Following a dangerous precedent
Years ago glucose monitoring companies began advertising their systems on television and in many respects this was the beginning of the end. Realizing that monitors were becoming a commodity, BGM companies hoped to create brand name awareness and get patients to ask for their brand. Looking back one has to wonder if this attempt to create stronger brand identity actually had the opposite effect and further reinforced in the patients mind that all monitors are basically the same.
Just as monitor companies quickly copy their competitor’s technology; they also copy each other’s marketing tactics. Soon the airwaves were filled with commercials from all the major brands. It didn’t take long for patients to tune out as the decision on which monitor they used wasn’t always theirs to make. Hindsight being what it is, about all this advertising did was increase marketing spending, with little, if any, impact on share growth.
Diabetic Investor is reminded of this situation as Novo Nordisk (NYSE:NVO) is spending a small fortune on TV commercials for their FlexPen®. While these commercials are well done, one has to wonder if they’ll do anything more than spend Novo’s money. Just as most patients don’t have control over which glucose monitor they use, neither do they control which insulin is prescribed by their physician. Novo, like the BGM companies before them, seems to believe that these commercials will get patients to ask to put on the FlexPen.
Diabetic Investor sees some danger with this strategy as Novo isn’t the only insulin that has a user friendly pen delivery system. Sanofi-Aventis (NYSE:SNY) has the SoloStar® and Lilly (NYSE:LLY) has multiple pen options. The fact is pen usage continues to increase here in the US and while not as prevalent as overseas, pen delivery systems continue to garner a greater share of the insulin using market.
Pretty soon pens will also make the transition for a dumb device that just delivers insulin to a smart device which communicates with the patient’s glucose monitor or diabetes app on their smart phone. Sanofi is working on just such a project. The basic idea is the patients will measure their glucose using the iBGStar; the app will calculate how much insulin is needed and then send the recommended dose to the pen. The pen will then communicate with the app telling how much insulin was actually delivered and when. All of this information can then be shared with the patient’s physician and/or educator who using this information can help the patient better manage their diabetes.
Although all the insulin companies will disagree, truth is there are only minor differences between the three most popular short-acting insulin’s on the market. Frankly a patient on insulin therapy wouldn’t notice much difference if they used Humalog® one day, Novolog® the next and then Apidra®. Yes there are small groups of patients who will notice a difference but for the vast majority which brand of insulin they use isn’t as important as them actually taking their insulin.
This is why we are seeing more studies on whose pen is most patient friendly. Studies that include terms like “plunger efficiency”. Looking towards the future expect to see more of these studies as insulin companies switch tactics and see their respective insulin delivery systems as the key to driving greater share. This is in turn will start an insulin pen arms race to see who can develop the pen with the most advanced technology. Diabetic Investor also expects the results of this arms race will experience results similar to what the glucose monitoring market did when it became a race to see who could launch a system with the best whiz bang technology. Just as only handful patients actually used all this whiz bang monitor technology, the same will happen with all these fancy insulin pens. Just as the majority of patients want an easy to use glucose monitor and could care less about all this fancy technology, the same will be true with the majority of insulin using patients.
In their attempt to make their pen stand out with all these commercials for the FlexPen the opposite effect could result. Just as monitors became a commodity, insulin pens could fall into this same trap. A move that would be accelerated should Sanofi and Lilly follow Novo’s lead and begin advertising their pen systems on TV, something Diabetic Investor sees as likely given the copy-cat nature of the industry. In the end Diabetic Investor suspects that about all these commercials will do is increase marketing costs and do little to change share numbers.
One just might think that Novo would have learned from the mistakes made by the glucose monitoring companies who hastened their own demise with their move to TV ads. Diabetic Investor suspects Novo made this move for the same reason the BGM companies, as they likely were convinced by lots of numbers on a spreadsheet that should a solid return on their investment. Never mind that these spreadsheets don’t take into account the many unique variables that go into the decision as to which insulin a patient uses and that while delivery systems are important they are just one of many factors as to why a physician will prescribe one brand over another.
As Diabetic Investor has been stating with increasing regularity there are just some things companies cannot learn from a spreadsheet. But in their zeal to quantify every variable most of these companies fail to see the forest through the trees.