Devices & Diagnostics

Should Medtronic’s return to the standalone continuous glucose monitoring market worry competitors?

Medtronic had previously betted on higher adoption of its insulin pumps tethering the use of continuous glucose monitors to those pumps but has recently returned to the standalone CGM market with the launch of its Guardian Connect device in the U.S. Should Dexcom and Abbott worry?

The Guardian Connect Continuous Glucose Monitoring System marks Medtronic’s return to the standalone CGM market it abandoned

Back in the day – roughly around 2007, Medtronic offered a standalone continuous glucose monitoring system where diabetics who were not using a Medtronic insulin pump could use it to get continuous blood glucose readings.

But the Irish medical device maker eschewed the path creating instead a system by which only patients using a Medtronic insulin pump could get a CGM device. That strategy didn’t necessarily pan out — CGMs back then were expensive and did not have much in the way of reimbursement, per an analyst, and Medtronic likely believed the market wouldn’t take off. However, as of mid June, Medtronic has returned to that standalone market in the U.S. with the launch of the Guardian Connect CGM device that is not tethered to its insulin pumps after its FDA approval in March.

Two weeks ago in a quarterly earnings call with analysts, Medtronic’s CEO, Omar Ishrak, painted a positive picture of the early adoption of the device. But the question is whether this will hurt competitors like Abbott and Dexcom who also make CGM devices.

“In standalone CGM, the U.S. launch of our Guardian Connect product is off to a solid start, taking share in the $1 billion standalone CGM market,” Ishrak declared in prepared remarks in the call, according to a transcript from Seeking Alpha.

That phrasing — taking share — is generally meant to suggest that a company is gaining ground against the competition. But Ishrak offered no other details on the call such as the number of patients currently using the Guardian Connect device. And in a phone interview, a Medtronic diabetes executive similarly declined to quantify use. He declined to even name the competition despite repeated questions about the competitive landscape where DexCom with its G6 device and Abbott with its FreeStyle Libre play in.

Medtronic estimates the CGM sensor market to be worth $1 billion and expects it to grow to $2 billion though there are other reports that describe a much bigger market.

While it is not clear how many patients are using the Guardian Connect CGM device either with a Medtronic insulin pump or without,  it is worthwhile to consider what caused this change of corporate heart to return to a standalone CGM.

First, Ishrak has made no secret of his desire to expand the company’s reach into the much larger, type 2 diabetes market – more specifically those multiple daily injections. Combine that with the company’s desire to become a diabetes management player instead of a diabetes widget maker explains another rationale behind opening up to both type 1 and type 2 diabetes patients who may want to get off of blood glucose meters to a continuous glucose monitoring device. And finally, there is the broader trend of consumerization of health where patients are demanding ease of use and convenience from even their medical devices.

The Guardian Connect CGM device, for instance, eliminates the typical CGM receiver device completely, preferring instead to route readings from the bodyworn sensor directly to a user’s smartphone. This is apparently the only CGM device currently approved that actually requires a smartphone to transmit readings.

Here’s how Todd Robin, vice president of Connected Care, Medtronic Diabetes explained the move to the standalone CGM market in a recent phone interview:

As we spent time in the diabetes community, we recognized that not all people with diabetes are ready or willing to go on a pump and so it was really important to us, as we try to be a holistic diabetes management company, that we offered a fuller set of solutions. And So Guardian Connect became important for the strategy there. In parallel, consumer technology has evolved so rapidly in the last five to 10 years that as we better understood customer needs, we recognized that we had a unique opportunity to bring a smarter CGM solution to market to lessen the burden of diabetes management for the community that we serve. And one example of the ways we do that is eliminating the need for a separate receiver so that an individual can get their glucose values directly from their sensor and transmitter to their smartphone.

There’s also additional reasons for Medtronic’s return to CGM market. There is a growing body of evidence that shows that CGM devices help a person suffering from diabetes to exert better glycemic control and improve their diabetes management. Indeed Medtronic itself presented data at the American Diabetes Association’s annual meeting that showed patients using the companion app that comes with the Guardian Connect device showing more time in their healthy glucose range. [Medtronic studied 256 patients using the Sugar.IQ companion app and found that daily they spent 36 more minutes in their individual healthy glucose range than they did before using the app. This included 30 minutes less time in hyperglycemia (>180 mg/dL) and 6 minutes less time in hypoglycemia (<70 mg/dL). All this translates to more than 9 additional days in a year that a person with diabetes is spending in a healthy glucose range.]

Aside from CGM showing better diabetes management and overall clinical validation, another reason prompting return to the standalone CGM market could be because the regular insulin pump business has changed for the worse.

“Insulin pumps are not really a lucrative market anymore – in 2017, Roche discontinued insulin pumps, Animas (J&J) followed suit. We are left with new generation companies (Tandem Diabetes and the like), that are more focused on ‘artificial pancreas’ type products,” wrote Siddharth Shah, an analyst with Frost & Sullivan who follows the diabetes market, in an email response to questions. “In this environment, I think it makes sense to make money from the standalone CGM market — where Abbott and Dexcom are still doing pretty well overall. So a smart strategy in that sense for sure, with Medtronic having existing and good sensors (for pumps)” that can be applied to CGMs.

