Gauging the impact

While it seems unthinkable at the moment at some point the coronavirus crisis will pass and life will get back to normal or whatever the new normal will be. No one knows when that day will come all we know is it will come. That being said it’s worthwhile to look ahead and gauge the impact this crisis will have on the business of diabetes.

It’s understandable during this time of crisis that physicians have taken some drastic measures. We have received multiple reports from reps in the field that they have been banned from physicians’ offices an understandable move given the crisis. Given the fluidity of the crisis no one knows when or if these reps will be allowed back. While we don’t see this move adversely impacting sales of drugs, we do see this hurting device sales.

Just by way of example sales of the Control IQ from Tandem were skyrocketing. As we have noted thanks to social media patients are seeing the incredible results produced by the Control IQ. However with the economy in flux and patients understandably worried about their jobs it’s logical that sales of the Control IQ will slow. How long this slowdown will last is anyone’s guess, but we have no doubt that previous projections given by Tandem can be thrown out the window.

We also anticipate that Tandem isn’t the only insulin pump company that will be adversely impacted as Medtronic will also feel the pain. Again as we have noted previously many 670G patients were looking to convert to the Control IQ however now these conversions will likely be delayed. Patients on older Medtronic systems will likely follow a similar pattern preferring to remain on their older systems until everything sorts itself out. The real question is just how many of these patients drop their pumps in favor of multiple daily injection (MDI) in an attempt to cut costs.

Being the only pay as you go option Insulet may be the least impacted by this crisis. However like Tandem and Medtronic they likely will experience slower new patient adds. We aren’t saying that growth in the insulin pump market will come to a halt rather growth will slow sustainably until this crisis is over.

This slowdown in insulin pump sales combined with the economic uncertainty will also adversely impact growth in the CGM market. The simple truth is during a time of crisis especially this one which changes day by day, patients are in no mood to make major changes. We see this not just hurting new patient adds but also reorder rates as patients currently using CGM just might scale back reorders until the crisis passes.

Although we don’t anticipate sales of drugs adversely impacted, we so see new drugs such as Rybelsus® the oral GLP-1 from Novo Nordisk hurt by the crisis. Again patients are in mood to make major changes during a time of crisis and physicians don’t have the time or energy to push a new drug. Just as we see growth slowing in the device sector, we anticipate a slowdown in prescriptions as patients hunker down.

We continue to believe Livongo will be seriously impacted for the same reason. Livongo is dependent on new patient adds and with people at home, employers making major changes the last thing these people want to do is sign up for a new program. These people aren’t worried about improving their diabetes management they are worried about their families and having a job. Without new patient adds you can take every projection Livongo has made and flush them down the toilet and you won’t need to waste the most valuable commodity, toilet paper, to do it.

Based on the situation at this very moment and heaven knows it could change at any moment the best way we can describe the current situation is stagnation. With no movement forward and perhaps some movement backward. Again as we have noted second quarter results will be the first glimpse at the reality of the situation. Our educated guess is all the companies are making contingency plans to deal with the fallout and reignite sales when the crisis ends.

However just like everyone else they have no idea when it will end nor what the true impact will be. Like everyone else they are hunkering down hoping for the best planning for the worst. The better managed of these companies will go one step further and begin designing changes for what will become the new normal. A world we believe with fewer sales reps, virtual physician visits combined with virtual patient training/support.

It’s going to be a wild ride so hold on.