Gee another insulin pump

Gee another insulin pump

This morning privately held Asante Solutions announced they have received FDA clearance for the Pearl insulin pump. According to a company issued press release; “The Pearl Insulin Pump’s utilization of a pre-filled insulin cartridge is an evolutionary step forward for those on intensive insulin therapy,” said James Chamberlain, MD, medical director for Diabetes Services at St. Mark’s Hospital and St. Mark’s Diabetes Center. “The fact that the Pearl minimizes all the ‘plumbing’ issues associated with reservoir filling in other insulin pumps makes it an attractive choice as a starter pump for those initiating insulin pump therapy as well as for those seeking greater ease of use. The Pearl is designed to reduce steps, add convenience, and save time.”

Only in the wacky world of diabetes devices can a relatively unknown company like Asante come to market with a pre-filled insulin cartridge, something Medtronic (NYSE:MDT) sought to deliver long ago but just like their much hyped and much delayed patch pump, the company just couldn’t make this happen. While the pre-filled is an advantage for the Pearl, this one innovation alone won’t solve the issues facing the company, namely how do they establish a market presence in an already over-crowded market.

The answer lies where it always does with all these newcomers to the insulin pump market is Asante like everyone else in this space wants to be bought by someone who is crazy enough to enter the insulin pump market. Thankfully for Asante they cleared one of the bigger hurdles in that the FDA actually approved their system, not a small feat these days given how the agency has been acting lately.

So let’s spin the wheel here and see if we can figure out where Asante will land and you can’t mention insulin pumps and acquisitions without mentioning Sanofi-Aventis (NYSE:SNY). It’s well known that Sanofi is taking a serious look at multiple options for entering the insulin pump market and have made it clear they want to be a serious player in the space as they see pumps as another avenue to increase insulin sales. The fact that Pearl has a pre-filled insulin cartridge fits nicely into this strategy.

Another possibility is Medtronic, which may seem crazy but given their recent cutbacks at the company and the fact that their R&D department seems lost in the wilderness, the company rather than try and build a replacement for their aging Paradigm line of pumps, could just go out and buy a replacement.

The same could be said about Animas, but Diabetic Investor does not see them as having serious interest considering their parent company, Johnson and Johnson (NYSE:JNJ), believes they made a mistake in acquiring Animas in the first place as the acquisition has yet to yield the anticipated results.

Roche also falls into this category as they have a great track record of wasting money in the insulin pump space, first wasting over a billion dollars to acquire Disetronic and then they compounded their mistake by wasting another $200 million to acquire Medingo.

Diabetic Investor would also count out Novo Nordisk (NYSE:NVO), who once owned a piece of the company back when it was called M2Medical. Novo has made it clear that they have no intention of getting into the diabetes device arena beyond insulin pens, and given the way this market is going this just might be the smartest move of all.

An intriguing possibility is Nipro Diagnostics, who also acquired Home Diagnostics. Nipro dropped their failed Amigo pump and is widely known to remain interested in the space. Just as JNJ thought Animas would drive test strip sales for their LifeScan unit, Nipro sees the same synergies with their glucose monitoring unit. There is no question the Pearl is a much better platform than the Amigo and given Nipro’s long term commitment to the diabetes device market, could well be the ticket to re-enter the market.

Whoever ends up owning Asante still must solve the primary riddle of the insulin pump market, how can they take share away from Medtronic and be profitable at the same time. One only needs to look at Animas and Insulet (NASDAQ:PODD) to understand just how difficult a task this is. While both companies have captured share neither has yet to make a dent in Medtronic’s huge installed user base which is saying something considering how badly Medtronic has managed this unit. And let’s not forget Asante is not the only newcomer set to enter the market, there are several others all of whom believe they have built a better mouse trap, Tandem and CellNovo are just two companies that quickly come to mind.

The fact that there are so many newcomers to choose from could also dampen the enthusiasm for any acquiring company to move quickly. Add in the fact that besides all these newcomers Insulet has real live patients that would come with an acquisition. Add in the fact that Insulet has submitted their new smaller pod to the FDA, which besides being a third smaller than the current pod also comes with lower COGS, makes Insulet even more attractive.

Still it must be remember this is the wacky world of diabetes devices where anything can happen and usually does. History tells us that there is no shortage of companies who are eager to spend a small fortune in the hopes they will make a bigger fortune. So far things haven’t turned out that way and prove the old adage the best way to accumulate a small fortune is start with a big one.