Will 2013 be different?
Now that the ball has dropped in Times Square, most of the college bowl games are over and half of the resolutions made just a few days ago have gone by the wayside the question is will 2013 be that much different than 2012. Or perhaps we should ask a series of questions like is it even possible for the glucose monitoring market to get any worse or is there any diabetes drug company that doesn’t have a pipeline full of me-too, copycat drugs?
Diabetic Investor suspects 2013 will see more than its fair share of M&A activity as companies in both the drug and device area seek even greater efficiencies. In fact that just might be the theme for 2013 as with few major drug approvals or new devices being launched, it’s easier to grow through acquisition. We already know that Bayer is still trying to sell their diabetes device unit, a deal which may or may be consummated with Sanofi (NYSE:SNY), who at the moment seems more interested in building their consumer brands than diabetes.
Now that the FDA has finally approved the Eros pod Insulet (NASDAQ:PODD) will be an interesting company to watch. Amazing at it is Insulet is still the only company that has a truly wireless insulin pump on the market as Roche and Medtronic (NYSE:MDT) continue to talk a good game but so far that’s all they shown they can do, as neither company can back up any of their bluster with actual action. This leaves the market alone for Insulet to capture and now with the new, smaller and less expensive to make Eros pod ready to go we’ll soon find out if everything the company told us about Eros is really true. If it is Insulet could finally achieve what it set out to achieve almost 10 years ago and get bought by a bigger player in the diabetes device market.
Dexcom (NASDAQ:DXCM) looks like the company with the most upside as the market for continuous glucose monitoring is expanding, reimbursement is improving, the company has the best products and a top notch management team. The only problem is Dexcom really doesn’t want to sell at the moment as the company will only become more valuable when their hospital system gets further along and they see more uptake from their relationships with all the insulin pump companies not named Medtronic. Diabetic Investor sees suitors knocking on the door but doubts Dexcom will dance with just one partner, that day is coming it’s just not today.
Although Diabetic Investor does not yet see an acquisition for Halozyme Therapeutics (NASDAQ:HALO) we do believe this likely will be the year when they find a partner for their improved short-acting insulin additive. With both Humalog® and NovoLog® facing patent expirations and Apidra® going nowhere in a hurry, one or more the major insulin companies will likely come a calling. It’s equally possible that the a generic insulin maker just might beat the big boys to the punch and decide to launch not just a generic short-acting insulin but a generic that’s better than the original. That possibility alone should push the Big Three of insulin – Lilly (NSYE:LLY), Novo Nordisk (NYSE:NVO) and Sanofi – to action but then again this is the wacky world of diabetes and none of these companies are known for moving quickly and all are prone to overanalyzing.
While neither company is publicly traded it’s worth watching for news on TelCare and Intuity Medical, both companies ironically are in the BGM market yet both have innovative offerings that just might attract the attention of the Big Four, soon to be the Big One and little two. As bad as this market has become both products will make a nice fit into a broader product line and would add value to an existing portfolio.
Another private company worth watching is Tandem Diabetes and their new t:slim insulin pump. For a company with practically no sales people and a miniscule marketing budget the t:slim is sure getting the attention of the people that matter most, insulin pump patients and patients considering an insulin pump. Frankly it wouldn’t Diabetic Investor at all if either Medtronic or Johnson and Johnson (NYSE:JNJ) took a serious look at Tandem, that is of course if Medtronic doesn’t sue them first.
Diabetic Investor also sees money moving into the smartphone/glucose monitoring space as everyone seems to believe this is the future of glucose monitoring. Although the iBGStar from AgaMatrix/Sanofi has issues, there is no question the day is coming and coming quickly when glucose monitors will either attach to or communicate seamlessly with the whole range of smartphones and not just the way cool iPhone.
Another interesting sector to watch will be the expanding role of social media which is actually connected to the trend towards interconnected diabetes management. Just as Diabetic Investor believes interconnected diabetes management will play an expanding role in diabetes, so too will diabetes social media. Already growing by leaps and bounds the key to the future is insuring the quality of the information provided through social media.
It’s been said many times and bears repeating, that with little financial barriers to enter the market anyone, even those with some truly wacky ideas can start a web site or blog. If diabetes social media is to truly empower patients it’s critical that we find a way to keep the scam artist and wake jobs from gaining too much attention. There are some excellent resources in the cyber world, with great information that should do everything within their power to make sure they are not negatively tainted by the many charlatans who are only looking to enrich themselves and care nothing about actually helping patients with diabetes.
Diabetic Investor will also be changing in 2013 as we see the bigger companies in the diabetes space not just getting even bigger but coming out with far fewer innovative ideas. This could actually be the year when the smaller, less well capitalized companies come out with the most innovative and impactful ideas. Our goal this year is to seek these companies out and separate the real possibilities from the those who have nothing more than a fancy PowerPoint presentations. It is with these smaller, less well-known companies that we see having the most upside as in their desperate attempt to find new growth areas the bigger players will become investors, partners and/or buyers.
Whatever happens in 2013 Diabetic Investor will be there every step of the way.
