The Game
Back when Diabetic Investor first began we did so because back then many of the companies in this wacky world of ours weren’t covered by analysts and the few that were covered the analysts were clueless about diabetes. Today the first part has changed unfortunately the second part is alive and well. We mention this as recently we have read many analysts reports and kept wondering how such smart people could write glowing reports when we see things so much differently.
For example, we couldn’t understand why so many analysts had written off Dexcom (NASDAQ: DXCM) when Abbott (NYSE: ABT) received FDA approval. It wasn’t that long ago that these same analysts were writing glowing reports about how Dexcom was going to rule the CGM world. The Libre approval comes along and all of a sudden Dexcom goes from the penthouse to the outhouse.
The same can said about Tandem (NASDAQ: TNDM) a company that was on the verge of closing their doors yet now viewed as the company to beat in the insulin pump market. Listen we know that there is a fair amount of hate directed at Medtronic (NYSE: MDT) but even this hate does not explain the glowing reports now being written about Tandem.
Having been around the block more than once we do understand there is natural bias by analysts to say nice things about the companies they cover. This niceness gains them access to management and more importantly a shot at fat fees from deals the company throws their way. How many times have you seen a firm become the lead underwriter for some sort of offering after a series of favorable reports.
This cheerleader attitude extends to our friends in the West Coast Mafia, many of whom have never meet a way cool whiz bang device they didn’t like even when this way cool whiz bang toy had no chance at being commercially successful. Like the analysts the Mafia wanted access to management and let’s be honest management loves you when you write nice things, tell the truth however or point out mistakes and your condemned to the block.
This love fest between analysts, the mafia and management is all great until you consider the real-world impact it has. Anyone remember Exubera, the $4 billion Pfizer disaster? Or what about the Cygnus and their GlucoWatch? Hey anyone notice that Afrezza isn’t the billion-dollar product everyone said it would be? Oh, and did we mention that Animas has now joined Deltec, Disetronic and Asante in the insulin pump graveyard?
These are all examples and believe us there are more when the analysts and mafia did what they always do, they turned a blind eye to the truth. Like always they viewed the world through rose colored glasses failing to recognize sometimes very obvious weaknesses. While our motto may be if you want a friend get a dog, their motto seems to be all is right in the world so let’s sit around the camp fire for a kumbaya moment.
The funny, sorry more like sad thing is when you speak to these folks privately their true hypocrisy shins like the sun breaking through the clouds. You hear a lot of yeah, we know the company has problems, but we just can’t write that in a report. Or yeah, we know this toy has an ice cubes chance in hell, but these folks have been very good to us (i.e. they advertise on our site), so we let some things go. But wait it gets better for when a company or toy fails their other face comes out and you hear yep we knew that so and so was no good.
To be honest we’re not sure why were even writing this as everyone sees how this game is played. Management isn’t stupid they understand the power of a good write up. Analysts understand what fat fees means to their firms, their bonuses and their future at the firm. The mafia knows that even if the toy fails some other company will come along with a similar toy and they too will advertise with or hire for consulting members of the mafia.
Everyone it seems knows how the game is played meanwhile what is the patient getting out of all this? Zilch, nada, not a damn thing. They are being mislead by the mafia and their glowing reports on some new whiz bang way cool toy that doesn’t stand a chance. Nothing like raising hope when there isn’t any. Or worse patients invest based on a glowing analyst report only to see their investment shrink faster than 100% cotton shirt washed too many times. And management collects fat paychecks, fat bonuses, cheap options and when things go bad they get rehired and the cycle begins anew.
Isn’t it time the patient got something out of this deal? All this pontificating about the “high” cost of insulin is another case where the patient will get the short end of the stick. Everyone will pontificate and what will happen? Nothing or worse the government will get involved.
Managing diabetes isn’t easy and for some it isn’t cheap either but are patients getting any real help? Are we seeing improvements in A1c for the masses and not just the few who are actively engaged with their diabetes management? Do ALL patients have equal access to the tools that can help them better manage their diabetes?
For over 20 years we have watched as this game is played over and over. For over 20 years we’ve been hearing that two thirds of patients are not under good control. So, what is everyone doing; bitching about the “high” out of pocket cost of insulin which even if it was a real problem impacts perhaps less than 1% of the diabetes population. Isn’t it time that game change so the needs of many come before the needs of the few?
The sad reality is there is a notable bias towards insulin using patients even though non-insulin using patients vastly outnumber insulin users. There is a notable bias towards whiz bang way cool yep everyone just loves the toys in the toy chest. Yet no one seems to care that patients aren’t getting better. It’s time for this game to change.
