Not enough seats at the table

Not enough seats at the table

First we must state for the record we are starting to feel very sorry for our good friend that dead cat. So much so that we think it’s only fair that our good friend Mr. dead cat have a name. After much soul searching, well not that much but it does sound impressive whenever someone writes that, we’ve decided to name Mr. dead cat after a good but sadly departed friend, Loop. Loop has been a regular contributor to our musings so its only appropriate that we honor him.

Anyway Loop is beginning to wonder when it will dawn on some of these insulin pump wannabes that hey there just might not be enough patients to go around. That maybe just maybe there are more pumps than there are patients who want to be on a pump. That only 30% of Type 1’s use a pump, a number that has not meaningfully changed in years. And yes we need to say it, one company effectively controls 70% or so of the market.

Now we hear it all the time that insulin pump usage is under penetrated when it comes to insulin using Type 2 patients. Something we have heard every time a newbie comes along. We heard Lilly say it when they entered the market, we heard OnDuo say it when they entered the market, we heard …. There is no need to once again repeat the many reasons why this is so and why this like the 30% of the Type 1’s who do pump hasn’t changed in like forever, let’s just say the reasons are legitimate and not made up.

Oh did we mention that Bigfoot also mentioned this and so has CellNovo, but again we digress.

What’s funny is that not only is the conventional pump space getting crowded so too is the tubeless space currently a space owned by Insulet. Insulet until recently has had no competition and now still has no competition even though Roche has finally at long last launched the Solo in Europe. OnDuo’s pump is a patch pump, the CellNovo pump is kind of a patch pump and there are a host of companies developing patch pumps. Not to mention all the “dumb” patch pumps too.

Ok here’s where you know people are leaving the reservation and going off the deep end. There is a now a patch pump under development that delivers insulin and glucagon. The same concept pursued by Beta Bonic’s, only in an OmniPod like device. Folks stop for a moment and THINK about this and seriously think. Ok we have how many conventional insulin pumps under development, how many patch pumps coming, how many “dumb” patch pumps and now two pumps, one conventional one patch that deliver insulin and glucagon. Poor Loop.

At this point we should mention a few minor details;

1. Medtronic owns the market and the most valuable piece of real estate formulary position.

2. Tandem makes a pretty good system and has a really good one coming.

3. Insulet has done a nice job building their installed base and will eventually have a sensor augmented OmniPod.

4. Animas has joined Deltc, Asante and Disetronic in the insulin pump graveyard.

5. Tyler is coming.

6. Medtronic owns the space – oh we said that already.

Here is where we hear the greatest corporate speak ever as when you mention these pesky little facts to Lilly, OnDuo, CellNovo, BigFoot, Beta Bonics and the like what you hear back is “Hey we have a better mouse trap.”. Which is great only problem is what we don’t hear is how they are going to survive when there aren’t enough patients to go around.

This is the classic diabetes device syndrome, hey lets spend a few hundred million to make a few hundred bucks. But no all these wannabes say we are going to GROW the market, we are going to get MORE patients to use an insulin pump, more insulin using Type 2’s. And Momma Kliff has a bridge in Brooklyn she wants to sell and it’s very affordable.

Listen we can understand, sort of, why Lilly wants to be in the market and same goes for OnDuo, and if Bigfoot ever gets its system to the FDA we wish them well. But in all honesty these companies and their investors would be far better off building a Tyler or investing their money in something that actually might make money, maybe an alpaca farm in Argentina. The reality is even if the come up with the coolest damn system on the planet, one that leapfrogs everything else that’s available the fact is there aren’t enough patients using a pump, this group ISN’T growing and NO insulin using Type 2’s will NOT save the day.

Yet here we are with the diabetes device sector hotter than George Clooney in a tux, George Strait in pair of Wranglers, Kate Uptown in a bikini or Halle Berry in almost anything, and this is what happens. Money gets thrown around with little or no due diligence performed.

Folks THERE IS NO UNMET MEDICAL NEED HERE. Yes it would be nice to have better systems but the company’s in the market are doing just that already. Yes it would be nice, albeit a pipe dream (kind of like my Fighting Illini football team beating Penn State after leading in the third quarter only to get crushed… but we digress) if it was level playing field in terms of the reimbursement environment. It would also be nice yet also a pipe dream, kind of like being able to use my hall pass with Ms. Berry, if the insulin pump market was actually growing.

At this point some are certainly saying hey your being just a bit snarky. To wit we would agree as you would be pretty snarky too after watching our beloved Chicago Bears barely eke out a victory over the lowly Arizona Cardinals but heck a win is a win and yep we’re in first place so maybe we shouldn’t be so damn snarky and leave the snarkyness to Alexa. You’d also be snarky too if you watched over the last 20 years heaven knows how many companies come along saying the exact same thing only to see them fail like a Mitch Trubisky deep pass.

The reality, a place where none of these wannabes live, is that there are not enough patients to go around. That no matter how way cool whiz bang the toy is there aren’t enough kids around to play with the toy. Folks no matter what the West Coast Mafia or the JDRF might believe, an insulin pump company is not a philanthropic entity. Stakeholders do not invest their money because they want to lose money. It is in the BEST INTEREST of the PATIENT when these companies make money just ask any current Animas patient.

SCALE IS CRITICAL TO MAKE MONEY IN THE INSULIN PUMP MARKET. There are only two ways to achieve scale – take it away from Medtronic (something no one and we do mean no one has ever done) or grow the market (also something no one and we do mean no one has ever done either). The insulin pump market is not a game of musical chairs it’s a highly competitive dynamic market. It’s not for the weak kneed or faint of heart. It’s also not for most of these wannabes either.