JNJ Reports – Holding Steady
This morning Johnson and Johnson (NYSE:JNJ) reported second quarter results and for their diabetes franchise, LifeScan and Animas, results reflected the new realities of the diabetes device world. While the company does not breakout results for each unit overall results for the franchise were in line with expectations growing 5.3% worldwide.
This morning we also gained some insight into the future and for diabetes the future isn’t much different than the past. As expected the company touted their OneTouch Verio™ blood glucose monitor which is currently available in some overseas markets. While the company continues to tout the accuracy of the Verio the meter also reflects another trend in glucose monitoring, the addition of a bolus calculator.
As Diabetic Investor has noted on many occasions when it comes to glucose monitoring insulin using patients rule. These patients monitor their glucose levels with greater regularity as they need this information to properly dose their insulin. Several companies including JNJ are now rolling out glucose monitors like the Verio which allow the patient to calculate how much insulin they should dose. Besides the Verio, Abbott (NYSE:ABT) who reports earnings tomorrow has the InsuCalc monitor and Sanofi-Aventis (NYSE:SNY) has the IBGStar coming to market in the near future. Basically BGM companies are taking a page from the insulin pump market as bolus calculators are now a standard feature.
Diabetic Investor suspects it’s only a matter of time before every glucose monitor has this feature, as the one constant in the BGM market is its copycat mentality. Soon bolus calculators or insulin dosing calculators or whatever you want to call them will be as commonplace as fast test results and alternate site testing. Unlike previous innovations that have done nothing to increase testing frequency Diabetic Investor believes this innovation has the potential to increase testing among insulin using patients, the caveat being will patients take the time to enter all the information that’s needed.
Providing a correct insulin dose is not as simple as one might believe, glucose levels are just one piece of information used in this calculation. To properly calculate how much insulin to dose the patient must also enter carb intake, insulin duration of action, insulin on board, insulin to carb ratio and target glucose level. Even when all these pieces of information are entered correctly there are also external factors to take into consideration, factors such as whether or not the patient will be exercising later, the weather, stress, etc.
Even sophisticated, well- educated and experienced insulin pump patients who have been using bolus calculators for years sometimes make mistakes which can lead to hypoglycemic events or periods of hyperglycemia. This unfortunately is the nature of insulin therapy. However, Diabetic Investor does believe that monitors like the Verio can be helpful as they make it easier for the patient to make an informed decision as to how much insulin to dose.
The company also touted their new Vibe™ insulin delivery system which combines an Animas insulin pump with the Dexcom (NASDAQ:DXCM) continuous glucose monitoring system. Like so many diabetes devices, the Vibe is another product not yet available in the United States but is available overseas. Although the Vibe isn’t really that much different from what insulin pump market leader Medtronic (NYSE:MDT) is offering, it does have some nice features. Besides being waterproof the Vibe comes with a nice large color screen which makes it very patient friendly and easier to use. Even better the Vibe has the Dexcom CGM which lasts for seven days compared to the three day life of the Medtronic CGM sensor.
While Diabetic Investor liked both the Verio and Vibe, neither product is revolutionary nor will either blow the doors of the competition. The central fact is we have reached a point with glucose monitors and insulin pumps where advancements are becoming more cosmetic. For all the talk about making insulin pumps better the reality is a pump is a pump, just as all glucose monitors do the same thing the same is true with insulin pumps. This is part of the problem with both markets, the days of major innovation are pretty much over and whatever innovations are introduced they are quickly copied.
This is one of the reasons Animas is having such a tough time gaining on Medtronic. Looked at realistically Animas actually has a better system than Medtronic as the Paradigm line of pumps is really outdated technology that hasn’t changed all that much since its introduction. Yet, Medtronic continues to hold a dominate position in the insulin pump market larger due to the fact that they have a huge installed user base, thank you very much MiniMed, and insulin pumps patients are very brand loyal.
One the flip side, LifeScan is not unlike Medtronic when it comes to the glucose monitoring market. LifeScan correctly anticipated that insulin using patients would rule the glucose monitoring world and set about on a strategy to own this critical market segment; a strategy that went beyond introducing systems that would be favored by insulin using patients and including buying their way to the top formulary position. LifeScan understood two critical aspects of the BGM market, all monitors are basically the same and the majority of patients would not switch brands when their insurance favored the LifeScan brand.
So here we are today, living in a diabetes device world that has reached maturity and if things don’t change quickly will fall into old age. While there are some new technologies on the horizon, Diabetic Investor has yet to see one that truly has the WOW factor. Even worse, none of what we have seen will change patient outcomes or move market share numbers.
What’s needed more than anything in diabetes is a move away from companies selling single non-integrated products to companies selling complete diabetes management systems; systems that include patient education and patient coaching. Diabetic Investor has said it before and we will say it again, all this great technology is worthless if the patients who are supposed to using this great technology don’t use it. As Arnold Toynbee wrote way back in 1947; “Man cannot live by technology alone.”
