Flying Solo – What’s going on with Medingo
Ever since Insulet (NASDAQ:PODD) introduced their OmniPod Insulin Management System and validated the concept of a wireless insulin pump, the industry has been waiting for the next entrant in the wireless pump arena. Medtronic (NYSE:MDT) recently announced they would have their version of wireless pump ready by 2010, while Animas, a division of Johnson and Johnson (NYSE:JNJ) has also stated they too were working on a wireless system.
The company generating the most buzz outside these established players has been a small Israeli company, Medingo. At the end of 2007 the company completed another financing round raising an additional $27 million and there was speculation they were about to submit their Solo™ system to the Food and Drug Administration (FDA) for approval. At the recent ADA conference the company was supposed to participate in an investors conference but failed to appear. While there are varying explanations for their disappearance the company missed a great opportunity as the room was packed with eager investors wanting to learn more.
This missed opportunity also created a whirlwind of rumors ranging from a possible buyout to the company running out of money. It’s known that the company has recently undergone several personal changes and is looking to build their presence here in the US.
For their part Insulet is not resting on being the only wireless system available and has an updated version of the OmniPod ready to go.
The question is just what the heck is happening with the Solo. Industry sources told Diabetic Investor the 501K has been delayed as the system had to redesigned due to IP concerns. Others have told Diabetic Investor they are doubtful Solo will ever make it to market. Just what does the company say about all this? Nothing.
Call Diabetic Investor the ultimate skeptic but we have been down this road before and aren’t optimistic about the company’s long term outlook. Even if Solo was submitted to the FDA in the near future the company must deal with the complexities of actually running an insulin pump company. Everyone seems to be living under the false impression that if any company could build a cheaper version of the OmniPod they would be successful. This simple view assumes that with a lower cost of goods the system could be sold at lower price than the OmniPod and therefore gain share.
There are several problems with this view not the least of which being there is a reason insulin pumps aren’t cheap. Running an insulin pump company requires 24x7x365 customer support, an army of well trained sales people and dealing with the complex maze of reimbursement. This is also the reason it would be nearly impossible for the insulin pump market to follow the blood glucose monitoring market by giving the pump away for free and making money on the continuing sale of pump supplies.
It was widely assumed that if anyone came along that could compete with Insulet, a bigger player would gobble them up and use their platform as entry into the wireless arena. Diabetic Investor has long believed this to be a foolish view as these same players could just as easily buy Insulet.
This fascination with Medingo mystifies Diabetic Investor. Not because we don’t believe there is not a need for another wireless system, quite the opposite Diabetic Investor sees wireless systems as a growing segment of the insulin pump market. Nor do we have any doubts that the Medingo’s technology is somehow substandard. However, technology is not the issue here. The issue here is the ability to actually run a pump company.
For anyone who doubts just how complicated running a pump company can be ask the people at Smiths Medical, who are desperately trying to sell their Deltec unit who makes the Cozmo insulin pump. After getting off to a strong start Deltec has fallen on hard times as Smiths is no longer committed to the unit. Meanwhile Medtronic, Animas and Insulet continue to add users and introduce new systems. There are a host of companies in the development stage who believe they have a system just as good or better than the OmniPod. All with the same objective as Medingo, that being to find a bigger player to partner with or buy them.
Looking over the insulin pump landscape it’s a buyer’s market and right now the best buy is Insulet.