Medtronic Reports
With each passing quarter Diabetic Investor
has been anxiously awaiting any news from Medtronic (NYSE:MDT) on just when
their patch pump will go to the FDA. Frankly with their insulin pump and
continuous glucose monitoring business slogging along there isn’t much to look
forward to and the patch pump is the one area where the company remains weak.
Diabetic Investor has heard all kinds of reports that the patch pump continues
to have issues. What we haven’t heard from any source is there are actually
solutions to these issues.
All we can say is the patch pump better get
here soon as the company continues to lose share to Animas and Insulet
(NASDAQ:PODD). The fact is Medtronic’s insulin pumps are now inferior to the
competition. The reality is when it comes to insulin pumps Medtronic is old
school. The basic design of the pump really hasn’t changed much over the years
and the competition actually offers better, more patient friendly product
offerings. Simply put the company has become complacent.
This complacency combined with ever
increasing sales quotas has seriously damaged the moral of the company’s sale force.
With no new products to sell the sales team really has no story to tell. Based
on field reports the MiniMed brand has been seriously damaged as the company
just hasn’t delivered on many of their announced initiatives. Besides the much
hyped but delayed patch pump, the company’s continued focus on a closed loop
insulin delivery isn’t helping either. Ask patients and physicians which continuous
glucose monitor they prefer and Dexcom (NASDAQ:DXCM) is the clear winner. The
fact is the Medtronic CGM isn’t as reliable as Dexcom.
Perhaps this is why the sales team,
frustrated with no new products to sell, has resorted to negative sales
tactics. The sad part here is these
negative sales tactics besides making the reps look foolish, have backfired. The situation has become so bad that there are
physicians who have banned Medtronic reps from their offices.
For years Medtronic has been the 800 pound
of gorilla of insulin pumps. At one time they owned the market and the company was
held in high regard. Sadly those days are long gone and the MiniMed brand has
been seriously damaged.
Diabetic Investor has stated many times that
the insulin pump market is not large enough, nor is it growing fast enough to
support all the companies in the market or the many who seek to enter the
market. We also have maintained that with their huge installed user base it
would take a major blunder by Medtronic to lose their position as the market
leader. Some of this is still true today as the company continues to maintain their
market dominance. However, cracks are beginning to appear and the damn could
burst wide open if the company remains complacent.
The fact is Animas and Insulet are winning
the battle for patients new to pump therapy and both are making serious inroads
in the replacement/upgrade market. New products are on the way and in the hands
of the right company will place Medtronic technology even further behind the
competition. Given the damage done to their reputation what was unthinkable
could actually happen. Still the company maintains the façade of superiority,
like ostriches with their heads in the sand; they are oblivious to what’s going
on around them. If this continues much longer they will likely follow a well
worn path in the diabetes device market of turning gold into sand. This happened when Abbott (NYSE:ABT) bought
Therasense and Roche bought Disetronic, two huge acquisitions that have failed miserably.
Based on the way Medtronic has managed
MiniMed since they acquired the company one just might think they were actually
trying to ruin the company. From the very beginning they mismanaged the unit
which could well end up costing them big time. Early blunders allowed Animas
and Deltec to gain market share and recent blunders are giving Insulet a free
pass in the fastest growing segment of the market. Although Deltec is no longer
around, Animas now in the hands of Johnson and Johnson (NYSE:JNJ) has the
resources to compete with Medtronic head on. All their missing is a wireless
offering, a problem that can easily be solved by acquiring Insulet.
The real question here is will Medtronic do
anything to repair the damage that has been done or continue to ignore the
problem as if it really doesn’t exist. Based on the company’s action, or should
we say lack thereof, it appears they continue to drink the kool aid. While this ignorance hasn’t yet cost them
dearly cracks are appearing and as Martin Luther King Jr. once said; “Nothing
in the world is more dangerous than sincere ignorance and conscientious
stupidity.”
