What have we learned?

What have we learned?

Looking back on 2016 we have one question for those playing in this sandbox known as the wacky world of diabetes; have they learned anything? The honest answer to that question is it all depends on which companies we’re talking about.

This year the major insulin companies Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO) and Sanofi (NYSE: SNY) were forced to learn that the products they make are nothing more than commodities, that it’s not about performance but price. All three have come to realization that they can no longer afford an army of sales people. All three are reexamining which compounds belong in their pipelines seeking innovation over imitation.  They are making some tough choices today so they remain relevant tomorrow. This has taken them outside of their comfort zones but it was necessary.

When it comes to conventional glucose monitoring unfortunately not much of anything has been learned. The major players Johnson and Johnson (NYSE: JNJ) and Roche can’t or won’t accept the fact their legacy franchises are dying. Abbott (NYSE: ABT) to their credit seems to have accepted this fact and is moving towards CGM. Yet what’s truly surprising here is just how quickly the interconnected diabetes management (IDM) space has commoditized. How quickly all the newbies who have raised millions are now wondering whether they have a future or not. CGM is not just going to kill the old and new players in BGM/IDM but alter how diabetes is managed.

It is this market, the CGM market where we see the battle lines being drawn. As the accuracy between systems diminishes and price becomes a factor this could be a very nasty fight. Dexcom (NASDAQ: DXCM) remains the leader but Medtronic (NYSE: MDT) won’t just roll over and concede, they will fight and fight fiercely. Depending on the strategy employed by Abbot, whether they go it alone or sell to one of the Valley companies, is a major wild card here. In the hands of another well capitalized player the Libre could make this a true three horse race.

One race that looks to be over, at least for now, is the insulin pump race. Medtronic is firmly in command and ironically a company that doesn’t even have an FDA approved system is their biggest threat. If and this is a huge if, Bigfoot gets the money they need and the right partner this could be a race in the future. But as it stands today with Tandem (NASDAQ: TNDM) running out of money, Animas twisting in the wind and Insulet (NASDAQ: PODD) under attack it’s open field running for Medtronic. Which just goes to show everyone that for the insulin pump market the more things change the more they stay the same.

Oh, and we forgot to mention that Becton Dickinson (NYSE: BDX) for reasons we still cannot grasp wants to play in this crowded sandbox. Wear BD may have a major impact is the “smart” insulin pen market. If and again this a huge if, their sensor augmented pen needle is for real say goodbye to all the smaller not as well capitalized “smart” pen companies.

And let’s just get this out of the way once and forever there is no hope, none for all these stupid patch pens. The simple fact is the market is not large enough, these dumb patch pens don’t have a place in the paradigm and they can’t answer a simple question; what problem do they solve. And yes, it is that simple which makes one wonder why a once smart company like JNJ is hyping their dumb patch pen as if it’s the second coming.

One area we will be watching closely is the growing SGLT2 market, will 2017 finally be the year Jardiance and all the positives behind this drug translate into greater sales. Or will the market continue to be like other diabetes drug markets with price trumping performance.

The most exciting new drug really isn’t a new drug at all but an old drug with an innovative delivery platform, the Intarcia exenatide micro pump. If and again another huge if, patient therapy adherence means anything this is the platform. The only thing that could stand in its path is the oral GLP-1 in Novo’s pipeline this drug has huge potential.

It will also be interesting if 2017 brings to an end the Afrezza saga. Will MannKind (NASDAQ: MNKD) be able to survive? Our guess is no.

Another interesting saga will be the Google/Sanofi partnership. Will Sanofi be Sanofi and do what they have always done or will they find religion? Just how long before Google becomes frustrated and says Au Revoir?

Given we’ll begin our year in that beautiful city by the bay, could 2017 be the year when Apple officially joins Google as full fledge members of this wacky world? What about all the other Valley players who have been sticking their toes in the water, will they make the deep dive in? Google continues to lead here but that lead could evaporate in a hurry and they do have a major liability, Sanofi.

On the fun side, it will be interesting which deals are done which make no sense whatsoever. The $40 million raised by Intuity is hands down the winner in this category for 2016. The $7 million spent to buy Telcare makes some sense, not much, but some. Could 2017 be the year when someone comes along and buys Livongo, Tandem?

Whatever happens in 2017 Diabetic Investor will do what we always do and of course so will Momma Kliff. Merry Christmas, Happy Hanukah and Happy Kwanzaa to everyone. Have a happy and safe holiday season. And remember something Momma Kliff used to say; “Be smart that’s why they have cabs.” Mom wasn’t around to see Uber.