Diabetes Tech’s 2020 success continued through early 2021, when manufacturers of continuous glucose monitors and insulin pumps increased sales and product volume year-over-year.
Insulet, which makes portable insulin pumps, and CGM company Dexcom increased sales by at least 25% in the first quarter of 2021, grossing $ 252 million and $ 505 million, respectively. Insulet rival Tandem Diabetes Care increased sales 44% to $ 141 million.
All three companies have raised their guidance for 2021 as internal expectations were exceeded in the quarter, while Wall Street analysts agreed that the Diabetes Technologies division met and in some cases exceeded forecasts for the quarter.
However, what is seen as a strong start to the year by industry and Wall Street has not resulted in sustained success with investors. All three companies have posted almost daily losses since the quarterly results were released. The price declines begin at the end of last month.
Between April 28 and Monday, Tandem’s share price fell 16%, Dexcom’s 19.5% and Insulet’s 25%. Each company saw slight gains as the market closed on Tuesday.
SVB Leerink analyst Danielle Antalffy said the trend was seen last week in medical technology in general, not just in diabetes companies. Antalffy added that while most medtech companies have been hit by the coronavirus pandemic and are now recovering, diabetes tech companies have been more resilient over the past year.
Insulet, Tandem and Dexcom grew their gross profits by between 21% and 34% in 2020 as technology-driven health services such as wearables, telemedicine and remote patient monitoring increased during the pandemic.
“Their sales growth stayed pretty strong through 2020. They definitely saw an impact from the pandemic, no doubt, especially internationally … but much less so,” Antalffy said. “So if you’re playing the recovery trade, these are stocks that are not tied to a recovery.”
The stock market battles could be tied to company-specific updates to earnings views rather than longer term issues.
For example, Insulet has updated that the launch of the Omnipod 5 integrated insulin pump is expected to be delayed until late June or early July after the company planned to launch in the first half of the year.
CEO Shacey Petrovic said during an earnings call on Thursday that the delay was due more to FDA workload and prioritization of COVID-19-related tasks than to issues with the product that the entire medical device industry had to grapple with.
“I don’t think there are any other drivers outside of the pandemic workload,” Petrovic said. “The review process is taking a little longer than expected, but we are in the final stages and are comfortable with where we are.”
An FDA decision would follow a study published during the Endocrine Society’s annual 2021 conference in March that shows that using the Omnipod 5 built-in system will lower blood sugar levels and reduce the amount of time spent daily in the desired blood sugar ranges for patients with type 1 – Diabetes prolonged.
JP Morgan analysts, who named the Omnipod 5 the top 2021 product launches for all medical technology, wrote that the delay should not last longer than “very early July,” and that the product’s later launch later this year will allow them to Keeps company optimistic.
Dexcom also reported on unexpected challenges for 2021. During an earnings call on April 29, CEO Kevin Sayer stated that the company is lowering international average sales prices in certain markets to improve access and volume.
Sayer said the decision reflected a similar strategy in the U.S. when the company switched from the durable medical device channel to the pharmacy channel, a strategy that increased sales by lowering prices but increasing overall volume.
Executives said the change in strategy will add an additional one $ 50 million weighs on the company, bringing total revenue to $ 250 million in 2021.
When asked whether the decision was made to stay closer in price with Abbott Laboratories’ Freestyle Libre 3 CGM product approved for the European market in September 2020, the CEO quickly pushed back.
“We didn’t base our decisions on Libre 3. We looked at what we achieved in the US,” said Sayer. “We’re not going to let Libre 3 make our decisions. We’ll make our own decisions.”
Jefferies analysts wrote that while pricing “is reasonable,” the pressure on margins as [Abbott] urges towards Free 3 will keep the ‘price war’ theme going. “
Even with lower international prices, Dexcom sensors will still be more expensive than Abbott’s, according to analysts at William Blair.
“Management noted that international prices are expected to stabilize around US pharmacy prices (we estimate this is around $ 1,900 a year), suggesting that Dexcom continues to sell at a premium to Libre worldwide will “write the analysts.
Abbott’s Freestyle Free Line raised $ 829 million in the first quarter. The company’s entire Diabetes Care group raised $ 980 million, up roughly 30% year over year.
The upcoming release of the Freestyle Libre 3 in the US will further increase the price pressure on Dexcom, according to Antalffy. The analyst added that increasing competition in both the insulin pump and CGM markets is likely to affect investor behavior as well.
Growing international markets
While Tandem faces increasing competition from Insulet, the company has the potential to grow its business internationally.
International sales were $ 37.7 million for the first quarter, up 105% from the same period last year, and insulin pump shipments outside the US increased 106% to 8,708 from 4,220 in the first quarter of 2020.
John Sheridan, CEO of Tandem, said during a earnings call on May 5 that demand growth was not coming from one particular country but across all markets.
“The countries in which we operate internationally have approximately 4 million people with type 1 diabetes, and yet the average pump penetration is less than 20%,” said Sheridan. “It’s a great opportunity. And while our commercial efforts are still scaling up and there are significant COVID-19 restrictions in place, we exceeded our internal expectations for the first quarter.”
CFO Leigh Vosseller said international sales will make up a larger portion of Tandem’s overall business, with forecasts that overseas markets will account for approximately 20% of all sales in 2021.
“I think it was very positive to see a significant international revenue contribution as it will be an important revenue growth stream going forward, especially given the increased competition here in the US,” said Antalffy.
However, international markets are likely to become part of overall insulin pump competition as Insulet seeks growth overseas as well. The company entered five new countries in Europe and the Middle East in 2020, entered Turkey in the first quarter of this year, and plans to expand to Australia later in 2021.
Wayde McMillan, CFO of Insulet, said international markets are still recovering from COVID-19 as some countries introduce lockdowns, but Omnipod’s international sales growth of 13% in the first quarter still exceeded internal expectations.
Bigfoot wins smart pen sharing
Another participant in the Diabetes Tech Contest is Bigfoot Biomedical, which announced Monday that it has received 510 (k) clearance from the FDA for its intelligent insulin pen system that can treat patients with Type 1 or Type 2 diabetes informed CGM of insulin dosage levels based on data from a.
While Bigfoot is smaller than other diabetes technology companies like Dexcom, Insulet, and Medtronic, the privately held company has partnered with medical device giant Abbott. Bigfoot’s intelligent insulin pen system is approved for use with Abbott’s Freestyle Libre 2.
The Bigfoot Unity System consists of intelligent insulin pen caps that can connect to Abbott’s CGM and collect data about a patient’s glucose levels. Dosage recommendations are then displayed on the pen cap. The system can also connect to a smartphone app and notify patients of very low glucose levels or for possible missed doses.
The pen caps and system work with single-use insulin pens from companies such as Eli Lilly, Novo Nordisk, and Sanofi.
SVB Leerink analysts wrote that the news is positive for Bigfoot as it is the first product to be released and the decision has been long awaited. The analysts added that the release will also give Abbott a boost, as Unity “is an important first integrated system for Libre that could drive further adoption among multiple daily injection (MDI) patients and improve patient loyalty.”
Along with insulin pumps and CGMs, Medtronic entered the intelligent insulin pen space with the acquisition of Companion Medical in August 2020.