Well it took long enough, now what?
At a time when Medtronic is still promoting a CGM that requires fingerstick calibration, Abbott a leader in CGM technology got some long-awaited good news as finally at long last the FDA has approved the Libre2 and with an iCGM designation for good measure. Per a company issued press release;
“Abbott (NYSE: ABT), the worldwide leader in continuous glucose monitoring (CGM), announced today the U.S. Food and Drug Administration (FDA) cleared its next-generation FreeStyle® Libre 2 integrated continuous glucose monitoring (iCGM) system for adults and children ages 4 and older with diabetes.”
Naturally shares of Dexcom are down on the news although not as much as we anticipated.
Regardless this long-anticipated news really isn’t going to change things all that much. We hate to sound like a broken record but CGM belongs to Dexcom and Abbott. Dexcom continues to own the premium segment of the market while Abbott continues to pursue their value strategy. About all this news does is make it even more difficult for companies like Medtronic and all the Dexcom wannabes. While these competitors continue to fumble about like the Keystone Cops, Abbott and Dexcom continue to gobble up patients by the boatload.
Another loser here are all the remaining BGM companies who continue to become more obsolete by the day. Each of them in their own way is trying to put lipstick on a pig but the fact is when it comes to glucose monitoring CGM is becoming the standard.
So what now? Well Dexcom is pressing ahead with the G7 a product that will not only outperform the Libre2 but come with a lower price point. While Dexcom has not made public what their strategy will be with G7 we suspect with its lower COGS they will do everything in their power to take away Libre2 perceived price advantage. Abbot has no intention of deviating from their value strategy therefore the only real question is will a price war develop or will Dexcom and Abbott continue to peacefully co-exist while continuing to make life a living hell for anyone who decides to compete against them.
As we have said many times the CGM market is huge and what we are we seeing today is just the tip of the iceberg what’s above the water line. Several studies released at the virtual ADA have shown that CGM is not just for insulin using patients but for ALL patients with diabetes regardless of their therapy regimen. But that’s just the beginning as once CGM expands beyond diabetes and into other disease states that’s when the real fun begins. Needless to say neither Dexcom nor Abbott is worried about running out of new patients, quite the contrary their real worry will be keeping up with increasing CGM demand.
Even better Abbott and Dexcom are not just sitting around while the cash roles in. They continue to aggressively court new patients. Again as we have said before CGM will become what BGM used to be with Dexcom and Abbott effectively controlling over 80% of the market, perhaps 90%, leaving everyone else to fight over what they leave behind.
So kudos to Abbott for the approval but in the end as Momma Kliff used to say the more things change the more they stay the same. CGM belongs to Abbott and Dexcom and as Mom also said there isn’t much anyone else can do to change that.