No surprises here

This morning Abbott and Tandem announced they were exploring working together. Per a press release;

“Abbott (NYSE: ABT) and Tandem Diabetes Care (NASDAQ: TNDM) announced today that they intend to develop and commercialize integrated diabetes solutions that combine Abbott’s world-leading glucose sensing technology with Tandem’s innovative insulin delivery systems to provide more options for people to manage their diabetes.”

We see this as an offensive move for Abbott and a defensive move for Tandem. Let’s look at Tandem’s rational first as they seemed to be joined at the hip with Dexcom. This relationship has been mutually beneficial with sales of the Tandem Basal IQ and soon Control IQ largely being driven by the fact both pumps work with Dexcom sensors. The folks at Tandem may not like to publicly admit it but neither the Basal IQ nor the Control IQ would be all that special without being attached to Dexcom.

However we can understand in this new world of interoperability why Tandem would also want to work with Abbott. The Libre has done well, the Libre2 is coming and why not communicate with as many CGM’s as possible. There really is no downside for Tandem.

Abbott who’s been on deal making binger also has everything to gain and not much to lose. They know they are well behind Dexcom when it comes to partnerships. They know the Libre2 will eventually get here so why not partner with as many insulin delivery companies as possible. They may be late to the game but just as there is little downside for Tandem there isn’t much downside for Abbott either.

We don’t see either deal adversely impacting Dexcom as they are already imbedded with the several partners and these partners are not going to abandon them. We may be headed for a world of interoperability, but we aren’t there yet. The fact is Dexcom knew this coming, so we don’t anticipate the company doing anything irrational.

The real loser here is Bigfoot at one time Abbott’s only partner. Many forget that at one time Bigfoot was all about having a way cool whiz bang insulin pump and actually had one ready to go. Recently however the company has deemphasized the pump in favor of their collection of connected pen cap covers. Yet just as they couldn’t bring their pump to market, they have failed to bring these connected pen cap covers to market. Abbott watching this lack of execution likely realized that Bigfoot overpromised on what they could do so they began seeking other partners.

The harsh reality is that Bigfoot needed Abbott, but Abbott does not need Bigfoot.

To us it’s just a matter of time before the fat lady sings Bigfoot’s swan song. She’s not singing just yet but is warming up getting ready to belt out on hell of a song.