Finally Roche Back in the US insulin pump market

Finally Roche Back in the US insulin pump market

This morning Roche announced that the US Food and Drug Administration (FDA) has lifted the import alert for the sale of Accu-Chek insulin pumps by Disetronic Medical Systems AG (Burgdorf, Switzerland) for customers in the United States.

Roche’s re-entry into the US insulin pump market comes at a difficult time. At one time Disetronic was a firm number two behind market leader Medtronic (NYSE:MDT). While Medtronic maintains their market dominance, Animas now part of Johnson and Johnson (NYSE:JNJ), has moved into the number two spot. Insulet, the makers of the OmniPod, has also emerged as a serious contender.

It will be curious to see which strategy Roche pursues as their Spirit insulin pump has nothing unique to offer patients and is considered a me too product by most industry observers. While they have the resources to reach physicians and educators, they are well behind in pump technology. With their 722 system Medtronic has taken the lead in the conventional insulin pump market, while the OmniPod is the leader in disposable pump market. Diabetic Investor sees the insulin pump market as basically a two horse race between Medtronic and Insulet.

The wild card here is just how aggressive JNJ will be with Animas. The company has already announced plans to integrate their LifeScan blood glucose monitors with future versions of the Animas pump. Like Roche, JNJ has the resources to reach physicians and educators. Unlike Roche however, JNJ could soon be facing a patent infringement lawsuit from Medtronic over the use of the bolus calculator and their plans for a remote control. Medtronic has publicly stated they will vigorously defend their huge patent portfolio and has already successfully demonstrated the power of this portfolio with their victory over Smiths Medical, the makers of the Cozmo insulin pump. The settlement agreed to by Medtronic and Smiths, has crippled Smiths ability to effectively compete in the insulin pump market. Salespeople are abandoning the company and several key members of management have moved on as well.

Also on the horizon is Abbott’s (NYSE:ABT) expected entry into the market with their Aviator insulin pump. After acquiring Therasense, Abbott has taken an extremely aggressive approach with their pricing and rebates moving the company well ahead of Bayer (NYSE:BAY) and now within striking distance of market leaders LifeScan and Roche. Should they follow a similar strategy with the Aviator it could turn the insulin pump market on its head. Although pricing is not the primary factor when a patient chooses an insulin pump it is a great concern to third party payors. From what Diabetic Investor has been able to learn about the Aviator it is a conventional insulin pump similar to Medtronic’s Paradigm 715 model. With no technological advantage Abbott could be the first company to adopt the lease rather than buy pricing model.

Diabetic Investor is also aware of several companies looking to enter the market, one of whom that plans on following the BGM market model of giving the pump away for free and making their money from the continual sales of pump supplies. There are also a host of efforts under-way to develop a disposable pump to compete with the OmniPod. Not to mention that everyone in the insulin pump market is looking to develop a closed loop system that integrates continuous glucose monitoring and insulin pump technology. Medtronic’s 722 system is the first such system and surly won’t be the last.

One just might think with all this activity the insulin pump market was growing at 20% or more, when in reality the market is growing at no more than 12% annually. While several clinical studies have demonstrated the effectiveness of pump therapy it is still considered the therapy of last resort. With all the advances in pump technology and the advent of “smart pumps” physicians, educators and patients still find initiating pump therapy a daunting task. The bottom line in the insulin pump market is this market is not large enough nor is it growing fast enough to support all the current players let alone all those set to enter the market. With their huge market share and equally powerful patent portfolio Medtronic is the clear leader and will be tough to beat. With its advanced technology and unique pricing structure the OmniPod from Insulet is also well positioned for the future. This leaves some well heeled players to fight over a rather small share of what really is a niche market. Roche’s return could mark the start of an interesting shake out in the insulin pump business or worse the beginning of a price war as everyone begins to fight for market share. Either way the insulin market is headed for some interesting developments – STAY TUNNED.

David Kliff
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