Shah also pointed to features that Medtronic’s Guardian Connect CGM has that no other CGM device has: “predictions for 10-60 minutes and also Sugar.IQ AI support – no one else still has that support.”

That is a reference to the predictive analytics that’s part of the Sugar.IQ app referenced above in the data presented to ADA. Medtronic developed the app with IBM using machine learning and AI to gather insulin pump data and bette predict blood glucose highs and lows. It’s a feature that Robin of Medtronic also highlighted.

“One of the pieces of customer feedback that we get on Guardian Connect is that people managing their diabetes want more than just a number — that is their blood glucose levels. They like the predictive alerts where they get advance warning in terms of when they might get a high or a low,” he said. “They also just want personalized insights that they can act on. So with Guardian Connect, plus the companion app, Sugar.IQ, we believe we have a really smart CGM system that can add significant benefit patients.”

Dexcom’s G6 may not have personalized insights per se, but it does have predictive alerts to help avoid low blood sugar events, which can be lethal. Abbott’s device doesn’t provide alerts.

On the other hand, both the G6 and the Libre from Abbott possess a quality that Medtronic’s Guardian Connect doesn’t: FDA indication for therapeutic dosing. And this means that Medtronic’s device cannot be used to make treatment decisions and fingersticks – which are no longer necessary with Dexcom’s G6 —  is still required with the Guardian Connect system.

“The therapeutic CGM means that patients can make treatment decisions based upon their Dexcom CGM readings – no more fingersticks!,” wrote Rick Doubleday,  Dexcom’s chief commercial officer, in an email response to questions forwarded by a company representative.

Also of note is that lacking that ability for therapeutic dosing, Medtronic’s device is not covered by CMS — Dexcom’s G5 is covered by Medicare as is Abbott’s device.

Shah, the Frost analyst, said the therapeutic dosing is a big difference between Medtronic’s Guardian Connect CGM and competing CGMs but only as it relates to those using multiple daily insulin injections, the market Medtronic wants to target.

Yes, definitely the other two are better, but for standalone, MDI users. There are insulin pump users who use Dexcom sensors with other non-Medtronic pumps too, where insulin dosing indications are irrelevant.” he explained.

Shah speculated whether Medtronic’s plan to not add the technology for a therapeutic claim was spurred by the desire to still get diabetes patients on to their insulin pumps.

“… this is a chosen strategy I feel by Medtronic, still pushing the agenda on insulin pumps, and later on the artificial pancreas [the MiniMed 670G]. I may be wrong on this, [but] not entirely sure why they didn’t go for insulin dosing – they definitely have the tech and know-how.”

Medtronic’s Robin however declared that adding this insulin dosing capability would have required a longer regulatory cycle and Medtronic wanted to bring the Guardian Connect CGM sooner to the market.

The company is apparently working on a CGM device with a therapeutic dosing indication but Robin declined to provide a timeframe for when it will become available. Meanwhile the company, in the near future for, plans to ask Medicare to reimburse the bodyworn Guardian Connect sensor under a non-adjunctive labeling, which means reimbursement without that dosing claim.

Overall, it appears that Medtronic’s return to the standalone CGM market will not be a major headache for its competitors. Despite Ishrak’s “taking share” declaration in the earnings call, Shah said the CGM market is large enough to accommodate more than one player. [Indeed Medtronic’s own analysis puts CGM penetration at around 20 percent by people using multiple daily injections.]

Doubleday of Dexcom flat out rejected the notion that Medtronic’s Guardian Connect has taken market share, instead focusing the fact that Medtronic will now be pushing for better reimbursement too.

“We have no evidence of market erosion from the launch of the MDT standalone,” he wrote. “But I think it’s safe to say that competition is raising the awareness of CGM and growing the market overall. You’ve got not just us, but now others out there educating the value of CGM.”

And that is exactly where the rubber meets the road. The issue of reimbursement is paramount given that some of these devices are quite expensive for patients – in the several thousand range, per Shah.

“Any MDI (multiple daily injections) diabetic would probably like to get an insulin pump to avoid daily injections (unless they have concerns around having something on their body all the time, in which case they may not choose a CGM either) – but they cannot due to lack of reimbursement,” Shah said. “We continue to view CGM devices as only for T1 and insulin dependent T2 users.”

Meanwhile for patients who don’t have uncontrolled diabetes, Shah thinks Abbott’s cheaper FreeStyle Libre system might be better suited. Flash glucose monitoring is considered to be a replacement for the painful fingersticks and while not aconnected to the receiver device is considered a CGM. The Libre also a relatively cheap device.

Going back to Medtronic, irrespective of  whether it wins dominance in the CGM market or loses, the ultimate winner is likely diabetes patients who more have  more options than ever before.