ATTD Day Two- Smallest Piece of the pie
Here at the toy fair, oh excuse us, ATTD it dawned on us just how much of a disconnect there is between what’s happen in Vienna and whats happening in the real world. There is lots of excitement here about CGM and the promise of better closed loop technology coming down the pipe. So much so that tomorrow we’re going to get up early and do something we don’t much of attend a session. Yet as interested as we are with what this person has to say and the data that will be presented, the fact, yes those facts again tell me it won’t change anything all that much.
See what the toy makers fail to realize is that here we are in 2018 and insulin pump usage remains the least used technology in diabetes. This technology which has been around forever and is well known remains one of the smallest pieces of the diabetes pie. Think about this just for a moment, Animas before being shut down, had about 100,000 patients. Insulet (NASDAQ: PODD) based on their most recent public statements around 110,000 patients. Tandem (NASDAQ: TNDM) 68,000 patients. And although they do not disclose patient count it’s estimated that Medtronic (NYSE: MDT) has over 500,000 patients. Add it all up and then add on just for grins and giggles and that’s about 1 million patients using insulin pumps.
According to the latest figures we have seen there are more than 300 million patients with diabetes. Want to narrow it down, there are approximately 16 million patients with Type 1 diabetes. Start doing the math and well these 1 million patients look pretty puny when compared to the 25 million patients LifeScan has. Even if you regionalize this data, as these numbers are global, it doesn’t get much better.
Back home in the USA, there are some 30 million patients, of which approximately 1.5 million are Type 1. And even if we assume that of those million or so insulin pump patients 90%+ are Red White and Blue Americans, the numbers don’t look a heck of a lot better. Yet as we have stated time and time again a ton of money is being to develop a REAL, not hybrid, closed loop insulin delivery system.
Think about this just for a moment not from a therapy perspective but from a business perspective. Think about this just for a moment not from the technology perspective but from a business perspective. We don’t know the exact numbers but think about what Medtronic, Insulet, Tandem and Animas have invested to come out with a REAL artificial pancreas. Think about how much money the JDRF has thrown in and we might as well add in Dexcom (NASDAQ: DXCM) and Abbott (NYSE: ABT) as without a CGM there is NO artificial pancreas.
But wait these aren’t the only companies or organizations throwing money at the Holy Grail of insulin pump technology. Lilly (NYSE: LLY), Roche, Bigfoot, CellNovo and every other insulin pump/sensor company is throwing money in as well and for what? Again take away the heart wrenching stories about how little Jane no longer worries about her diabetes management thanks to this way cool toy. Or the stories about how this technology has changed patients lives forever as they no longer have to worry about managing their diabetes. Yes these stories are gut wrenching and are great for raising money but the fact is there are not enough Jane’s to make this a sustainable business.
There is not one piece of hard evidence to suggest that a REAL artificial pancreas will increase insulin pump adoption. There is not one piece of hard evidence that says all of sudden more Type 1’s will switch from injections to insulin pump therapy because of this technology. Keep in mind that insulin pump technology has been around a long time, there is no question it is a very effective therapy and even though costly it is widely accessible to patients, at least in the US it is.
Also keep in mind that insulin pump technology has improved dramatically over the past 5 years as has sensor technology. Insulin pumps are better than ever before but the insulin pump market, well that’s another story. The market is barley growing, by our estimates less than 7% annually. We now have the 670G, we have patch pumps and we have pumps that look like an iPhone. We have some the coolest damn pumps around and still the market is barley growing.
So naturally it makes sense to spend millions to create an even cooler toy, that will cost way more than the current toys and carry with it much higher patient support costs that will only be used by less than one tenth of one percent of the patient population.
Yep, like payors who are looking to cut costs will naturally make this way cool but also very expensive technology easily accessible. Yeah and Sanofi (NYSE: SNY) is going to hire Diabetic Investor to take over their diabetes franchise. Seriously what are these toy makers and the people who back them thinking.
Listen we know the drill by now as everyone will say we’re against advanced technology, that we are missing the bigger picture. And frankly we could care less as this has nothing to do with what we think and everything to do with helping patients. The fact is a disproportionate amount of money is being thrown at a technology that will only benefit a handful of patients. That investors are being deluded into thinking this technology will lead to riches.
We have nothing against a REAL artificial pancreas but we are against seeing another Animas. We have nothing against the JDRF using this quest as a fundraising tactic but we are against them taking undo credit for things they haven’t done and promising but not delivering. Yes there is no question a REAL artificial pancreas will benefit some patients but more patients would benefit from cheaper insulin, lower deductibles, easier access to CGM and more than 10 seconds of education on how to mange their diabetes.
Yep a REAL artificial pancreas will be a technological marvel, a true achievement. But when it comes to helping the millions of patients with diabetes, it will just be more money thrown down the tubes. To paraphrase Spock it won’t be the needs of the many outweighing the needs of the few, it will be the exact opposite as with an artificial pancreas it will be the needs of the few outweighing the needs of the many.