More Wackiness

More Wackiness

“First in Libre I am excited about the product. I think it’s a great innovation, a great product. I think we’ve had really good customer response and I guess our challenge right now is capacity expansion. I’d say that’s a limiting factor for us. Quicker, faster, sooner than we expected.

So you know the organization’s got the blow torch going to expand capacity because I think that product particularly is what patients is going to be very strong. I am frustrated with the pace of regulatory approve Al in the US but nevertheless right now we need the capacity anyway so it’s open to a really good reception in Europe.

And I expect it’s going to be a real positive product for us and for patients in that sector. “

These words were spoken by Abbott (NYSE:ABT) CEO Miles White in response to a question during the company’s most recent earnings call.

Now never mind that the company’s conventional glucose monitoring business continues to experience sales declines or that the BGM market continues to be flushed down the toilet, nope the Libre, a product that has already been the target of two recalls, will save the day for Abbott Diabetes Care.

There is just one little problem here the damn thing doesn’t work all that well. Perhaps Diabetic Investors is being overly harsh and should rephrase – there are just too many sensor failures. As we have noted many times patients will put up with a lot but sensor failures are not among them. If we have learned anything at all since continuous glucose monitors came onto the market it’s that patients hate it when the damn thing doesn’t work. When they have to continually replace sensors that have failed. This is not just expensive it’s very annoying.

Keep in mind that the majority of patients using a CGM are motivated, educated patients. They understand not only what all this data means, they understand how to use this data to better manage their diabetes. These educated, motivated patients also understand that devices are not infallible and from time to time will fail. However, there is huge difference between an occasional sensor failure then there is with a nearly 50% failure rate which many Libre patients are reporting.

Back when Abbott announced earnings Diabetic Investor speculated that the company was touting the Libre as a smokescreen to distract investors from the poor performance and bleak prospects for the company’s conventional glucose monitoring business.  That in reality the company would love to sell this unit and by touting the Libre made the unit more salable. We noted not just the recalls but also the fact the product has yet to be submitted to the FDA and even if it is many experts believe it will not gain approval as it’s just not accurate enough.

Since then we have been following various patient blogs and the reports aren’t good. Yes the patient’s love it when it works the problem is it just doesn’t work often enough. Although Diabetic Investor is not an expert in manufacturing sensors we do know enough to understand this is not an easy process. That sensor failures are largely due not to user error but poor manufacturing processes. In other words Abbott cannot consistently manufacture a quality product which is somewhat amazing given the limited role out of the Libre.

Now Diabetic Investor isn’t naïve either as we know that higher than average failure rates are common for newly introduced devices. That no matter how mow much testing goes on things change when a device is actually launched for public consumption. Yet after time failure rates usually go down as the company figures things out. This is what happened when Insulet (NASDAQ:PODD) first launched the OmniPod, also on a limited basis. In the beginning patients were reporting high pod failure rates not unlike what we’re hearing from Libre patients. However over time Insulet got their act together and failure rates fell to an acceptable level.

This is the difference between the OmniPod and the Libre, failure rates appear to be INCREASING not decreasing over time. Not a good sign.  All this for a product the company believes will save the day, will return the diabetes unit to glory.

Folks patients with diabetes are tolerate bunch who put up with many inconveniences. However one thing they won’t tolerate and will be very vocal about is when the technology that supposed to help them doesn’t work as advertised. These folks aren’t stupid and understand that a medical device is just that a device and no device works 100% of the time. Yet when a device continually fails this is unacceptable.

This is one of the reasons Diabetic Investor has never jumped on the artificial pancreas bandwagon, yes its way cool but it’s also a device and devices fail.  At least when the Libre fails the patient has other options and the failure of the device doesn’t have the potential to kill the patient. That may sound overly dramatic but think what would happen should an artificial pancreas or one of its many components fail and the system delivers too much insulin. Insulin is not just a lifeline it is also a lethal drug when taken improperly.

Honestly since the Libre was launched Diabetic Investor has never understood where it fit in. We never thought even if it did work and somehow gain approval here in the states that it would be a commercial success. The simple fact is patients have better more reliable tested options in CGM. The market is already dominated by two players Dexcom (NASDAQ:DXCM) and Medtronic (NYSE:MDT).  Just how Abbott whose history in CGM doesn’t inspire confidence would make the Libre commercially successful baffled us. Kind of like trying to understand why Bruce Jenner a gold medal decathlete all of a sudden wants to be a woman. Yet we digress.

The reality here is that Mr. soon to be Ms. Jenner stands a better chance of winning a beauty contest than the Libre does at being commercially successful. Wacky we know but par for the course for Abbott diabetes care.