Some final thoughts AADE

Some final thoughts AADE

Although this wasn’t the most exciting AADE from a breaking news perspective, that doesn’t mean there wasn’t any news to report. As with most AADE’s the best news of all comes from the educators themselves. Unlike the folks manning the booths, educators provide some of the best perspectives on the business of diabetes. As we have noted in the past these dedicated, passionate, over-worked and under-paid professionals are the foot soldiers of diabetes management. Each day they see first-hand what’s going on with the people that matter most, the patient with diabetes.

One of the more interesting facts to come to light this year is the amazing number of educators who have a love-hate relationship with insulin pump behemoth Medtronic (NYSE:MDT). On the one hand they would like nothing better to stop recommending Medtronic pumps, especially now that Medtronic is pushing a their Revel™ system. The simple fact is the cgm sensor for the Revel is inferior to the Dexcom (NASDAQ:DXCM) sensor.  Educators are also less than thrilled by the fact that Medtronic has failed to upgrade their user-interface and prefer instead the way cool iPhone like Tandem t:slim insulin pump. If all things were equal, which they are not, it’s pretty clear that if given the option educators would recommend the Tandem/Dexcom combo to their patients over the Medtronic system.

Yet on the flip side of this educators are also acutely aware that Medtronic is the 800-pound gorilla in the insulin pump space and has been around forever. As much as they like the way cool t:slim they are also well aware that Tandem is just getting started in the insulin pump market and are worried the company won’t survive. Many remember recommending the now-defunct Cozmo system only to see that system pulled from the market. The last thing these educators want to do is recommend a new system, no matter how much they like it and then see the company that makes that system go out of business.

Many also noted as much as they dislike Medtronic the fact that company has been around forever is a huge advantage. As one educator stated it’s not just that physicians are very familiar and comfortable with Medtronic so too are others who have to deal with insulin pump patients. Far too often people forget that physicians and educators aren’t the only people who interact with insulin pump patients. There are school nurses, paramedics and emergency room personal that are also very comfortable dealing with patients on a Medtronic  pump just because that’s the system they have dealt with over and over again.

Now Diabetic Investor does sense an opportunity for Medtronic’s competitors, Tandem in particular. As we have reported in the past Medtronic is doing everything they can to alienate the physicians who prescribe their products.  While educators have a great deal of influence in which pump a patient uses, ultimately it is the physician who writes the prescription. Several educators noted that their physicians are aware of competing systems but won’t write prescriptions for them as they felt more comfortable dealing with the market leader. This is attitude is changing thanks in large part to Medtronic’s high turnover of sales reps. For all the talk about the demise of the medical device sales rep, insulin pumps are one area where a rep really matters. Back in the day Medtronic had these best reps in the field that in large part are responsible for why physicians are so comfortable with the company.

Diabetic Investor asked several educators why if they are dissatisfied with Medtronic they aren’t recommending an Animas or the OmniPod. After all Animas is owned by corporate titan Johnson and Johnson (NYSE:JNJ) and while Insulet (NASDAQ:PODD) isn’t huge they have been around for ten years.  Diabetic Investor was surprised to learn that many believe that JNJ isn’t committed to Animas and will soon be either shutting down or selling the unit. They also noted that while Animas and Insulet have been around awhile they never hear from them, while Tandem a newbie to the insulin pump market is aggressively hiring reps who are actively calling on educators.  Diabetic Investor should note that now that Insulet has the new smaller pod that educators seem to favor the OmniPod over the Animas system. Imagine that size does matter.

Now the news for Animas isn’t all that bad as they do have something going for them, namely their relationship with Dexcom. As noted earlier by an overwhelming margin educators favor the Dexcom system over the Medtronic CGM. They also see clearly the benefits of insulin pump/CGM combo system. Finally of all people they realize that all insulin pumps are about the same and it really doesn’t matter which pump a patient uses. However the same cannot be said of CGM, so if Animas has a saving grace it’s the fact their Vibe system which is doing well in Europe should be approved soon in the US.

In an interesting side note the question most asked of Diabetic Investor from educators was, why Insulet and Dexcom parted ways. Even educators who could care less about the business of diabetes understand just how wacky things are.

These conservations basically confirmed for Diabetic Investor our general feeling that there is an opportunity to dethrone Medtronic but it won’t be an easy task. It should also be noted that Medtronic is not immune to what’s going on and the company is taking steps to rectify some of their issues. Although the company sometimes appears to be clueless to what’s happening they do realize things cannot continue as they have been. The fact is Medtronic can use their scale in ways their smaller competitors cannot.  So one could say that size does matter in the insulin pump world, Insulet is doing better with a smaller pod and Medtronic is rectifying issues by taking advantage of their huge market share.

Finally the biggest winner here is Dexcom which should be pretty obvious. Now not every educator was in love with their system, just ninety percent where. These foot soldiers on the front lines of diabetes management clearly see the benefits of CGM and just as they clearly see that the Dexcom system is head and shoulders above the competition.

Now if we could just get Dexcom and Insulet to get along and stop behaving like two spoiled children. Honestly we really don’t care who’s responsible but is it necessary to have the two companies schedule their earnings calls on the same day thirty minutes apart. See that the BGM companies aren’t the only ones who don’t play well with the other children.