Medtronic Full Year Results

Medtronic Full Year Results

Listening to Medtronic (NYSE:MDT) conference calls reminds Diabetic Investor of how Abbott (NYSE:ABT) used to handle their calls when they waiting for the FDA to approve the FreeStyle Navigator continuous glucose management system. For a time Abbott officials insisted that approval was right around the corner and on many occasions dared to offer a time frame for approval. Yet with each passing call there was no Navigator approval leading Abbott to change their tune. Eventually the situation became so laughable that Abbott and stopped mentioning Navigator. Eventually Navigator was approved but never gained traction in the marketplace and is now on the verge of extinction.

It appears that Medtronic is taking a page out of the Abbott playbook as with each passing call, and today’s was no different, there’s no mention of their much vaunted patch pump. Perhaps Medtronic, like Abbott with Navigator, is getting tired of opening their mouths only to insert their corporate foot. Like Abbott, Medtronic has gone from a stance of promoting a product whenever they could, to an eerie silence which makes one wonder if we’ll ever see this product.

 As Diabetic Investor has stated previously the Medtronic patch pump is well behind schedule and has undergone several design changes. Based on all available public statements Medtronic will eventually get this product to the FDA and like Navigator it will be the third player in the patch pump market. We can only hope that Medtronic has better luck with their patch pump than Abbott had with Navigator, although at the moment we can’t say we overly optimistic.

The company continues to hitch their diabetes wagon to an equally elusive goal, a closed loop insulin delivery system. For some time Diabetic Investor has questioned the need for such a product and has outlined not just the technological hurdles but economic hurdles such a product would face should it ever make it all the way through what will be a rigorous FDA approval process; an FDA that is taking a much harder look at infusion pump products.

With Dexcom (NASDAQ:DXCM) submitting their 510K for integration with the OmniPod system made by Insulet (NASDAQ:PODD) it won’t be long before Medtronic loses another strategic advantage as they will no longer be the only pump that integrates with a continuous glucose monitor. Dexcom is also working with Animas, a unit of Johnson and Johnson (NYSE:JNJ), to integrate the Dexcom system with Animas insulin pumps. So once again a market owned by Medtronic will soon be filled with new competitors.

The reality for Medtronic, if they choose to acknowledge what’s really going here, is that the future for their diabetes franchise is cloudy at best. Already the company has seen Animas and Insulet chip away at their market share with Animas and Insulet garnering a greater share of new pump placements. While Medtronic continues to hold onto a large share of the upgrade market, field reports indicate cracks are surfacing here too.

Without a patch pump to fend off Insulet and everyone else working on integrated systems one has to wonder what Medtronic’s share will look like five or ten years from today. The Medtronic ship isn’t sinking but the ship is taking on water. The question is can Medtronic bail fast enough, execute the repairs needed before it’s too late. Only time will tell and right now time is not on Medtronic’s side.