Been there, done that
To us it seems like yesterday but with so many newbies now in the wacky world we sometimes forget that these newbies don’t know the history of our wacky world. Therefore, it is difficult if not impossible for them to add historical context to what is going on around them. The fact is the diabetes market is no different than any other in that history repeats itself. These folks do not laugh out loud as we do when we see something that we saw years ago just repackaged and put in a shinny new box. They look at it as if really is new and fresh when it’s really just an old idea redone.
The same goes for many of the commonly held myths about our wacky world. Many of the newbies believe these myths unlike us grizzled veterans who know better due to our experience. Myths such as;
1. A Non-Invasive glucose monitor will increase testing frequency because the reason patients don’t test is due to the pain associated with performing the test. This isn’t true as the reason patients don’t test is because they don’t value the information the test provides. Thanks to technology this myth has now been updated to non-invasive CGM.
2. Inhaled insulin will be a major blockbuster because patients won’t have to inject. Yep, like the non-invasive BGM myth everyone seems to believe the pain of injecting is the reason more patients aren’t using insulin. There are multiple reasons why more patients don’t use insulin but the so-called pain factor is way down on the list.
3. It’s possible for an insulin pump company not named Medtronic (NYSE: MDT) to expand insulin pump usage, take substantial share away from Medtronic and do so while making money.
It’s this last myth we’ll talk about today as once again many seem to believe Medtronic is at risk of being overthrown. So, let’s take a trip down memory lane and add some historical context.
Believe it or there was a time when insulin pump usage was growing at double digit rates. Back in the day before being acquired by Medtronic MiniMed was growing at 50% a quarter. This is one reason Roche spent a billion dollars to acquire Disetronic then the number two player. It’s also the reason Medtronic bought MiniMed, Johnson and Johnson (NYSE: JNJ) invested in Animas and Smiths Medical started Deltec.
As so often happens after an acquisition the people who built the acquired company leave, some voluntarily others are shown the door. Which is exactly what happened at MiniMed as Medtronic brought new people to run the unit. People who knew little of the insulin pump market and how it functioned. People who believed profits came before patients. To maximize profits these folks made the mistake of cutting back on customer service.
Although it seems like a distant memory today there was a time when MiniMed set the standard for excellent customer service. See what made MiniMed great was they always put patients first and knew profits would follow. What many of the newbies don’t get is that back then many thought Disetronic had better technology than MiniMed that its pump was superior to what MiniMed was offering. So why did MiniMed win in the marketplace? They knew how to treat the patient, they knew how to market and they treated physicians and CDE’s well.
This began to change after Medtronic came in and made the decision to make cuts in customer service. Once considered the gold standard for customer service all of a sudden became an albatross around Medtronic’s neck. This opened the door for Animas and Deltec. Both of whom established a toe-hold in the market thanks to Medtronic’s mistake. A mistake which they eventually corrected but the damage was done as Animas and Deltec were gaining share.
This in turn lead JNJ to acquire Animas and was why Abbott almost bought Deltec. But in classic Medtronic fashion they did not just sit around they fought back. They sued Deltec, who settled and because of this settlement shutdown operations. They went out and began securing prime formulary position making it difficult for Animas to gain share. It seems hard to believe but back then even with the many mistakes made by JNJ Animas was growing. Along comes Insulet (NASDAQ: PODD) with the OmniPod and all of sudden Medtronic was facing a fight.
After another change in management at Medtronic it looked like that once again the goose that lays the golden eggs was in danger of being cooked. Yes, Deltec was gone but like the team before them this new team blundered allowing Animas to grow and Insulet to establish themselves. So as sure as night follows day Medtronic changes management yet again which corrected the mistakes and once again they fought back and fought back hard.
Fast forward to today and what do have? This new team at Medtronic has hit some bumps in the road. Yep, Animas has joined Deltec in the insulin pump graveyard but Insulet now has an installed user base of over 100,000 patients and Tandem (NASDAQ: TNDM) even with their many mistakes has built a solid foundation of users. Both Tandem and Insulet have new systems coming which look very promising and people are beginning to believe that once again that Medtronic is ready to be taken down.
The perception is that at long last the evil empire will be brought to its knees. That Tandem and Insulet have better mouse traps coming, mouse traps that will not just increase insulin pump usage but take share away from Medtronic. That it will different this time.
Time will tell if this belief becomes a reality but some of those pesky facts might just get in the way. Facts such as;
1. Medtronic still owns the space with almost 80% share.
2. They also own the most valuable piece of real estate; prime formulary position.
3. There is no hard-real evidence that growth in the insulin pump market is accelerating.
4. Recent changes at Medtronic shows they are doing what they always do when they see a threat to the golden goose; they are fighting back and bringing out the heavy bats.
5. Neither Tandem nor Insulet have shown they can take major share away from Medtronic.
So, will it be different this time? Will the mistakes and missteps made by Medtronic finally catch up with them? Or will history repeat itself? Will Medtronic fight back, fend off this latest threat and go along there marry way? Will Tandem and Insulet become another Disetronic, Deltec or Animas?
Frankly we don’t know the answers to these questions. Yet our many gray hairs tells us not to believe that the goose that lays the golden eggs is about to be cooked or that Death Star is about to destroyed. Just as the Death Star was rebuilt and used again we have this feeling Medtronic will not go quietly into the night. That they will take full advantage of their size, scale and resources to protect the goose from harm.
