Pump It Up

Pump It Up

On the eve of the EASD conference in Stockholm, the diabetes community is abuzz with rumors about who’s buying whom in the insulin pump space. Word coming from across the pond is that Bayer, long interested in adding an insulin pump is said to be close to buying CellNovo. Not to be outdone, Nipro which recently bought blood glucose monitoring company Home Diagnostics and already has a pump line of their own is said to be scraping their Amigo pump and will buy Asnate, which was formerly known as M2 Medical.


Diabetic Investor has also learned that Tandem, who made a splash at AADE, will not be able to launch their much hyped pump as the FDA is requiring the company to conduct additional clinical studies. The company had anticipated launching their pump later this year but it appears the launch has been delayed a year.


Not to be outdone, Medtronic (NYSE:MDT), the insulin pump market leader, is said to be in discussions with Lilly (NYSE:LLY) about developing a prefilled insulin cartridge for their line of insulin pumps. This is not the first time these two companies have had these discussions and at one time Medtronic and Novo Nordisk (NYSE:NVO) had an agreement to develop a prefilled insulin cartridge which was ultimately scrapped.


And everyone is still waiting to see what Sanofi-Aventis (NYSE:SNY) is going to do. As Diabetic Investor has previously reported Sanofi has been very public about their intentions to expand their diabetes franchise beyond insulin’s and into diabetic devices. A move which began when they partnered with AgaMatrix and could soon expand into the insulin pump market as they have just hired Shawna Gvazdauskas to lead their diabetes device unit. Ms. Gvazdauskas is an excellent hire and will bring a wealthy of experience and knowledge of the complex diabetes device space.


One thing that won’t change with all this activity is, the simple fact that we already have too many insulin pumps on the market and the insulin market is not large enough nor growing fast enough to support the existing companies already in the market let alone the many newcomers to the market. Let’s not forget also the many quasi-pump companies who are developing non-mechanical patches which deliver insulin.  

Regardless of the realities of the insulin pump market, what all this activity shows is how the industry remains focused on whiz bang technology rather than actually dealing with the issues that stand in way for greater adoption of insulin pump therapy. The adage that if you build it customers will come just doesn’t apply to the insulin pump market. The market is already occupied by one company, Medtronic who holds a nearly 70% share, with Animas, a unit of Johnson and Johnson (NYSE:JNJ) and Insulet (NASDAQ:PODD) a distant second and third. Of the three Insulet has been the most successful at expanding the market yet lacks the size and resources to pose a serious threat to Medtronic’s market dominance.


It’s ironic with all this interest in the space that Insulet is not the subject of any rumors regarding a possible acquisition. As reported previously the major sticking point with a possible acquisition continues to be Insulet’s cost of goods; an issue which should dissipate when Insulet launches their new, smaller and cheaper to manufacture pod sometime in the not too distant future. (Although with the way things are going at the FDA, its anyone’s guess just when that will be. With their ultra-conservative nature and renewed focus on medical devices all the diabetes devices are privately complaining about how the agency is handling new product approvals.)


One just might think even with their cost of goods issue, someone would have come along by now and acquired Insulet and their 15,000 or so patients. Given that Abbott continues to shop their diabetes device unit, Insulet is a perfect fit for a BGM company who knows that on average insulin pump patients test their glucose levels eight times each day. This is exactly the reason JNJ bought Animas and Bayer is acquiring CellNovo.


What Diabetic Investor is trying to figure out is why everyone who isn’t in the insulin pump business wants to get into the business. This is not a market where the grass is greener on the other side of the fence. The stark reality is no one has had any success penetrating Medtronic commanding lead in the market even with the many missteps made by the company.


This fascination with the insulin pump market reminds Diabetic Investor of something Gustave Le Bon wrote; “Many men easily do without truth but none is strong enough to be without illusions.”