Hotel California – You can check out, but you never leave.
If there is one thing that’s a constant in the diabetes world, it’s that it’s hard for good people who have made their mark in the industry to stay away for long. Al Mann, the founder and CEO of MannKind (NASDAQ:MNKD), made millions selling MiniMed to Medtronic (NYSE:MDT). Terry Gregg, the current CEO of Dexcom (NASDAQ:DXCM), also made millions when MiniMed was sold to Medtronic. Charlie Liamos, who recently became COO of Insulet (NASDAQ:PODD), made millions when Abbott (NYSE:ABT) bought Therasense. Although there are other examples, it’s fairly safe to say that the business of diabetes is not unlike that great Eagles song Hotel California, where you can check out but never leave.
Joining this list of distinguished diabetes alumni returning to the industry is Mark Lortz, who like Mr. Liamos is an alumnus of Therasense and now has joined the board of ArKal Medical, Inc. According to a press release issued last week; “ArKal Medical, a privately held venture capital-backed medical device company is developing a next generation continuous glucose monitoring system for the management of diabetes. ArKal Medical’s monitoring system is designed to reduce many of the inconveniences of current continuous glucose monitoring systems.”
Given their past relationship it should come as no surprise that MedVenture Associates, where Mr. Liamos worked before moving to Insulet, is one of the investors in ArKal.
Given their extensive knowledge and experience in the diabetes world, just what is it that drives these individuals, who do not need to work, to come back to this business. Are they not aware of the many issues facing the industry or could it be they see opportunity where everyone else sees chaos. The central fact is many of the current leaders in the diabetes market have chosen a strange path recently by bringing in talented people to run their diabetes units, yet these people have no diabetes experience whatsoever. While new blood is always welcome and can bring with it fresh ideas, there are some fundamental aspects of the diabetes market these people seem unable to grasp.
Simply put, there are unique aspects of the diabetes market that cannot be learned from looking at a spreadsheet or by simply crunching the numbers. There are reasons why, for example, patients with diabetes do not respond to certain marketing approaches. Fundamentally what these newcomers fail to grasp is that diabetes is as much a lifestyle as it is a chronic disease for which there is no cure. A disease which to be managed properly requires an extraordinary effort from the patient. As we have noted on numerous occasions managing diabetes properly is a 24x7x365 job with no days off and little in the way of tangible rewards. The fact is a well-managed patient is not like an obese patient who gets on diet and actually sees the pounds shed away.
Studies have shown that patients with diabetes would actually sacrifice years off their life rather than do all things necessary to manage their diabetes effectively. And as much as we hate to beat a dead horse the majority of patients with diabetes want diabetes management to fit into their already hectic and busy lives and not control their lives. Or put simply, patients want to live their lives with diabetes and not for their diabetes.
Perhaps this is why these seasoned individuals, who understand the diabetes market, cannot stay away for long. They see what’s going on in the industry and understand that many of these newcomers just don’t get it. Using their experience and understanding of the market, they are not deterred by market developments and see an opportunity where others see hurdles. They just might also see that many of the current companies have lost their way which opens the door of opportunity even further.
Frankly it would not surprise Diabetic Investor at all if we were to see others return to the industry, even after extended absences. The central fact is the diabetes market is even bigger than when they left and continues to expand each day. It is also sadly true that some things have not changed since they left and that the majority of patients are not properly controlling their diabetes.
The real question is will these newcomers, many of whom who actually have some great ideas, learn from these experienced and talented individuals or will they chose to ignore their advice. It would be wise for these newcomers to remember something J.C. Masterman wrote back in 1972; “We can learn from experience if we are ready to adapt that experience to changed conditions.”