How Big is Big

“IDTechEx, expert providers of market intelligence in emerging technologies, have forecast the medical wearables market to be worth $19.7 billion by the year 2024 in their latest research. This market will be driven by the demand for continuous health monitoring and point-of-care diagnostics for the management of chronic diseases.” – BioSpace July 30, 2019

“Every day consumers become more and more connected via their smart phones and other devices for banking, entertainment and a host of other applications. Health will be one of the fastest growing sectors in this expansion. In fact recent reports have said that “…the global market of wearable medical device is expected to grow with a CAGR of 18% during the forecasted period 2017-2023. The market generated near around USD $2 billion during 2016 and is expected to reach approximately USD $6 billion by the end of the forecasted period.” P&T Community July 30, 2019

“So, if we think about Libre this year, it’s approaching maybe $2 billion, based on consensus. Does that mean that ultimately you think it could be $6 billion to $10 billion type product as you go mass market?” part of a question asked at the recent Abbott earnings call

With Dexcom reporting later this afternoon we thought it might be a good idea to provide some perspective to this market only problem being is no one not even the so-called experts can agree on how big this market really is or how fast it will grow. Yes everyone agrees we have just scratched the surface but just how big is this iceberg below the water line.

To us the CGM market is transforming into a multifaceted market with each submarket having its own possible growth path. The first and most obvious of these is intensive insulin using patients, which we define as insulin pump and multiple daily injection (MDI) patients. This market consists of approximately 7 million in the US alone. Outside the US that number increases some fivefold depending on who’s estimates you want to believe. This is as we have said is the low hanging fruit for CGM and even with as well as Dexcom and Abbott are doing they have only captured a minority of these patients.

As we climb the CGM tree next up are less intensively managed patients taking basal insulin alone or in conjunction with oral medications a global market of 25 million or so . These patients have begun to experiment with CGM but have not embraced it just yet, they will it will just take a little more time.

While it would be nice to believe that patients using orals alone or following GLP-1 therapy would adopt CGM we don’t see this large population embracing CGM at this point. CGM would definitely help these patients but they will be enticed to use CGM for reasons beyond just helping them manage their diabetes. AND THIS IS WHAT ALMOST EVERY ANALYSTS MISSES OR JUST FLAT OUT DOES NOT GET.

Diabetes is the reason CGM came to be, but it is not the reason it will grow into a multi-billion market growing at 20% annually over the next 5 to 10 years. What will drive CGM growth into the stratosphere will be non-diabetes applications the biggest of which being weight loss. When diabetes patients who are less intensively managing their diabetes see other reasons to use sensors, they will jump on the bandwagon too. Throw in the millions of overweight people and cha ching the flood gates will open.

Throwing gas on this already raging fire is CGM prices are contracting, the systems are becoming simple to use and wait for it …. The big tech companies Google, Apple, Amazon and Facebook haven’t yet fully embraced them. When big tech fully embraces CGM and believe us they will the sky is the limit. These players don’t see CGM as a health tool per se they see it as tool to bind consumers to their platform as a means to sell them other services.

And let’s not forget that Walgreens and CVS are also battling with big tech, Amazon in particular for control of the patient and they too will drive greater CGM adoption and they too will discover CGM has more applications then diabetes.

The best part here is the for the moment the two biggest players in CGM, Abbott and Dexcom, have each found their niche. Abbott has become the value option with Dexcom becoming the premium option. Both are gobbling patients and making enhancements to their existing platforms. Abbott has committed billions of dollars to expand capacity and we suspect Dexcom is about to do the same. Both companies realize that this business is as much about manufacturing skill as it is about way cool and whiz bang.

The better part is the best is yet to come which to us just boggles the mind. Diabetes by itself is a huge and unfortunately growing market and that market alone could support these growth estimates. Throw in other applications such as weight loss and you can see why there are lots of people doing the happy dance in Alameda and San Diego.

So how big is big to be honest we have no clue which in this case isn’t a bad thing.