More issues for Insulet

More issues for Insulet

This morning Insulet (NASDAQ:PODD) issued a recall which according to the notice posted on the FDA’s site involves “40,846 boxes (10 Pods per box) of the OmniPod (Pod) Insulin Management System. This field corrective action is due to the possibility that some of the Pods from these lots may have a higher rate of failure than Insulet’s current manufacturing standards.”

Now recalls are nothing new in the insulin pump market and one could argue that a company isn’t officially in the market until they experienced a recall. However this recall from Insulet could not have come at a worst time as it appeared that sales were beginning to pick up. The recall also shows that the production problems that plagued the company under the previous management team have not been totally solved.

It will interesting to see how Pat Sullivan and his team which lacks much diabetes experience handles this recall. Will they take it seriously or will they just shrug it off? This may seem like the dumbest question in the world but this is the same team that thought it was a good idea to give out chocolate pods at a trade show. Yes that’s right an insulin pump company that works with patients who have diabetes was giving away chocolate and no we are not making this up.

As we’ve been noting the insulin pump market like every other diabetes market is ultra-competitive and things like a recall matter. The reality is Insulet which was never known for great customer service has been getting hammered on the many patient blogs for what can only be characterized as very bad customer service, and we’re being overly kind here. And whether Pat and his team knows it prospective insulin pump patients are very proactive when selecting which pump to use and read these blogs. This recall will only add to the perception that’s building in the marketplace that Insulet isn’t committed to being an insulin pump company.

So just when it looked like the company might be turning the corner along comes this recall. A recall that will only strengthen the belief that when it comes to choosing an insulin pump there are more attractive choices then the OmniPod. While it may be the only commercially available wireless/tubeless pump on the market this really doesn’t matter all that much if the damn thing doesn’t work. And as a user of the OmniPod Diabetic Investor can state emphatically that it’s very frustrating when pods keep failing.

Frankly this has been the problem that has plagued the company since it began. There is no question that the OmniPod is an innovative system and there are many compelling benefits to wireless/tubeless pumping. However one issue patients, physicians and CDE’s won’t stand for is constant malfunctions. As we noted earlier wireless/tubeless is nice but a pump that works consistently even if it’s tethered to a patient’s body is better.

The way we see it things really haven’t changed all the much since Pat and his new team has taken command. First they blamed every issue they could find on the previous management team and only when the results “appeared” to improve did they take ownership of the results. Yet when looked at closely those results really weren’t that great. Now we have yet another recall from the company for an issue that was supposed to be fixed long ago.

Wonder who they will blame for this mess- the tooth fairy?