High Stakes Poker

Doyle Brunson a living legend in the poker world once said; “The key to no-limit is to put a man to a decision for all his chips.” In the high stakes short-acting insulin market Lilly and Novo Nordisk and to some extent Sanofi currently have the best hands. However as everyone knows the best hand does not always win.

With billions at stake here we’re having a difficult time figuring out why the major insulin players are taking so long to bring Tyler to market. All three have connected pens, all three have apps which communicate or will communicate with CGM sensors plus they all have insulin dosing algorithms. Why then since they have all the components of a Tyler is it taking so long to take Tyler from the concept stage to the reality stage?

Novo has already launched their connected pen in select European markets, Lilly has submitted their connected pen to the FDA while Sanofi has multiple connected pen relationships.

As we have noted for some time, we suspect these companies will own the Tyler market as they will likely give away their respective toys for free as their goal is to protect their insulin franchises. Novo and Lilly know that it won’t be long before there are multiple biosimilar short-acting insulins available and Sanofi already has one. Given the dynamics that are playing out in the insulin market combined with increasing political pressure it’s safe to say that insulin prices are headed south.

Both Novo and Lilly noted during their recent earnings calls the continued pricing pressure in this market and all three have witnessed the impact biosimilars have had on the long-acting market. The insulin market has become a game where market share is everything. The simple fact, which Novo pointed out in their earnings call, with prices contracting and competition for formulary position intensifying they may be selling more insulin but are making less money on each unit sold.

The simple fact is none of these companies can afford to let anyone else bring Tyler to the market. Which makes their methodical approach to bringing Tyler to market even more befuddling. Given the number of non-aligned connected pen companies plus the coming of multiple biosimilar short-acting insulins it’s possible, perhaps even likely, that someone will come along before the major players and steal their thunder.

Just as selling insulin is the goal of the insulin companies, selling CGM sensors is the goal of Abbott and Dexcom. Although Abbott seems content with their value strategy for Libre, Dexcom has established a strong presence with intensively managed patients and has a well-deserved reputation for producing highly accurate and reliable sensors. It’s possible that Dexcom and Abbott could align themselves with a connected pen company and a biosimilar insulin company and launch their version of a Tyler. Keep in mind that Dexcom also owns TypeZero who makes the insulin dosing algorithm that will run Tandem’s Control IQ system.

Speaking of insulin pump companies they too could enter the Tyler market. These companies already have deep experience with CGM integration plus dosing algorithms. Although the insulin pump market has recently showed renewed signs of life Tyler is a major threat to the future growth for the simple reasons its much cheaper than a conventional pump plus requires little in the way of training. Having a Tyler would accomplish two important objectives for a pump company, first it would provide additional revenue and second Tyler could be used as an entry tool before converting to a full-blown insulin pump. We have long believed and still believe these companies must reposition themselves from insulin pump companies to insulin delivery systems companies.

And who’s to say one the cash rich techies won’t enter the Tyler market. Verily, the life sciences unit of Google is already partnered with Sanofi while Dexcom has a strong relationship with Google and Apple. Oh and there is a small retailer based in Seattle who’s known for disrupting markets and they too could enter the market.

Hence the reasons all the major insulin companies need to take Tyler out of the development category. This is a multi-billion-dollar poker game with multiple players all of whom have plenty of chips to play with. Let the games begin.