Lies and damn lies
As Diabetic Investor has already reported it is not beyond Medtronic (NYSE:MDT) to use their dominance of the insulin pump market to bludgeon health insurers into submission without showing any interest in actually helping patients. We have also seen that when caught red handed and faced with overwhelming evidence of their actions, real hard evidence the company does not take responsibility for their actions. The simple fact is Medtronic could care less about what they do, how they do it and how far they have to bend the truth.
Back on June 1st the company held an analyst meeting in the Big Apple which covered among other areas what’s going on in their diabetes device unit. Chris O’Connell, Executive Vice President & Restorative Therapies Group President provided the update for what’s going on with their insulin pump and continuous glucose monitoring unit. On the fifth slide of his presentation it shows 18% of Type 1’s on insulin pump therapy and Medtronic with approximately 65% of this market. On the same slide he notes there are 11 million patients who could become insulin pump patients, or put another way he presented an opportunity of 11 million patients with diabetes and a current industry penetration of 18% which by our math translates into almost 2 million patients on could be on insulin pumps. While Mr. O’Connell is entitled to his opinion it should be noted that insulin pumps have been around for well over 20 years and there are less than 700,000 insulin pump patients worldwide.
Really what Mr. O’Connell is doing is implying that with a 65% market share and two million more patients getting set to use insulin pump therapy the Medtronic insulin pump gravy train will continue well into the future. He likely knows that none of the analysts will actually check his “facts” and actually believe him because after all he works for that bastion of integrity Medtronic.
In perhaps the biggest stretch of the truth or one incredible whopper of a lie Mr. O’Connell states that the much hyped much delayed patch pump is in the final design phase. He also begins to talk out of both sides of his mouth when he also states patch pumps are a niche market but it should be part of the Medtronic platform. Now there are so many misstatements here and there are just two sentences in this paragraph. First and foremost the if the company is telling the truth today about which “phase” their patch pump is in, then they were lying to investors all along as if anyone bothers to check previous analyst days or earnings calls they actually showed pictures of their system and noted it was well on its way and only a matter of time before it was submitted to the FDA.
It’s also disingenuous for Mr. O’Connell to state that the patch pump market is a niche market, while we are not authorized to speak for the folks at Insulet (NASDAQ:PODD) we’re pretty sure they would violently disagree with Mr. O’Connell’s opinion. The fact of the matter is this is another example of Medtronic’s arrogance as they are implying to analysts that if Medtronic is not in a particular market segment that segment just isn’t important. Never mind that the facts that clearly show not only has Insulet proven there is a demand for wireless pumping but they have also done something that Diabetic Investor thought was impossible actually expanded the market for insulin pumps. Could it be with the new smaller pod coming to market that Medtronic is actually worried that Insulet will take away share?
The fact is Medtronic has old insulin pump technology and subpar continuous glucose monitoring technology. The success of Dexcom (NASDAQ:DXCM) , a system which most experts agree is far superior to what Medtronic is offering, is even more stunning when you consider the built in customer base Medtronic has to work with. Although no system is perfect the patients who are using the Medtronic complain long and loud about sensor failures, inaccurate readings, etc. While there are also some issues with the Dexcom system Diabetic Investor does not here the chorus of complaints that we hear when speaking with Medtronic patients.
With newcomers Tandem and CellNovo entering the market, Roche re-entering the market and Sanofi (NYSE:SNY) thinking about coming into the market Medtronic just might be thinking the emperor really has no clothes and something needs to be done. So what do they do? Do they innovate and come out with state of the art technology? Do they improve their sensor technology? Do they stop hyping the artificial pancreas project as though they own this piece of diabetes landscape? Do they return to what made MiniMed great and put the patient first?
No in pure Medtronic fashion they pound their chest and tell everyone we’re the big boys in the room so you better watch out. They play fast and very lose with the numbers. They use their current market dominance to beat insurers into submission, not content for reasonable increases or understanding there is such a thing as a slow economy. Like a hungry vampire looking to suck every drop of blood from their victims, Medtronic wants to squeeze every ounce of profit from this unit. The Regence debacle is just one example of this.
In the past Diabetic Investor has stated that the only way Medtronic would see serious competition would be if they themselves screwed up. We have stated on more than one occasion that even though the company has outdated technology the competition has been unable to break through and take away share. It seems as though Medtronic is reading their press clippings and beginning to believe they are invincible, that they can do no wrong and they can do or say whatever they want and heaven forbid if anyone questions their facts or motives. Diabetic Investor sees the day of reckoning coming as even Superman was not immune to kryptonite. But then again Superman used his incredible powers for good and not evil.