Will he Un Do It

Monday was a big day for our chardonnay guzzling friends as Paul Hudson officially took the helm. Early reports have Mr. Hudson embarking on a fact-finding mission as he looks to transform Sanofi into a viable player again. While we can’t speak to other aspects of the Sanofi portfolio when it comes to diabetes Paul has his work cut out for him. Although the best possible move just might be to dump this franchise, we consider this an unlikely scenario.

Yet there is one part of diabetes that he just might undo, he could take advantage of the hot digital diabetes market and get out of the company’s partnership with Verily. Now that Livongo has gone public and is valued at over $2.6 Billion, he just might convince his partners in the valley that now is the time to spin Onduo off as a publicly traded company.

Livongo proved that investors have an appetite for digital diabetes companies that do nothing but lose money and Onduo has also proved they too can lose money.

Such a move might also be a saving grace for Verily and their parent company Google as it would give them a way out as well. When Verily first came on the scene and began their deep dive into diabetes everyone was as excited as Bears fans are here in Chicago for tomorrow’s game with the Packers. However like so many of the techies who jumped into the diabetes pool the actual results have been less than impressive. Anyone remember those glucose measuring contact lenses?

However, Google isn’t the only company who jumped into the pool thinking they would swim like Michael Phelps. For all the money and effort these cash rich techies have thrown around what has happened other than lots of favorable press coverage? Not much and unless major changes are made nothing much of substance is going to happen.

The core problem here, no clarity of purpose. We aren’t surprised these techies have fallen in love with whiz bang way cool. However we thought they’d understand that way cool whiz bang, the toys in the toy chest, aren’t worth zilch if patients don’t use them. That they would understand the biggest problem in diabetes isn’t the toys in the toy chest or the drugs in the medicine cabinet. The biggest problem has been and continues to be getting patients to play with the toys and take their medications as prescribed.

Rather than bring a new fresh perspective that everyone hoped for these cash rich techies have fallen into the same sink hole as the old guard. Rather than come up with new innovative ideas they are merely taking old ideas putting them in a shiny new box and trying to pass them off as something new. As Momma Kliff used to say you can dress them up you can spray them with perfume, but a pig is a pig and pigs get slaughtered.

Not to dump on our friends in Mountain View but they are a perfect example of what has gone wrong. In the beginning it looked as if they would be different. After the dumb contact lenses they did an about face partnering with Dexcom, a company that happens to make a product that actually works. For a moment it looked as though they would spend their billions wisely, well that moment ended quickly when they decided to partner with Sanofi for no other reason than Sanofi ponied up more money than Lilly or Novo Nordisk was willing to part with.

When JNJ was trying to unload LifeScan and Animas many advised the company to buy these units as they would provide the launching platform for their deep dive into diabetes. Instantly the company would capture millions of patients and as we keep saying when it comes to diabetes the company with the most patients wins. Even better LifeScan was throwing off gobs of cash which would make the deal more palatable. Cash that could have been used to fix the problems at Animas making them a serious player again in the insulin delivery business.

So why didn’t they do the deal, it was too expensive and no we are not making this up. No the folks at Verily felt it was better to start from ground zero rather than instantly capture millions of patients. Like so many who came before them they believed they were building a better mouse trap. Like so many who came before them they believed since they were good at one thing, they would be good at all things.

Fundamentally they suffered from the same affliction as others in this wacky world, a healthy of dose of arrogance combined with a splash of hubris.

Way back when all the cash rich techies began their deep dive our main concern was would they understand that diabetes is not a simple math problem but a complex algebraic problem. We knew these companies had talent and money what we didn’t know was if they would harness this talent or spend their billions wisely. As it turns out much of this talent and money has been wasted and they are no closer today to having a major impact in diabetes then they were when they first started.

Can these problems be fixed? Perhaps but it will take much more than trying to buy their way out of the problem. It will take something that money cannot buy, a serious change of attitude.