JNJ Results and what they mean for the entire glucose monitoringmarket
This morning Johnson and Johnson (NYSE:JNJ) reported 2006 second quarter results which showed LifeScan sales increasing 14% in the United States and 5% Internationally for the quarter. On a year to date basis LifeScan sales are up 10% domestically and flat internationally. It should be noted that this is the first reporting period which incorporates JNJ’s acquisition of insulin pump maker Animas.
It would difficult to characterize LifeScan’s results as encouraging. Recently the company introduced their new Ultra2 glucose monitor which allows patients to tag their glucose readings as pre or post meal. With glycemic variability gaining increased attention, the company is marketing the Ultra2 with an emphasis on patients seeing glucose trend information. Based on this marketing strategy it appears LifeScan is targeting the Ultra2 at insulin using patients, not a surprise as insulin using patients monitor their glucose levels more frequently than non-insulin using patients. However, it also puts the Ultra2 in a very crowded category and points to a bigger problem in the entire blood glucose monitoring market.
The entire blood glucose monitoring marketing while not ignoring non-insulin patients has made a decision to compete for the 4 million insulin using patients in the United States. Because insulin using patients need to know their glucose levels prior to taking their insulin they check their glucose levels more frequently than non-insulin patients. Patients on insulin pump therapy on average check their glucose levels 7 times each, patients on multiple daily injections (MDI) are next in line followed by patients on insulin plus oral therapy. As Diabetic Investor pointed out before although there are a greater number of patients on oral therapies alone but as whole this group are the least frequent testers.
Although this marketing strategy is perfectly understandable it does point to the main problem within the industry. Currently none of the major glucose monitoring companies have a continuous glucose monitoring (CGM), the two approved systems are the Guardian RT from Medtronic (NYSE:MDT) and the STS system from Dexcom (NASDAQ:DXCM). In their current form neither of these systems is ready for prime time. As these systems improve it is likely that a large percentage of insulin using patients will use CGM as their primary means for monitoring their glucose levels. This puts the major glucose monitoring companies in the uncomfortable position of marketing to group of patients who test infrequently.
As we pointed out yesterday the key to this market isn’t fancy technology, the key is patient education. Until patient education becomes an integral part of companies overall strategy it is unlikely this large market will ever yield favorable results. The time has come for everyone in the diabetes marketplace to push third party payors and managed care companies to provide higher reimbursement levels for patient education. An effort that would payoff handsomely in the long run as patient education is the only proven method for increasing the frequency of glucose testing.
Television advertising, giving away meters and advanced technology aren’t the answer in the non-insulin using patient market. The answer is clear but no one seems to paying attention.
David Kliff
Publisher
Diabetic Investor
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www.davesrunfordiabetes.blogspot.com
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