Will it work?

Will it work?

Today Johnson and Johnson (NYSE: JNJ) is holding their Consumer and Medical Device Business review. Although the webcast has had some technical issues the slides used during the presentation tell the story quite nicely. Now before we go into an analysis of what we have seen so far a few points.

When it comes to diabetes JNJ is no longer just a device company as they now have the number one SGLT2 with Invokana. The company is also making an aggressive push into the health and wellness arena.  Finally, few companies have what we like to call the vision thing, understanding not just where the market is today but more importantly where the market will be in the future. To their credit JNJ sees things as they are not where they would like to be.

Too often the companies in this space just can’t break from the past, they cannot accept how things have changed and worse they seem incapable of change. So kudos to JNJ for being realistic.

Now onto where the company is going in diabetes and in move that should shock no one the company sees … wait for it .. interconnected diabetes management (IDM) as the future. Our as they call it connecting the dots. The question is, will connecting the dots actually work or put another way can connecting these dots offset some of the negative dynamics of the diabetes market.

Like everyone else in diabetes the company believes that it’s just a matter of time before outcomes really matter. That reimbursement and formulary position will be linked to patient outcomes. Additionally, the company also is moving ever closer to being a provider of not just drugs and devices but diabetes management systems. Systems that will not just include devices and drugs but include apps which connect all the dots. Apps which will transform data into patient relevant patient actionable information.

Frankly it would not surprise Diabetic Investor if in the future the company moves move aggressively into the insulin market and we don’t mean just insulin delivery systems. Again like everyone else they see the coming of not just biosimilar long-acting insulin but also biosimilar short-acting insulin. It would not surprise us if the company in the future the company comes out with a pre-filled OneTouch Via™, this is the name they have given the Calibra patch pump, or pre-filled reservoirs for Animas insulin pumps. Nor would be it shocking if they rounded out their insulin delivery portfolio with the addition of .. wait for it .. a cloud enabled insulin pen.

Nor would be it shocking given the growth in the category that the company would move into the GLP-1 arena.

As a side note Diabetic Investor isn’t quite sure what the company will do in the CGM arena. Given that the success of the Animas Vibe is directly tied to the fact that it works with the Dexcom (NASDAQ: DXCM) sensor one just might think the company would buy Dexcom. However, Dexcom just might hold out for a better offer from their other well healed partner who is also moving aggressively into diabetes, the good people in Mountain View. No question Dexcom is the hottest commodity in diabetes these days and we imagine it won’t be long before someone makes a play for the company.

Nor will we discount the possibility that the company could acquire Tandem (NASDAQ: TNDM) and/or Insulet (NASDAQ: PODD), although we would view Tandem as a stronger and more cost effective possibility. JNJ knows that Medtronic (NYSE: MDT) the insulin pump market leader is moving more aggressively into alternate insulin delivery systems as well as targeting patients with Type 2 diabetes. Given where both companies appear to going this could set up as battle between two heavyweights and create one of the more interesting dynamics in diabetes.

As we have been stating for some time the reality is scale, massive scale is critical in the diabetes space. That data analytics combined with scale will be transformative. The goal going forward is not to have the best drugs or devices, the goal now is having the best diabetes management system. Systems which transform all this data into patient relevant patient actionable information which ultimately should translate into better patient outcomes.

JNJ seems to be on the right track, the question now is can they execute.  One thing is certain things in this wacky world are getting more interesting by the day. For the first time in a long time we’re actually looking forward to the annual ADA confab in just a few weeks. No it won’t be like the old days but it will be quite interesting to see the dynamic develop between the old guard and the new kids on the block.

As Momma Kliff was fond of saying; “Just when you think you have seen it all, something comes along that blows your mind.” This is getting very interesting indeed.