Roche takes on more water

Roche takes on more water

That sinking ship more commonly known as Roche Diabetes, is taking on more water or should we say throwing the deck chairs into the ocean in a desperate attempt to remain afloat. As Diabetic Investor reported last week the company has eliminated 40% of their diabetes sales team and now has decided to dump the Solo patch pump into the ocean. For those readers who have forgotten about the Solo or are new to Diabetic Investor, the Solo was yet another OmniPod wannabe which came from our friends at Medingo.

Roche acquired Medingo just two years ago for the bargain basement price of $200 million and at the time believed that the Solo would be their way back into the insulin pump business. Just as Abbott (NYSE:ABT) has screwed up two glucose monitoring acquisitions, MediSense and Therasense, Roche has a  preference for screwing up insulin pump companies, first Disetronic and now Medingo. Perhaps the good news here for Roche is their screw-ups are becoming less expensive as they acquired Disetronic for $1.2 BILLION.

With Solo now gone and the Medtronic (NYSE:MDT) patch pump nowhere to be found and unlikely to be heard from anytime soon, that leaves the patch pump market the sole domain of Insulet (NASDAQ:PODD) who has bet their future on their new smaller and cheaper to make Eros pod. (If anyone wants to have some real fun; check out the web site but be warned if small children are around, this site is for adults only and makes Diabetic Investor wonder how the company plans to market this new and smaller pod.)

At this point some just might be wondering whether or not anyone can compete with Insulet or perhaps the question should be asked a different way; does anyone want to compete with Insulet. While Insulet has shown there is a market for tubeless pumping, they have yet to turn a profit and the company has had a host of quality issues. The company has had trouble holding onto sale peoples, has done serious damage to their reputation with the way they handled the FreeStyle strip issue along and as we mentioned they had some noted quality issues.

Quite frankly they cannot afford the Eros to have any issues whatsoever and not just because it’s cheaper to make. Think what would happen if the company tools up for the new pod, receives FDA approval and launches the new system sometime in the second half of this year – based on comments made by the company recently this is exactly where they stand. Now think what happens IF the new eros pod develops any type of quality issue AFTER the company has already converted their production lines, in other words with the Eros in the market there would be no going back to the older version of the pod as the system is not backward compatible. Keep in mind the Eros pod does not work with the existing PDM and that besides getting new pods existing Insulet patients will be getting a new PDM.

This is why the company MUST get it right from the beginning as once they flip the on switch there is no off switch. This is also why Diabetic Investor believes that while the company is likely to receive FDA approval for the Eros it’s likely the new system won’t be in the hands of patients until the end of 2012, possibly early 2013. Thankfully with the demise of the Solo and Medtronic’s lack of enthusiasm for their patch pump, Insulet has the time it needs to get the Eros right. There’s no reason to rush as once out of the gate there’s no bringing the horse back into the barn.