Blood Glucose Monitoring – A Market in Turmoil
The market condition for blood glucose monitoring products continues to deteriorate, basically going from bad to worse. Besides fully transforming into a commodity market where price is the driving factor. The industry is facing declining strip usage as patients dealing with the tough economy cut back on testing. After years of double digit growth, today’s winners are companies that can maintain share or lose less than the competition. The days of introducing new systems to grab share are long gone.
Several of the major players in BGM have already drastically cut their sales teams and marketing budgets. These cuts have now expanded to include research and development budgets as the players realize that newer systems do little, if anything, to expand share. The fact of the matter is several of the major advancements introduced over the past few years have become standard throughout the industry. No-coding, Alternate Site Testing, small blood samples and fast test results are now common and not unique to any one company or system.
Hurt particularly hard by these horrible market conditions is Abbott (NYSE:ABT). As Diabetic Investor reported last week in a conference call with their sales force Abbott management issued an ultimatum; either increase market share or your gone. Just how alienating the people who are supposed to be selling the products you sell will increase share is something only Abbott management seems to understand. Keep in mind this is a sales force who’s moral is already lower than sand at the bottom of the ocean. A sales force that has seen management make one mistake after another causing their incomes to decline as the Abbott line of products continues to lose share.
Things have become so bad at Abbott the company has either scratched or halted development of several key products. The first to feel the ax is the company’s all-in-one device code named the Fusion. Some may recall that management use to tout this product during every conference call and investor presentation. As Diabetic Investor noted after the company’s most recent earning call no mention was made of ANY new products in the pipeline. Also put on hold is the new Omni test strip. It appears management has decided to use fear and intimidation with their already disgruntled sales force as their primary strategy to increase share.
Having fallen behind Bayer in terms of market share, Abbott is in the final stages of completely ruining a once promising franchise. With nothing in the pipeline and no strategy whatsoever they are close to completing their mission of turning solid gold into worthless sand. They can only hope that Bayer regains interest in acquiring this unit otherwise Abbott will continue to lose share and become an after- thought in diabetes devices.
Another company searching for answers and running into trouble is Roche. As we reported just yesterday the company had to issue a recall for their Accu-Chek Spirit insulin pump. Today we learned that the new Accu-Chek Active Nano glucose monitor has been delayed at the FDA and won’t be introduced as planned. Already on the market in Germany and the United Kingdom, the Nano looks like a pretty slick little device and could have helped the company reinvigorate their struggling glucose monitoring franchise.
While Diabetic Investor believes the Nano will eventually be approved and make it to market, it won’t be the only new system coming to market as Bayer has a new monitor on the way as well. LifeScan also is working on a new system that will finally bring the company into the world of no-coding. Even so, it really doesn’t matter much that these new systems are coming as they will do nothing to solve the fundamental issues facing the BGM market.
The day has arrived where that light at the end of tunnel is coming into focus and unfortunately for the BGM industry it’s not a ray of sunshine; it’s a freight train running at full speed. When it’s all over the wreckage won’t be pretty. The dominos are lined up and set to fall; the question is who will remain after the train hits.
