Self-inflicted Wounds

Self-inflicted Wounds

Greetings from the beautiful city of Philadelphia home to this week’s American Association of Diabetes Educators (AADE) conference. A city known as the city of brotherly love expect that is if you happen to be blood glucose monitoring company desperate to stop the bleeding and completely clueless as to where the market is and where it is going. As is customary at events such as these attendees receive a package each morning containing the day’s propaganda.

Notable today were two items from our friends at Roche, a company who’s seen their market share cut in half these past few years. Now Diabetic Investor always assumed that Roche’s diabetes device strategy wasn’t to actually take a billion dollar franchise and turn into a million dollar franchise but now we’re not so sure. Rather than acknowledge the obvious that this franchise is in desperate need of major strategy shift, the company continues to live the past thinking that pretty colors and dubious accuracy claims are the way to increase share.

Not one to learn from their own mistakes, one might think Roche would have learned something from another companies missteps. Notably absent from the show floor is privately held AgaMatrix, once an AADE darling. Now AgaMatrix is still operating but the company is mere shell of its former self, a situation not helped by Sanofi’s ill-fated launch of the iBGStar. For those with short memories back in the day AgaMatrix was known for two things, superior design and accuracy. Many at the time, not Diabetic Investor, believed that one of the big BGM companies would come along and buy the company as they were about to forever change the BGM market.

Yet even with way cool designs and the most accurate readings, the company has fallen on hard times and is struggling to survive. This is what makes Roche’s propaganda so funny, as the company is now claiming they have the most accurate meters and the research to prove it. Now even if you believe this is unbiased research, which we don’t, the fact is no one cares much about accuracy in the real world. Yes, here amongst CDE’s it may be a big deal but the fact of the matter is CDE’s don’t control which meter a patent uses, insurance companies do.

Keep in mind this is the same company which was the last to deal with the maltose issue and has pretty much alienated many of the most respected diabetes researchers and thought leaders.

Now to be fair Diabetic Investor should point out that Roche is not the only meter company living in the past as this affliction is shared by almost every major BGM company. These companies continue to believe that pretty colors and competing accuracy claims will somehow offset the impact of competitive bidding. That the lack of connectivity with a mobile device, a must have in the future, will change this market back to medical device model with high margins and double digit growth rates from the commodity market it has become.

Yes there are some who are striving for this connectivity but as the ill-fated iBGStar shows, this quest for connectivity cannot overcome corporate stupidity. Yet as sure as the sun rises in the east and sets in the west, BGM companies will do what they always do as move closer and closer to a device that either works with is attached to a patient’s mobile phone. Each will develop their own protocol, each with its own way cool app and each will come out for the way cool iPhone ignoring 60% of the market which uses Android.

Truth be told what these CDE’s really want is one protocol used by all the companies so that they don’t need six or seven different software packages to track and analyze a patient’s readings. They are sick and tired of connecting cables to meters and want data not on a hard drive but stored in the cloud. They know their patient’s cannot afford a device that costs $100 a pop and they really could care less what color it is. CDE’s understand that even if meters became more accurate that accuracy really doesn’t matter much when the patient isn’t testing on a regular basis.

Looking at the Roche propaganda Diabetic Investor can’t help but wonder if the company is somehow behind the efforts by the FDA to require BGM companies to conduct post-market surveillance for meters and test strips. Falsely believing that this somehow would make the government change their mind and reverse competitive bidding. We’ve said this before and we’ll say it again changes to Medicare reimbursements rates have about as much chance at happening as the Chicago Cubs have winning the World Series this year.

Now if the major BGM companies were really interested in having an impact perhaps they would stop all the mud-slinging and actually do something smart for a change, like work together. Rather than have six or seven different connectivity protocols have one, rather than have multiple apps, software packages have one that works for all.  Rather than assist the FDA in their efforts to increase costs, fight together for FDA reform. Keep in mind this is industry that is cutting costs with reckless abandon, Roche being the most recent, but not the last company to announce layoffs.

All around the exhibit hall here are meter companies each believing they have built a better or cheaper mouse trap. But at the end of the day that’s all they really are, mouse traps. For all the blather about how far meters have advanced the fact is average testing frequency hasn’t budged one bit and is likely to fall not increase in the future. So naturally it makes sense that rather than working together, which will save time and money, it’s better to continue this childish tit-for-tat back and forth nonsense.

There are many reasons why the BGM industry is about to be flushed down the drain and the industries ills are not completely self-inflicted. However, one cannot help but think these companies somehow enjoy their childish actions and could care less that their own actions are contributing to their future demise. As most parents know children eventually grow up and learn from past mistakes, unfortunately BGM cannot do the same.