Insulet Glaxo Hook up

Insulet Glaxo Hook up

This morning Insulet (NASDAQ:PODD) and GlaxoSmithKline (NYSE:GSK) announced they have reached an exclusive distribution agreement for the OmniPod Insulin Management System in Canada. According to a jointly issued press release; “According to the agreement, GlaxoSmithKline Inc. will have exclusive rights to promote, advertise, market, distribute and sell the OmniPod System in Canada.”

This move into Canada with Glaxo is a nice compliment to Insulet’s existing agreement with Ypsomed to distribute the OmniPod system in Europe.

Although Diabetic Investor does not see this move into Canada having an immediate impact on earnings it does pose some intriguing possibilities. It’s well known that the Avandia controversy has hurt Glaxo and damaged their reputation in the diabetes world. Glaxo could see this agreement as part of their strategy to reestablish themselves in diabetes. The OmniPod system is well established and offers a low risk move back into diabetes for Glaxo.

The move also helps Insulet expand into a small but important market. As Diabetic Investor has been stating for some time the key to Insulet’s future is lowering cogs and the additional volume provided by this deal should help in that regard. We do not on the other hand see GSK moving full bore into diabetes devices and eventually acquiring Insulet.

Simply put this is a classic win win deal with each company getting something they need.