The problem in a nutshell
“I think in the sensor area we still have more work to do. And I think it’s going to take a little longer in reducing the number of finger sticks, where we continue to make progress, but that’s going to be an area of pressure even going into next year” – these words come from Michael Coyle Executive Vice President Group President Medtronic Cardiac and Vascular Group – Mr. Coyle was taking question on the diabetes franchise as the new EVP for diabetes Mr. Salmon was not part of the earnings call.
Now we hate to be captain obvious here but when a sensor company is still talking about eliminating fingersticks, something Dexcom and Abbott did a long time ago, that in a nutshell describes why Medtronic Diabetes is in the crapper. As we keep stating, only because it happens to be true, the sensor is the most critical link in the hybrid closed loop insulin delivery system. The insulin pump which delivers the insulin is for all practical purposes a commodity (and yes, we know the folks at Tandem and Insulet would disagree) and the algorithm while critical only functions properly when it’s getting accurate information from the sensor.
And to be quite honest we could care less what the company said about how the 780G will be so great, because without an accurate and reliable sensor, something Medtronic has yet to demonstrate they can manufacture on a massive scale, the 780G will be just as worthless as the now way cool whiz bang 670G. The harsh reality here is that Medtronic is paying a heavy price for the sins of the past when they knew their sensor was problematic yet went ahead and launched it anyway. The horse has now left the barn and they are beginning to realize they should have closed the barn doors before the horse left.
The coming Control IQ from Tandem which works with the highly accurate and highly reliable Dexcom sensor will not just put the 670G to shame, but it will put added pressure on the 780G which unless there is a dramatic change to the crappy Medtronic sensor nothing will change. To put this in terms everyone can understand this is a like Chicago Bears fans believing that their quarterback will all of a sudden go from being a complete bust to Tom Brady overnight. And let me tell everyone after watching another lousy performance at the beautiful LA Coliseum this isn’t going to happen. But let’s not digress as writing about my beloved Bears makes me sad and frustrated at the same time.
Although in many ways Medtronic Diabetes is like my beloved, they both had high expectations when new management came in, they both invested heavily in the wrong areas and now both are paying a heavy price. The big difference so far is that Medtronic team has paid the ultimate price and was shown the door, while unfortunately Bears fans are stuck with a GM who can’t identify talent and a coach who went from an offensive guru to play calling moron.
It remains to be seen with all the issues facing Medtronic Diabetes whether Mr. Salmon can do anything more than manage disaster which is where this unit is headed until they can make an accurate, reliable sensor which does not require fingerstick calibration. Besides the coming of the Control IQ, Insulet also has the Horizon on the horizon, two systems which will leapfrog the way cool whiz bang 670G and likely make life very difficult for the way cooler whiz banger 780G.
Frankly no subscriber should be shocked by what we are saying as we’ve been saying it quite often. Honestly all the earnings call confirmed was facts we already knew. So now we watch Medtronic Diabetes as we watch our beloved Bears, wondering what happened when expectations where so high and if there is talent around to fix the mess. Both Medtronic Diabetes and our beloved Bears need lots of help, in lots of areas and quite honestly not sure either can turn things around anytime soon.