Does Insulet have a PR problem or is there more to this story?

Does Insulet have a PR problem or is there more to this story?

It seems as if the launch of the new smaller, less costly to make pod isn’t going all that well. While the new pod was approved back in December of last year, Insulet (NASDAQ:PODD) appears to be struggling getting the new system into the hands of their installed user base. Although patients new to the OmniPod are getting the newer system, existing OmniPod users have yet to see it. Now back when the new pod was approved the company noted it would be a few months before existing OmniPod users would be converted to the new system. Well here we are nearly five months after the new pod was approved and still existing OmniPod users are being shipped the older pod and by the looks of things it will be sometime before users see the new pod and new PDM.

The situation has become so bad that the company recently posted a lengthy explanation of the situation on their web site ( Here are some highlights:

“We are currently transitioning all our operations for the new OmniPod System. This includes working with healthcare professionals, distributors and other essential partners to ensure as seamless a conversion as possible for all patients and their support system.”

“We expect to transition everyone to the new OmniPod over the next few months.” Diabetic Investor just loves statements such as these as it really says nothing whatsoever, as everyone has a different definition of what “next few months” really means. What this tells Diabetic Investor is there is much more to this story, for if everything was running smoothly the company would not need to be so ambiguous.

“In February, we began transitioning new users to the new OmniPod.  We know many of our current users are unhappy with that decision and we want to express our most sincere understanding to anyone who feels this way.” Nice try Insulet but your past sins are now coming back to haunt you and saying I’m sorry does not make up for poor customer service, pod failures and now your decision to delay even further converting your so-called loyal user base to the new system.

“We expect that all existing in-warranty OmniPod wearers will receive the new OmniPod over a period of three to six months from the point where we start the conversion.  This remains unchanged.” Again another nondescript statement as the company still has no idea when the conversion process will begin. Basically what the company is saying is once we get all the issues were having resolved we’ll then begin the conversion process and three to six months after that still unknown date is when existing users will start receiving the new system.

Now to the company’s credit it’s better to wait until all these issues are solved rather begin the conversion process now as once this process begins there is no going back, as we have noted on many occasions this conversion process is critical to the company’s future and they won’t get a second chance if they screw it up. As for what the true nature of the problems really are Diabetic Investor suspects manufacturing to be the main issue. Getting the new pod approved is one thing yet it’s a completely different animal when you have to supply 45,000 patients with 10 pods per and every month.

As much as patients love to be wireless Insulet has always been at a competitive disadvantage. Unlike Medtronic (NYSE:MDT) or Animas, the insulin pump unit of Johnson and Johnson (NYSE:JNJ), who only manufacturer less than 100,000 new pumps each year, Insulet by contrast must manufacturer over 6 million pods each year, which in simple terms basically means Insulet has more opportunities to screw up. Ask anyone who has a background in the manufacturing process and they will tell you it’s far easier to make 100,000 of something than it is 6 million of something. Keep in mind this is not like manufacturing test strips where additional scale equals greater efficiencies, unlike test strips pods are a complex device which is designed to deliver insulin on a constant and accurate basis.

The last thing Insulet needs now is to join the growing chorus of diabetes device companies issuing recalls because their particular device isn’t working properly. The harsh reality is a recall of the new system would effectively cripple the company and likely lead to its demise. Insulet knows all this which is why Diabetic Investor believes they will be ultra-conservative with this conversion process and will wait as long as necessary even if that means that existing patients who have been very patient will be unhappy with the company. Insulet also knows that even if these users are unhappy they really don’t have anywhere else to go.

Yes it is true, a small percentage may decide the wait isn’t worth it and switch to a traditional wired pump, but the vast majority of patients really have no other choice but to wait until the company is ready. This is one advantage Insulet has over Medtronic, Animas and now Tandem, as they are the only commercially available wireless pump on the market.

So to answer our original question is this just a PR problem or is there more to this story, the answer is yes to both. The fact that the company felt it necessary to post detailed information on the conversion process on their web site tells Diabetic Investor they are not clueless and are aware that there are many unhappy campers out in the OmniPod world. The fact they are being noncommittal with their timeline while frustrating for existing OmniPod users is also a smart move as they don’t want to be boxed into an exact time frame and then have to back track later on should something go wrong, and as we have seen so often in the device world something always goes wrong.

Whether or not we’ll ever learn the true nature of why this process is taking longer than anticipated is another story. Yet even here Diabetic Investor believes the company is taking the right path, rather than rush the process and see it blow up later, better to make damn sure everything is working properly even if that means taking heat from existing customers. The company knows there is more at stake than just its future existence; they also realize that if the product they make doesn’t work properly it could kill someone. For once it’s nice to see a diabetes device company not cut corners, rush a product to market only to suffer later for their haste to get something to market.

While the reasons for this delay may have nothing to do with the patient, in the end it’s the patient who wins here which is refreshing given what’s been going on lately.