With each passing day it’s becoming more apparent that CGM will replace BGM as the standard for glucose measurement. CGM systems are becoming more patient friendly, i.e. no calibrations, simple insertion and cheaper too. The data provided by CGM is transformative leading to improved outcomes. It is no longer a question of if this will happen but when this happen.
However, there are still millions of patients who use BGM and there is a portion of the patient population for a wide variety of reasons will not make the transition to CGM. Therefore, it’s understandable that a common question we get is what’s the future for BGM, can BGM survive? The quick and simple answer is yes there is a future for BGM and yes it will survive yet in vastly form than in the past.
Looking towards the future BGM will become a piece of what we like to call a diabetes management system (DMS). Think OneDrop and Livongo and the many other interconnected diabetes management systems (IDMS). However, these systems will also soon transition to using CGM to gather glucose data. As we have noted many times while these systems claim they can help all patients their current target are insulin using patients. So far none of these systems have shown they can move from insulin using patients to patients who do not use insulin.
Given that scale is critical in the BGM business we see the business model for BGM changing if any of these companies hope to survive. In the future meters and strips won’t follow the razor/razor blade model. In the future the patient will pay for what the systems does i.e. data analysis, coaching, etc. The meter and test strips will be thrown in for free. OneDrop is the closet to this shave club for men pricing model but others will follow.
BGM also has a future in international markets and with patients who cannot afford or do not have access to CGM.
The biggest challenge facing BGM won’t come for another 2 years or so when CGM reaches price parity with BGM. As everyone knows Dexcom and Google are working on a slap it on turn it on CGM system. What most people don’t know is that this system will cost the same as BGM. And Dexcom/Google isn’t the only CGM company moving in this direction. Dexcom/Google may be the first to get here but they won’t be the last.
Once this system hits the market the future for BGM will become the domain of emerging markets. Developed markets such as North America and Europe will use CGM. The key driver here isn’t because CGM provides better data, the key will be cost parity with BGM. Since it won’t cost the payor more CGM will move ahead of BGM on the formulary ladder. We hate to be redundant but as we say consistently this isn’t about better technology this is all about money.
So yes, there is a future for BGM but that future isn’t overly bright. Making matters worse for the companies that remain in this market is they still operate in a commodity market and it’s not just that meter and strips have become a commodity. Systems are also commoditizing as well. That poor dead cat can’t be swung today without hitting a BGM company that doesn’t also offer data analytics, coaching, etc.
It also doesn’t help a company like OneDrop when a company like Roche follows their move into the shave club for men pricing model. Now in the hands of private equity we suspect LifeScan will also offer something similar. The sad reality for companies like OneDrop and Livongo is they cannot reach the scale of Roche or LifeScan, scale which is critical if they are to make money.
The fat lady may not yet be singing the end of BGM but she’s getting her voice ready.