It seemed like a good idea at the time

It seemed like a good idea at the time

One of the more interesting aspects of the diabetes device world is that unique ability to look in the rearview mirror and see with incredible clarity why a particular product failed to meet expectations.  The examples of this phenomenon are too numerous to mention but a few products quickly come to mind. The GlucoWatch, the Amira AtLast glucose meter and the laser lancing device are all examples of products that came along with great fanfare that never made it in the marketplace. Besides failing to become commercially viable all three of these products shared another common trait, someone somewhere actually thought they were a good idea.

Well it looks like we can add another product to it seemed like a good idea at the time but never made it in the marketplace category as the iBGStar from Sanofi (NYSE:SNY) appears headed for the scrap heap. Just yesterday a patient could log onto the Sanofi US Diabetes Facebook page and see an ad that stated the following:

“Everyday price of $74.99, now $29.99 and just $4.99 with a coupon or online code. Learn more about the savings available at Walgreens for the iBGStar blood glucose meter for iPhone & iPod touch now thru 3/30”

Now we don’t want to be too hard on Sanofi as the iBGStar sure did seem like a good idea. The iBGStar attached to the way cool and very popular iPhone. There was a way cool app that worked with the iBGStar, an app so cool that users could easily share their readings with their physician or CDE. iPhone using patients could walk into a way cool Apple store and buy this way cool glucose meter or for those iPhone users who aren’t so way cool they could sneak into a Walgreens and buy this way cool glucose meter.

Yes the iBGStar was set to become Sanofi’s starting point for a complete interconnected diabetes management system; a system that would expand to include another way cool device, an insulin pen that also communicates with the way cool iPhone. Many speculated that it was just a matter of time before they added an insulin pump, which of course would communicate with the way cool iPhone. The driving force for this strategy, other than becoming a way cool diabetes company, was to help Sanofi offset the coming patent expiration of their blockbuster insulin, Lantus.

Sanofi knew that while Lantus would not face a generic immediately upon the Lantus patent expiration, that they would be facing this battle in the near future. They also knew that after years of ramming through prices increases, payors would have the leverage when a generic arrives and that payback is a real bitch. Understanding that their diabetes drug pipeline included nothing more than copycat, me-too, late to market drugs they further knew that they had to do something, anything to keep the diabetes gravy train going. Hence they came up with what seemed like a good idea at the time and decided to enter the diabetes device business.

As it turns out the company quickly realized that in order to become a player and actually make money in the diabetes device market they had to spend money too. It also dawned on them that glucose monitoring market was a commodity market and even with way cool products like the iBGStar they needed to get bigger and bigger in a hurry.  This began an on again, off again courtship with Bayer who was selling their beleaguered diabetes device unit. Yet as with so many things Sanofi the company who seemed hot to trot when this courtship began, quickly lost their appetite when they began to realize there was a reason Bayer was selling and that even if they were successful at acquiring this unit they would have to spend millions, perhaps billions, more to turn it around; all this at a time when competitive bidding was set to go into effect and push prices down even further.

To add insult to injury, Apple the makers of the way cool and very popular iPhone decided to change the connector port, the port which the way cool iBGStar connects to the way cool iPhone, on their iPhone 5. All of sudden the way cool iBGStar wouldn’t work with the latest version of the way cool iPhone unless patients bought an adaptor which allowed the way cool iBGStar to work with the way  cool iPhone 5. Believe it or not there were some members of the Sanofi management team who didn’t see this connector issue to be an issue at all and actually believed that patients wouldn’t mind it one bit. (Keep in mind this is the same management team that thought selling lunch bags was a great idea.)

So here we are with the company stuck with a boatload of inventory for a product no one really wants, which doesn’t work with the most recent version of the way cool iPhone 5, going against competition that is well established not just in the marketplace but also holds the number one position on almost every formulary wondering what to do. With nowhere else to turn they do what everyone does to clear out inventory, they make the price low enough so  even if the damn things doesn’t work all that well the consumer really doesn’t care as it cost less than most glossy gossip magazines also available at Walgreens.

Frankly Diabetic Investor is a little surprised by this rather conventional strategy from a company that brought us the way cool iBGStar and now the equally cool, specially designed diabetes lunch bags. We’re surprised they didn’t offer some sort of deal like buy a lunch bag and get a free iBGStar or buy the iBGStar and get a free lunch bag. Given their fondness for social media they could offer a free iBGStar for anyone who becomes their Facebook friend or like their page. As it stands today the page has around 5,800 “likes” which is about ten times more than patients using the way cool iBGStar and a thousand times more than how many diabetes lunch bags have been sold.

We must admit we can’t wait to see what strategy the company comes up with next, as so far Lantus is the only thing they done right in diabetes. However the goose that lays the golden eggs; Lantus, is about to face a set of very unpleasant circumstances and will lay golden eggs no more. So far the iBGStar hasn’t worked nor has those very cool specially designed social media marketed diabetes lunch bags.  What’s next specially designed insulin vial kozy’s, logoed insulin pen holders, pocket protectors or insulin storage containers that can double as a beer cooler when the patient tailgates. If there is one thing we can count one from Sanofi, whatever they come up with it will involve way cool social media and won’t stand a chance of helping offset the coming Lantus patent cliff. The way things are going it will be a very long, very hard and very painful fall.