To say this was an interesting day in our wacky world is like saying sunshine is better than rain. Just to recap shares of Dexcom (NASDAQ: DXCM) fell by over 32% while shares of Abbott (NYSE: ABT) jumped by $1.49 or almost 3%. Yes, it seems that everyone is staking out their territory or perhaps a better way of saying it is taking sides. Like most things in life reality lies somewhere in the middle. So, before we head off to watch our beloved Chicago Bears take on those cheeseheads from Wisconsin otherwise known as the Green Bay Packers, some final thoughts.
First and this cannot be understated the biggest winner of all were patients with diabetes. No matter which system you think will win the commercial battle that is about to ensue patients came out on top and that is a very good thing.
When it comes to which company will win the commercial battle something that goes unsaid is that both can win. We do not see the CGM market evolving as the insulin pump market has with one company, Medtronic (NYSE: MDT) effectively having a monopoly. Unlike insulin pumps which has a finite market the CGM market has plenty of patients to go around.
Although we can almost emphatically state that Medtronic at least when it comes to the stand alone CGM market was a big loser today. But this is not a material loss for the company as with their dominance in the insulin pump market they will still make plenty of money.
While we hope that all the CGM wannabes lost today they likely just got a big boost. As sure as night follows day these CGM wannabes will use this event as proof that CGM is going to replace BGM and they have a better, cheaper mouse trap.
One more thought that hasn’t been mentioned but needs to be is neither Abbott or Dexcom will win if they cannot penetrate the Type 2 market, if they cannot get beyond highly engaged patients who intensively manage their diabetes. If this turns into a battle over engaged insulin using patients both companies will lose as this will come down to price.
For all the Dexcom stakeholders feeling just a bit shaken relax, take a deep breath and don’t worry. Yes, things might be a tough in the short-term but we would not count out this very talented team. For all the Libre supporters, be careful what you wish for. No question today was a very good day but this is merely the first step in a very long and often treacherous journey. There are still several hurdles that must be cleared.
Now onto to the Bears let’s see if they can duplicate Sunday’s effort when they beat the mighty Pittsburgh Steelers, which just goes to show that diabetes is not the only wacky world.