The Play
As we head into the weekend it’s time we set some things straight. Earlier this week CNBC wrote;
“Apple has a team exploring a custom processor that can make better sense of health information coming off sensors from deep inside its devices, job listings show.”
Although the piece did not specifically mention CGM technology it has been widely reported that Apple is working in this area. An effort based on the technology from C8 Medisensors. An effort that is going nowhere in a hurry. Whether Apple can get this technologically to actually work is a long shot and in our opinion doesn’t matter even if they are successful. We do not believe Apple or any other cash rich tech company really wants to be making any device which requires FDA approval.
There are several reasons for this;
1. Time – The simple fact is FDA takes a long time to approve products even with their new attitude.
2. Supply – there are already an ample supply of way cool whiz bang technologies that work with either the iOS or Android operating systems.
3. Money – these high tech cash rich have an abundance of ready cash making it easy to buy what they need rather than build.
Yet what no one talks about is the real reason Apple, Google and the like want to be in this business in the first place. This is not a battle over who has the coolest toy in the toy chest. This is a battle over getting as many consumers as possible committed to their respective platforms. The more toys that work with iOS or Android the better.
As we have been writing in the very near future the patients smartphone will become the hub of their diabetes management. The smartphone will not just collect data from CGM’s, “smart” insulin pens and insulin pumps. The apps on these smartphones will analyze all this data and transmit back to the patient valuable information so they can better manage their diabetes.
When Amazon jumps into the pharmacy business we suspect the patients smartphone will also automatically order prescription refills.
While it may have gone largely unnoticed Google increased their investment in Oscar Health this week as well. Google as everyone knows is partnered with Dexcom and Sanofi. Well don’t be surprised if Google uses Dexcom’s CGM technology with the Oscar Health. As we have been stating its only a matter of time before someone incentivizes the patient for better outcomes. That in the future a patient will pay lower premiums based on how well they are managing their diabetes. CGM makes this possible.
It does not surprise us that everyone is fascinated with all the toys in the toy chest. That they seem to believe that Apple can build a better mouse trap when in reality a better mouse trap isn’t needed. That even if they could go where no man has gone before it really won’t matter all that much. Non-invasive CGM may be the final frontier but to us its more like lost in space.
The play here isn’t the toys in the toy chest the play here is getting patients committed to a platform. The toys are just tools to make this happen.
Now this does not mean by any stretch the toy companies will not benefit here. In fact a company like Dexcom for example has a huge upside, as does Abbott and maybe even Medtronic. Google is already well entrenched with Dexcom while Apple has been very public about their relationship with the company, a relationship we see getting more intimate. Now we wouldn’t go as far and say that Apple will eventually acquire Dexcom but as the two companies get closer this may prompt Google to make a move.
This is also great news for Abbott who desperately needs more partners to promote Libre. It also could be good news for Medtronic once they bring their stand alone CGM into the 21st century.
When it comes tp the insulin delivery ecosystem we see an interesting dynamic developing with the CGM sensor and insulin dosing algorithm being the two most valuable pieces. The insulin pump or “smart” insulin pens will become interchangeable parts. We suspect as this ecosystem develops all these way cool whiz bang apps will be open platform collecting data from a wide variety of interconnected devices. Again which toy is used to deliver the insulin really doesn’t matter the keys, the most valuable pieces of this ecosystem is an accurate, reliable CGM and a sophisticated insulin dosing algorithm.
It makes no sense whatsoever for Apple or Google to own what are basically commodities. However it’s a whole different dynamic with CGM and insulin dosing algorithms. These are the straws that stir the drink. And let’s not forget CGM technology can also be used as a weight loss tool. No it’s not approved for that yet but many including us here believe this will vastly expand the usage of CGM well beyond the diabetes community. And this huge market, yes the play on word is intentional, is somewhere Apple and Google want to be, as again it ties consumers more closely to their platform.
What’s even crazier here is all the cash rich high tech can peacefully co-exist in this market. Apple is perfectly content to own the premium market, Google is content with android becoming the dominate operating system while Amazon can work in either environment. All three companies already have massive scale, all three do NOT need to be in diabetes but see diabetes as way to increase their respective platforms.
The toys may be fun to play with but in the end what Apple, Google and Amazon want more than anything is as many consumers as possible using their platforms.
