Since everyone is asking

Since everyone is asking

Given the current situation in the insulin pump market many have asked why doesn’t someone come along and done a roll up. Combine Tandem (NASDAQ: TNDM), Animas and Insulet (NASDAQ: PODD) into one company and take on Medtronic (NYSE: MDT). Once combined take the best of the two wired systems, Tandem and Animas, and make one conventional pump platform and still have the OmniPod available for patients who prefer to be wireless. A bonus here is that all the systems would work with the Dexcom (NASDAQ: DXCM) sensor. Heck just for grins and giggles why not throw Bigfoot into the mix.

It would seem this strategy may work as these companies would like nothing better than to be bought. It would also seem that once combined many of the back-office functions and sales functions could be combined and streamlined. Heck even payers would like this as the way things are going in the insulin pump space this is one area where they lack leverage. With a clear-cut number two player in the insulin pump space payers could do what they best and pit one against the other.

We suspect patients, physicians and CDE’s would also be happy as everyone keeps talking about patient choice. And again, the way things are going it’s looking like if something isn’t done Medtronic will be the only choice.

As much as this seems to make sense, the biggest reason it won’t happen, we can think of several other reasons why it won’t happen. Let’s start with money because someone will not only need a ton of it to acquire all three, four if Bigfoot is thrown in, and buying them is just the beginning. Additional capital will be needed to keep up with Medtronic. Yes, there will be some savings by combining duplicate functions but not enough to overcome what will be needed to stay relevant technologically. Oh, and we should mention even when combined Medtronic will not merely roll over and play dead.

Now we can think of several valley companies who have the capital to make this possible. But the question is even with gobs of capital, why do it? Google could do it easily and has a reason to do it as it would protect their partner Dexcom. Listen Dexcom may have the best system on the planet but the way things are going with their insulin pump partners the once bright future for sensor augmented pumps is getting cloudy. As we have said many times the moves Medtronic are making aren’t just to strengthen their insulin pump franchise but also to block Dexcom from gaining even more share of the CGM market.

Yet, what’s really needed to make this happen are two things besides money, vision and cahonies – which the urban dictionary defines as “Balls – testicles – nuts”.  Or as Momma Kliff used to say; “Those people better have some major stones to make this work, big ones more like huge.” Just in case anyone hasn’t figured this out yet Momma Kliff did not grow up in the PC era.

By our way of thinking there are many who have the vision thing but few who have the cahonies.