Kicking sand in Tyler’s face

There are certain facts about our wacky world and one big is not everyone plays well together in the sandbox even when it’s in everyone’s best interest to play well together. The reason this happens as you can probably guess is greed, no wants to share wanting the sandbox all to themselves. Nowhere is this more obvious than in the quest to build a Tyler. Just as a refresher Tyler is our name for a connected insulin pen- CGM/BGM- insulin dosing algorithm and app.

It’s our belief that Tyler will forever change how insulin using patients manage their diabetes. Additionally Tyler will have an adverse impact on the future of insulin pump sales.

The problem with Tyler is no one makes all the parts to Tyler which forces companies to work together to make Tyler a reality. As we have stated before the insulin companies – Lilly – Sanofi and Novo Nordisk all have a Tyler under development as they see Tyler as way to increase the sale of insulin. As we have also noted when it comes to diabetes devices all three of these companies with perhaps the expectation of Novo pretty much suck at it.

Just the other day Sanofi paid 4 million Euros to BIOCORP who has connected cap cover. Lilly has already submitted their cap cover to the FDA for approval, while Novo has a durable connected pen. Given the popularity of disposable insulin pens we see these connected cap covers as the most likely winners in the connected pen space. This is not to say there is no place for a durable connected pen rather cap covers fit better into the current insulin delivery infrastructure.

Given that insulin companies see Tyler as way to sell more insulin combined with the fact that insulin has become a commodity, we don’t see payors paying extra for any connected pen, cap cover or durable. We see all the insulin companies giving away their particular connected pen for free. This basically means that cost of goods is more important than system performance. Given the scale of all three insulin companies they can drive costs to the lowest level and make money not on the connected pen but on the insulin in the pen.

The app and insulin dosing algorithm have also become somewhat commoditized. Yes, some insulin dosing algorithms are better than others, but the major algorithms all work well enough.

The problem comes with how the glucose information is collected. Captain Obvious says that a connected CGM is the easiest way to solve this problem but believe it not some companies still believe that insulin using patients those following multiple daily injection (MDI) therapy use a conventional old fashioned BGM to collect their glucose data. Now we know this flys in the face of market trends as CGM is quickly becoming the standard for glucose measurement, but it is a fact.

With Dexcom and Abbott dominating the CGM universe it would seem easy to solve the problem as all the insulin companies have to do is cut a deal with either or both companies. Well here is where the problem really kicks in as doing the deal isn’t the hard part, the hard part is the terms of the deal. Put simply who pays who what and how much. Our connection is the CGM is the most critical link in the Tyler chain for without accurate glucose data Tyler doesn’t function all that well.

Yet the insulin companies seem to think since they have payor access and can drive sales of CGM systems they deserve a bigger piece of the CGM pie. On the flip side Dexcom and Abbott now battling for market share don’t want to share too much of their profits. Just as the insulin market has become ultra competitive so to has the CGM market. This has created somewhat of a log gam with the insulin companies wanting what they want and the CGM companies wanting what they want.

Complicating the situation are the all the CGM wannabes who promise to be just as good as Dexcom only cheaper. Yet these wannabes also have a problem in that so far none of them have even made it through the FDA let alone demonstrated the ability to manufacture sensors on a massive scale, sensors which are reliable and accurate. Heck Medtronic not exactly a small company hasn’t mastered this yet.

So if we’re right and the insulin companies will own the Tyler market how is this situation resolved. Do the insulin companies foolishly try to play Dexcom and Abbott off each other demanding a bigger cut in the hopes that one company will sacrifice margins for greater market share or will Dexcom and Abbott make an end run do a deal with biosimilar short-acting insulin company, find a connected pen company or companies and come out with a Tyler of their own.

Abbott has a problem too as until the Libre 2 is approved they don’t have a system that communicates with a smartphone. Dexcom on the other hand already has such a system making it easier for them to either work with the insulin companies or if they choose to do so come out with a Tyler of their own.

In our minds Tyler will forever change diabetes management for insulin using patients but only when everyone learns to play nicely together. To us it’s all this positioning is just foolish for if all the parties involved would give a little rather than be so damn greedy everyone including the people that matter most, insulin using patients would win. But this is one area once again where the business of diabetes gets in the way of the management of diabetes.