“Snap” to it

“Snap” to it

What does a company do when it decides to enter an already over-crowded highly competitive market, a market where pricing pressure is intensifying and soon could face the prospect of competitive bidding? A market which is dominated by one major player, two minor players and one upstart; not to mention several other wannabes.

Now it’s not like the product this company makes is all that great either yes it has some nice features but nothing so revolutionary that would make it the preferred choice of patients or their physicians. And did we mention that this market is already having a hard time supporting the existing companies in the market let alone the many who want to play in this particular sandbox, or did we point out that running this type of company is extraordinarily expensive and that at least one very well capitalized company who bought their way into this space has never ever made money in this market.

We should also point out that entering this market is actually the easy part, getting this product covered by payors, supporting the patients who use this product on a 24x7x365 basis, dealing with the inevitable recalls and more inevitable intellectual property lawsuits that will surly come is where the rubber really hits the road.

Just in case anyone hasn’t figured out which market we’re talking about, and as we noted just yesterday this the wacky world of diabetes which at the moment is not filed with the sharpest knives in the drawer, the market we’re speaking of is the insulin pump market and the company we’re referring to is none other than Asante who plans to go public and ….wait for it… has raised its target for the upcoming IPO. According to a story posted on the Silicon Valley Business Journal web site;

“Asante Solutions, which makes disposable insulin pumps for diabetes patients, increased the amount it hopes to raise in an upcoming IPO to as much as $60 million.

The Sunnyvale company led by CEO David Thrower had set its top target at about $45 million when it disclosed its plans to go public last month.”

Now before we go any further let’s be clear here we have no problem with Asante going public or raising the target from $45 to $60 million. To Diabetic Investor this proves several things;

The reports of the demise of capitalism have been greatly overstated.

The greater fool theory continues to live on.

P.T. was right there is a sucker born every minute.

And yes more money is stolen with a good PowerPoint presentation than with an Uzi.

Having been around this wacky world for over 20 years (and we can’t believe we just wrote that as it means old age is coming) we are no longer surprised by this type of news. And please don’t misunderstand Asante does have a very nice product but the insulin pump market is NOT about technology, just ask the folks at Johnson and Johnson (NYSE:JNJ) who bought Animas and has never ever made money with this unit. Or ask the folks at Smith’s Medical who were forced to shut down Deltec the makers of the Cozmo pump due to intellectual property issues. Or if you’re looking to have some real fun call Pat Sullivan the new CEO at Insulet (NASDAQ:PODD) and ask him how things are these days.

Heck even the 800 pound gorilla in this space, Medtronic (NYSE:MDT) who controls about 70% of the market, and no that isn’t a misprint, has been around forever and is the most trusted name in pumps has recently restructured their insulin pump unit to deal with the many changes taking place.

Honestly none of this matters much for just as there are people who believe Afrezza is a sure blockbuster, there will others who believe Asante has built a better mouse trap. They will say what true believers always say; it really doesn’t matter much as the company will surely be ….wait for it …. acquired by a bigger player. Something that hasn’t happened since JNJ bought Animas and as we noted earlier that really hasn’t worked out all that well.

So let Diabetic Investor be the first to congratulate the good people at Asante as they have proven that while the insulin pump market may be tough, the capital markets are a “snap.”