Yet another pump and more wackiness

Yet another pump and more wackiness

This morning Tandem Diabetes finally received FDA approval for their t:slim™ insulin delivery system, and now enters the already over-crowded insulin pump market. The t:slim is also the first of series of new pumps coming to market that are trying to capitalize on what Diabetic Investor likes to call the cool factor. Unlike the current crop of wired insulin pumps the t:slim looks and works much like the very popular iPhone incorporating features such as touch screen technology and a rechargeable battery.

Based on the material sent out by the company along with their press release it’s also a good bet that the company’s marketing focus will not be that the t:slim is necessarily a better insulin pump, rather it’s more patient friendly, easier to use and cooler than the competition.

As cool as the t:slim may be Diabetic Investor isn’t convinced coolness will be enough to turn the t:slim into a commercial success as now comes the hard part; getting the t:slim into the hands of insulin pump patients. While coolness may get a patient interested in the pump the rubber will meet the road should the patient actually decide they want to use the pump.  Unlike their established competitors who already have the infrastructure in place to handle the mundane yet critical aspect of getting their product covered by insurers, processing orders and performing customer support functions Tandem is starting from scratch.

Tandem will also have to find a way into the physician’s office and become one of the pumps offered to the patient. Not an easy task given that when it comes to insulin pumps most offices only carry two insulin pump options; Medtronic (NYSE:MDT) and someone else.  Even if they do somehow get in, the Tandem sales people will have some explaining to do for as cool as the t:slim is it lacks some basic functionality that is available on the competition.  One example being the t:slim does not interface with either a conventional glucose monitor or a continuous glucose monitor, which means that patients are required to manually enter their glucose readings.

The biggest problem of all, which is not unique to Tandem and the t:slim, is finding a profitable strategy to convert current Medtronic patients into Tandem patients.  To understand just how difficult a task this is consider all those who have tried and failed. Animas, a unit of Johnson and Johnson (NYSE:JNJ) and the current number two player in the market, has never turned a profit for JNJ. Insulet (NASDAQ:PODD) number three in the market and who’s OmniPod system has been on the market for over seven years is struggling even when they are the only wireless system available. The Cosmo from Smiths Medical has been pulled from the market. Roche, yes Roche is still in the insulin pump business, once the number two player has fallen into oblivion.  There are others all of whom thought they too built a better mousetrap only to give up after realizing they couldn’t make a profit.

This is not to say that Tandem cannot overcome the obstacles ahead rather just how daunting a task this actually is. Diabetic Investor has no doubt that the t:slim will attract attention as it is cool and does have some nice features, however we have been down this road before and seen this movie before. As we have stated on many occasions building an insulin pump is one thing it’s quite another to run a profitable insulin pump company. A task made tougher by something else we have said a thousand times as the insulin pump market is not large enough nor is it growing fast enough to support the existing players in the marker let alone the many new players coming to market.

Tandem may find a ray of sunshine among these dark clouds as if there is one thing they can almost bank on is the wacky world of diabetes devices where anything can and usually does happen. The insulin pump market in particular is overly wacky with numerous examples of pump companies screwing things up.  Diabetic Investor has documented these screw-ups over the years as it seem as if these companies are actually more adapt at making mistakes than they are at effectively managing their various franchises.

Not like we needed another example of how badly some companies can screw up a very good thing, another example comes from our friends at Insulet. For reasons only Insulet seems to know the company has yet to receive FDA clearance so that OmniPod patients can use the new FreeStyle test strip with their OmniPod Personal Diabetes Manager (PDM). A situation which if not rectified soon will cause some serious issues for OmniPod users. As Diabetic Investor has previously reported the company has posted the following statement on their web site;

“Abbott Diabetes Care received FDA clearance for its NEW FreeStyle Test Strips. New and improved FreeStyle Blood Glucose Test Strips are intended to be used with FreeStyle (also know as FreeStyle 3 and FreeStyle 5), FreeStyle Freedom® and FreeStyle Flash® blood glucose meters only.

Insulet is awaiting clearance from the FDA for the use of the new FreeStyle® test strips in the OmniPod PDM.

Please continue to use your current FreeStyle® test strips until Insulet obtains FDA clearance. “

Diabetic Investor has also noted that some OmniPod patients have had to switch to a different meter or use a conventional handheld FreeStyle meter, which can use the new strip, as their pharmacy does not have the “old” FreeStyle strip in stock; a situation which is worsening by the day as Abbott (NYSE:ABT) stopped making the “old” strip long ago. Although Abbott will not disclose just how much supply of the “old” strip is left, it is well known whatever the supply is it is quickly dwindling. Frankly it’s becoming difficult to even find the “old” FreeStyle strip.

News is now coming that Insulet has begun shipping their patients FreeStyle meters that are can use the “new” strip along with a warning NOT to use the “new” strip with their existing PDM. Besides the obvious embarrassment this is creating for the company, think of the cost to Insulet. Once again Diabetic Investor has reached out to OmniPod for an explanation and once again no response.

This is just one more issue for OmniPod patients to deal with as we have also reported pod failure rates have become common place and in some cases has reached 20%. It’s bad enough not being able to use the “new” FreeStyle strip with their PDM but at least this is a manageable problem as the patient does have alternate options even if it means they must manually enter their glucose readings into the PDM. However, pod failure rates approaching 20% are totally unacceptable as this is not just a source of frustration for the patient but a costly problem for patients and the company. Besides the company having to replace all the failed pods, patients with a failed pod either loses the insulin that was in the pod or must suck the insulin out of the failed pod. Needless to say Insulet is not endearing themselves to their existing patient base or creating much confidence in the small and very vocal insulin pump community. As we have stated previously as much as patients love being wireless they would prefer a wireless system that actually works.

So if the folks at Tandem want to hang their hat on something positive they can look at Insulet as a perfect example of how their competition just can’t get out of their own way creating opportunities for them to get established in the market. There is a whole group of OmniPod patients who are pretty ticked off at Insulet and ripe for the taking. Patients who just might sacrifice their love for being wireless for a system that although wired actually works.  The fact is when it comes to insulin pumps, a device that is critical to the patients well-being, cool is nice but reliability is more important.

Yes the wacky world of diabetes devices is not just alive and well, it’s thriving.