Some Random Observations from AADE
As always the annual meeting of the American Association of Diabetes Educators (AADE) brings with it a number of interesting tidbits and this year’s installment in Indianapolis was no different. Here are just some of the more interesting observations from Diabetic Investor-
Although it wasn’t really needed but with Wal Mart now selling a box of 50 test strips for just $9 and competitive bidding here, is it really necessary to tell everyone that the glucose monitoring market is not a great market to play in. But this being the wacky world of diabetes, where anything can and usually does happen, there are companies currently not in the market, or barely in the market, who are lining up for the right to pay Bayer billions to take their struggling diabetes device unit off their hands.
As Diabetic Investor reported back in June during the ADA get together, the leading contender appeared to be Panasonic. Since that time reports have surfaced that besides Panasonic, Sanofi (NYSE:SNY) and a leading private equity firm are also making a run for the unit. In other words, there is actually a bidding war developing to buy this unit. If this does not conclusively prove the greater fool theory we don’t know what will.
Walking around the exhibit hall, which was empty half the time, Diabetic Investor was struck by the number of software programs designed to help educators more closely monitor their patients. These whiz bang programs do everything from collect glucose readings to design insulin dosing patterns. Yet nearly every educator we spoke with complained about two things; lack of time and money. Or put more simply they don’t have enough of either and while all these programs are neat they can’t afford them and even if they could they don’t have enough time to use them. Seems we’ve heard this somewhere before.
Going back to BGM for a minute, with all the new whiz bang monitors that are specifically targeted at insulin users; can we also declare once and for all that the major BGM companies and the many BGM wannabes are about as original as peanut butter and jelly. Once again rather than innovate and try something different these companies do what they always do and copy each other’s ideas. Is it any wonder this has become a commodity market where price and formulary placement are the only thing that matters.
Two companies that did stand out were Intuity Medical and their all in one device the Pogo; and Telcare and their meter which is basically a cellphone that does everything expect make and actual phone call (come to think of it the Telcare isn’t all that different from the iPhone). The reasons these companies stand out is that each in their own way is making life easier for the patient. Every time we see the Pogo Diabetic Investor thinks of that busy mom who besides managing her diabetes must also take the kids to soccer practice and is constantly on the move. Rather than find her meter, test strips and lancing device the Pogo has it all in one nice little package, it may not be cool or revolutionary but it sure does make the patient’s life easier and that’s what this business used to be about.
The same goes for the Telcare monitor as it allows glucose readings to be seamlessly downloaded from the monitor to the cloud using cellular technology. While this may not seem all that innovative think of that Mom again who has a child with diabetes, who can now not only make sure her daughter is monitoring her glucose but can call the school to make sure they take action should there be a reading outside the normal ranges; high or low. While there are much broader applications for this simple yet effective technology, Diabetic Investor believes every parent who has a child with diabetes should be required to own this device.
Another company that stood out was Tandem and their t:slim insulin pump. Just as Diabetic Investor expected, educators loved the slick iPhone like design and there is no question when put side by side with the pager like Medtronic (NYSE:MDT) insulin pump the contrast is stunning. The big issue for Tandem isn’t the t:slim but can they raise the $100 million they need to effectively launch the product. We know this will be a trough road for Tandem even if they raise the money but one thing in their favor is that Medtronic seems intent on killing the goose that lays the golden eggs. As has been said many times when it comes to diabetes devices the best way to get a small fortune is to start with a big one.
Although the people at Tandem swear it wasn’t their choice their booth happened to be next to Insulet (NASDAQ:PODD) another insulin pump company with a much different set of issues, not the least of which being the rumor circulating on the floor that the new Eros pod has been delayed six to nine months. Diabetic Investor has heard this as well which makes Wednesday’s earnings call even more interesting. Should these rumors become fact, expect some major changes at the company which has already experienced more than its share of departures.
One company that deserves kudos are the folks at Johnson and Johnson (NYSE:JNJ) who once again put on a great time for attendees with their annual Irish Coffee event. The fact is most educators don’t make a great deal of money but these woman (while there were more male educators in attendance this year this is still an profession dominated by woman) are highly dedicated and extraordinarily passionate about helping people with diabetes. It’s great that JNJ provides such a wonderful event where these people can let loose and let loose they did.
Speaking of letting loose Diabetic Investor couldn’t help but laugh as we walked past the very large Amylin (NASDAQ:AMLN) booth which along with their very large ads in the conference newspaper aggressively promoted Bydureon. Here we were within walking distance from world headquarters for Lilly (NYSE:LLY) and Amylin was basically telling their former partners to take a very long walk off a very short pier. We couldn’t pick a better example of how Lilly really has gone to the dogs.
One last observation here; with all the fancy technology on display whether it be a new monitor, insulin pump or software package Diabetic Investor couldn’t help but think that if companies put as much effort and resources into diabetes education as they did all this fancy technology we would not be facing a situation where nearly two-thirds of all patients are not properly controlling their diabetes. Nor would these companies be lamenting about competitive bidding, slowing market growth or poor therapy compliance. The facts speak for themselves and the facts tell everyone that educated patients not only achieve better outcomes but use more of the products and drugs these companies produce. Given how the diabetes market continues to evolve companies who adopt as education as a part of their platform will truly become the industry leaders. The old ways of doing things are thankfully dying a slow and painful death. While we’re not there yet, change is on its way.