Bye Bye Navigator
It appears that Abbott (NYSE:ABT) is about to put an end to all the speculation and say so long to the Navigator. Sources inside the company are telling Diabetic Investor that layoffs are coming in the sales unit assigned to Navigator and the entire project will not see the light of day.
Diabetic Investor is hardly surprised with this move as the company tried to shop the product but found no takers. Although many researchers have been impressed by Navigator’s performance, the reality of the situation is there just isn’t room for a third player in the continuous glucose monitoring (CGM) market. It is also becoming quite clear that after all the hype surrounding CGM, it is really a tool for insulin pump patients and minority of multiple daily injection (MDI) patients. While Abbott does have relationship with Insulet (NASDAQ:PODD) makers of the OmniPod, this agreement is now worthless due to Abbott’s inability to get Navigator through the FDA.
Diabetic Investor is also hearing that Medtronic (NYSE:MDT) and Johnson and Johnson (NYSE:JNJ) are getting set to do another deal which will allow Medtronic’s CGM to work with Animas insulin pumps. This would come on top of their already announced agreement which allows JNJ’s meters to work with Medtronic insulin pumps.
With Dexcom (NASDAQ:DXCM) already working on their third generation device and gaining acceptance in the market, Abbott realizes that even if Navigator were to be approved and ready for sale in 2008 they would be between a rock and hard place. The Dexcom seven day sensor has a longer life than Navigator and only has two hours of blinded data compared to Navigator’s ten hours of blinded data. Dexcom also has the advantage of already dealing with real live customers. Given that Navigator no longer has a technological edge, all Abbott could do to move Navigator off the shelf would be to price the system aggressively. A move that would not sit well with investors as management is still trying to fix their struggling conventional blood glucose monitoring unit.
Having fallen to fourth place in BGM, Abbott just might be thinking they can no longer through money at Navigator. Especially when they would be third to a market that is already crowded with two players. Two players that are picking off the low hanging fruit. As Diabetic Investor has said since the introduction of CGM, this market would follow the same path that the insulin pump market did back in its early days. Back then two players picked off the low hanging fruit while issues such as reliability and reimbursement were worked out. The major difference between the CGM market and the insulin pump market is patient usage of a CGM is limited to pump patients and one the largest player in the market has their own CGM system.
The bottom line here is that Navigator doesn’t stand a chance to be commercially successful. Better to throw in the towel than let this fight continue. Quite frankly the referee’s should have stopped this fight long ago, Abbott is on the canvas and the countdown has begun.
David Kliff
Publisher
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