What happens when they get it?

What happens when they get it?

It’s fair to state that technology has forever changed diabetes management. Today a patient has a plethora of options when it comes to the drugs they take and the devices they use. The explosion of diabetes apps is just the latest tech phenomenon to impact diabetes management. Tech is also impacting and changing the role the physician plays. Yet by far the biggest impact on diabetes management is the use of big data, turning data into patient relevant, patient actionable information.

Big data is also changing the power structure of diabetes. In the past companies like Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO), Johnson and Johnson (NYSE: JNJ) and Medtronic (NYSE: MDT) controlled the diabetes management echo system, providing the drugs used to treat the disease or the devices used to monitor the disease. In the past if innovation was to come it would have likely come from companies like these.

This is no longer the case as the companies driving innovation in diabetes management reside where else but Silicon Valley. Innovation that is centered around big data. There is no question that Google, Apple, Facebook, Amazon and the like will have a larger more powerful impact on diabetes management than any drug or device company. The simple fact is with some rare exceptions drugs and devices have become commodities, interchangeable tools.

Now here is the irony in all this, as powerful as these companies are, as rich as they are they still don’t get it. For all practical purposes they neophytes when it comes to diabetes. Sure they can throw money around for whiz bang way cool stuff but when it comes to truly understanding diabetes and diabetes management they are still infants playing among grown-ups. However, these kids are growing up fast and once they do get it watch out.

This is why some of the smarter companies are attempting to transform themselves from the makers of products to the sellers of solutions. They see what some are calling the “Googleization” of diabetes management. As payors, drug and device companies move even further into outcomes based contracts the challenge of diabetes management takes on a whole new meaning. It isn’t so much which drug or device is used but how effectively that drug and/or device is used.

When it comes to insulin using patients it really doesn’t matter much which insulin the patient uses. The keys to the kingdom will held by any company that comes up with personalized insulin dosing algorithms. This may sound like Star Trek but given existing technology it is not unreasonable to imagine a world when a patient receives information tailored specifically to their unique data set.

The flip side of course is dealing with the largest set of patients, those not using insulin. The key with this group isn’t so much developing sophisticated dosing algorithms rather improving patient compliance. Yet even here data will be critical as any company with an outcomes based contract won’t want to wait around every 90 days for an A1C result before intervening. The difference in data sets between insulin and non-insulin using patients is how the data is used and who interacts with the data.

Just by way of example, insulin pump patients using a sensor augmented system will interact with their data set on a much higher level than a patient taking Lantus plus orals. It’s also true that the pump patient will be less reliant on a third party for help while the Lantus plus orals patient will have greater interaction with their diabetes coach. Yet in both cases the data is being used to more effectively manage the patient’s diabetes.

As we have been stating for some time interconnected diabetes management (IDM) involves the entire diabetes management echo system, the patient, the patient’s physician, the patient’s health insurance provider, their pharmacy, employer and family.  All of these people have a vested interest, some financial, others emotional in the patient more effectively managing their diabetes. It may sound like a cliché but in some respects it takes a village to manage diabetes.

Here is where the diabetes world gets turned upside down as who knows data and consumer interaction better than anyone? Yes, companies like Lilly, Novo, JNJ and Medtronic may know diabetes drugs or devices but when it comes to data and interaction with consumers Google, Apple, Facebook and Amazon are light years ahead. This is the reason Medtronic has partnered with Watson Health, why Dexcom (NASDAQ: DXCM) and Sanofi (NYSE: SNY) have partnered with Google and why everyone else and we do mean everyone else is seeking to align themselves with Silicon Valley.

Here is the danger – as we mentioned earlier Silicon Valley doesn’t quite get it yet but they are learning quickly and as an added bonus they have boatloads of money. While there is no question in our minds that diabetes drug and device companies need Silicon Valley, the question is does Silicon Valley need them. Now some may consider this a stupid question but that would be short sighted. Consider this;

Although they may not be experts in diabetes devices with their vast wealth they can easily acquire the devices they need or use contract manufacturers to build their own devices.  Remember it’s not the device that matters it’s how this device is used. Are there advantages to acquiring rather than building, of course there are but to believe that they must acquire their way into the device world is foolhardy thinking.

The same can be said about some diabetes drugs, insulin in particular. We already have a biosimilar version of Lantus and it won’t be long before we have biosimilar versions of Humalog and Novolog, the two most popular short-acting insulins. It is not outside the realm of possibility that Silicon Valley could not contract with the makers of biosimilars and in the insulin world become vertically integrated.

The reality here is that Silicon Valley has become the epicenter for diabetes management and the existing drug and devices know this. They also know that these capital rich companies have the means to build their own diabetes echo system. This is why Sanofi paid dearly to partner with Google and why Lilly and/or Novo would like nothing better than to replace Sanofi. This is why Medtronic did their deal with Watson Health and ran into QualComm’s arms. This is why JNJ is sitting around contemplating several moves as they too seek to build their own diabetes echo system.

Perhaps the best way to think about how this will play out is look at free agency in sports where the best players command the most lucrative contacts.  Since there is no salary cap in the wacky world of diabetes Google or Apple could become like the New York Yankees were years ago when they bought up the best talent that was available. A strategy which worked very well bringing multiple World Series championships. Given the capital they have at their disposal these high tech companies could do the same thing.

Just imagine what happens when they do get it, when they do have what we like to call their light bulb moment. Change is on the way ladies and gentleman and as Momma Kliff used say; “Either accept change or get out of the way as there is nothing anyone can do to stop change.”