Strange “Vibe”

Strange “Vibe”

A few days ago while everyone was recovering from Thanksgiving dinner and Black Friday word came that at long last the FDA approved the Animas® Vibe™. This product combines the Animas insulin pump, Animas at least for now is still a unit of Johnson and Johnson (NYSE:JNJ), and the Dexcom (NASDAQ:DXM) G4 Platinum continuous glucose monitoring system.  Based on previous public statements by both companies the Vibe has done very well in European markets which makes many believe that the product will do well here in the US.

Now before everyone gets really excited it’s important to point out just a few small items. First while the Dexcom sensor is superior to the sensor offered by Medtronic (NYSE:MDT), Medtronic launched their integrated system long ago and as we have stated on numerous occasions they have a much larger installed user base than Animas. Next, as we have also mentioned JNJ for the moment at least has decided to keep Animas rather than sell this unit. We mention this as the company is still struggling as to just what they want to do with Animas; something we don’t anticipate enhances the success of the Vibe.

Yet here is the most ironic part of this approval and something that has been generally overlooked by almost everyone, everyone that is but Diabetic Investor. No one other JNJ product, not the OneTouch VerioIQ, OneTouch Ultra, OneTouch Ultra Mini or OneTouch Ultra Smart nope not one JNJ conventional glucose meter communicates with the Vibe. Now this may not seem like a big deal as the Dexcom sensor only needs to be calibrated twice a day but it does point to one of the reasons JNJ has always had an issue with Animas. A company they bought years ago and one that has never, ever turned a profit.

Given that the BGM market has become ultra-competitive and that every share point counts one just might think that the good folks at JNJ wouldn’t want an Animas Vibe customer calibrating the Dexcom sensor with a competing meter. That they would have made calibration easier for the patient with having not just the Dexcom sensor communicate with the Vibe but their very own meter communicate with the Vibe. Keep in mind that the Dexcom CGM as good as it is, has yet to be approved as a replacement for conventional finger sticks and that patients are encouraged to confirm CGM readings prior to administering insulin. In essence besides the 2 calibration finger sticks it’s highly likely a Vibe patient would add 3 or 4 test strips confirming readings at meal time before they bolus.

To keep things simple and heaven knows when it comes to the wacky world of diabetes devices the simpler the better, think of it this way.  While no one knows exactly how many existing Animas patients will convert to the Vibe or how many new patients will chose the Vibe, it’s reasonable to believe that number could reach 10,000 over the next 6 months to a year. Based on calibrations alone that’s 7,300,000 test strips per year, add in 3 more tests, one for each meal and that number grows to 18,250,000 test strips per year not exactly an insignificant number.

Now call us crazy, and many have, but it seems logical not to mention good business if JNJ who already has the VerioIQ Sync which communicates with the way cool iPhone also came up with a VerioIQ that communicated with the Vibe. Not only would this make life easier for the patient but it might just prevent patients from calibrating the sensor with a competing meter. What makes this situation stranger, and yes that it is saying something, is that JNJ actually has experience in this area; anyone remember the Ping? While the Ping may not have been that great it did communicate with the Animas insulin pump or put another way this type of communication between a conventional meter and an insulin pump is not brain surgery.

One just might think that the Animas team would have thought about this, that maybe there was someone in that room with a brain who mentioned that the BGM market is going down the toilet. That every share point counts and that even without the business case for this no-brainer of a move, such a system would make the patient’s life easier and actually give the Vibe a competitive advantage over the Medtronic system. Logical right? Well we can’t have any of that now can we.

Honestly we aren’t making this up although we wish we were. Yet it does show why Animas and JNJ haven’t exactly been a match made in heaven.  From the day JNJ bought Animas everyone naturally assumed that the company would integrate the OneTouch line of glucose meters with Animas pumps. That these two diabetes device units would work together especially when one considers that insulin pump patients test their glucose more than any other patient, on average 8 times per day. The synergy between these two units seemed obvious, that is unless you’re JNJ.

Is it any wonder that this unit has never turned a profit? Is it any wonder that it wasn’t that long ago the company had decided enough was enough and wanted to sell the unit?

Don’t get us wrong here the Vibe is a very good product and we do believe the system will do well here in the US. The issue here isn’t the Vibe; the issue here is JNJ’s lack of foresight, their inability to grasp the obvious.  Having a JNJ meter communicate with the Vibe was the ultimate no-brainer. Yet like the Tin Man in the classic Wizard of Oz film, JNJ is singing “If I only had a brain.”