Another one bites the dust
Only in the wacky world of diabetes can a company go from penthouse to the outhouse in a matter of months. Such is the case with insulin pump maker Asante who according to well-placed sources is about to call it quits. Yes this is the same Asante that was all set to go public only to pull the plug on their IPO.
Now Diabetic Investor does not take any particular gratitude with this news as we hate to see any company fail. However it does reinforce something we have been stating for some time now in that when it comes to the insulin pump market the market isn’t large enough nor is it growing fast enough to support not just the existing players in the market but the many who seek to enter the market.
The fact is the insulin pump market is now on that slippery slope towards becoming a commodity market. That if a company is going to survive in this market it must transform itself from a seller of hardware to a seller of solutions. Solutions which help insulin pump patients achieve better outcomes.
Yet Asante isn’t the only insulin pump company in trouble. The problems at Insulet (NASDAQ:PODD) are well known as they too are struggling to transform themselves from being an insulin delivery company to a drug delivery company. Animas, still a unit of Johnson and Johnson (NYSE:JNJ), has seen their situation improve thanks in large part to integrating the Dexcom (NASDAQ:DXCM) system with their system, whether this will continue is anyone’s guess. Tandem (NASDAQ:TNDM) has perhaps the best user interface and soon will integrate with Dexcom as well but with so many sensor augmented systems on the market this battle to grow share is going to be difficult.
Medtronic (NYSE:MDT) the 800 pound gorilla in this space has seen the light and has begun their own transformation. The key issue facing Medtronic is can they succeed in areas that are foreign to their DNA, areas outside of the insulin pump world. The company correctly sees that insulin pumps by themselves aren’t the answer, they see how the market is changing from being hardware focused to system focused however moving into the Type 2 world is a tough nut to crack. This is not saying they cannot succeed here rather many have tried and failed.
One thing is becoming clearer by the day in that the diabetes device market is in the midst of a major transformation. This market is moving away from being hardware/technology driven to systems driven. Yet this transformation is not yet complete which means to survive device companies must live in the existing fee-for-service world while properly transforming themselves into the seller of solutions. The future is coming and will be here sooner than most think. However it is not here just yet and Diabetic Investor anticipates that it will be a rocky road ahead.
We’ve said it before and we’ll say it again things are about to get very interesting.
