The two companies already go toe to toe in blood glucose monitoring market and neither will sit ideally by and not protect their investments in the insulin pump market.
VI. VI. Novo Nordisk (NYSE:NVO) the worldwide leader in diabetes is also looking to enter this market and already has some of the best insulin pens on the market. In an attempt to regain momentum in the insulin market Lilly (NYSE:LLY) recently introduced some new insulin pens. Not to be outdone Sanofi-Aventis (NYSE:SNY) has also introduced a new pen for Lantus. What all these companies know is that insulin pen usage is growing in the US and pen delivery is preferred to pump delivery.
VII. VII. Besides Medingo, M2Medical, Seattle Medical Technologies and Valeritas are getting set to enter the market- and this is not a complete list of all the projects underway in the insulin delivery market.

In spite of all these developments Diabetic Investor still sees the insulin pump market developing into a race to be number two behind Medtronic. It would take a colossal blunder by Medtronic to lose their dominate market position. While this is possible the company learned a valuable lesson from previous mistakes they made after acquiring MiniMed.

Diabetic Investor also believes that Insulet has the best chance over the remaining players to move into the number two spot. Besides having an innovative system, the OmniPod comes with an attractive pricing model. The company is set to go public sometime in April which will provide the additional capital needed to firmly establish the company as a player. In the long run Diabetic Investor suspects Insulet won’t remain independent for too long and will likely follow the model set by another innovative company, Therasense. For those with short memories Therasense entered the crowded blood glucose monitoring space with an innovative product, went public, established themselves as a player and was eventually acquired by Abbott. Like Therasense, Diabetic Investor does not expect Insulet’s experience to a straight line to being acquired, there are sure to be some bumps along the way. Yet, in the end the outcome will be the same.

As far as all these new players coming in and expecting to establish themselves as players all Diabetic Investor can say is good luck. Their best and perhaps only hope is be acquired by JNJ, Roche or Abbott (although Diabetic Investor sees Abbott as the prime contender to acquire Insulet.). The bottom line is the insulin pump market requires lots of money and an equal amount of manpower. As a wise player in this market once told Diabetic Investor- Anyone can come along and build an insulin pump the technology really isn’t that complicated. The real test is building an insulin pump company which requires a sales force, 24x7x365 customer service, owning strong IP and getting the insurers to reimburse your system.

Come to think of it developing an insulin pump is the really the easy part, as NiliMedix and the many others are sure to find out.

David Kliff
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