Diabetes products compete – diabetes treatment equipment industry
Diabetes products compete
The market for diabetes products is experiencing a shakeout and realignment. Since 1989, three major manufacturers have elected to drop out of the insulin pump market. At the same time, the insulin pen market is experiencing intense competition as four major manufacturers battle for market share. Despite these trends, the diabetic product market is expected to increase to $3 billion in 1995 from $1.3 billion in 1989.
The competitive market can be summarized across all current markets as technology-driven and likely to change based on new technological breakthroughs.
Capitalizing on the diabetic patient’s demand for convenient and cost-effective products to maintain his or her quality of life, manufacturers have developed insulin pens and ambulatory infusion pumps. Marketed to both diabetic patients and health care professionals, these products provide a convenient alternative to the drudgery of daily insulin injections.
The insulin pump market is evolving quickly into a one player market. Since the pump’s inception in 1981, the product has been at the center of controversy. With sales not meeting expectations, three manufacturers, Orange Medical Instruments Inc., Costa Mesa, Calif., Pancretac Inc., San Diego, and Parker-Hannefin Corp., Cleveland, dropped out of the market in 1986. By 1988, four manufacturers dominated the insulin pump market and by 1989, both Baxter Healthcare Corp, Deerfield, III. and Becton, Dickinson and Co., Franklin Lakes, N.J., opted out of the market.
Entering 1990, two players were in the pump market. Today, only MiniMed Technologies Inc., Sylmar, Calif., remains. At press time, Health Industry Today learned that Cardiac Pacemakers Inc., St. Paul, Minn., a subsidiary of Eli Lilly and Co., decided to exit the insulin pump market. “We are no longer selling the Betatron IV,” said Carol Ann Modlin, product coordinator for the Betatron IV. Although no further information was made available, this is evidence of the shakeout occurring in the diabetic product market.
Pump revenues will remain relatively stable for at least one or two years, but will eventually decline, slowing the number of total shipments, according to Market Research Intelligence Co., Mountain View, Calif. By 1993 to 1995, revenues will reach a peak at approximately $9.2 million per year.
Two players dominate the insulin pen market, Ulster Scientific, Highland, N.Y. and Novo-Nordisk of North America, Princeton, N.J. Both market and distribute a variety of insulin pens considered by some industry sources as a safer alternative to the insulin pump. However, sales efforts can be complicated by the need to market to both the patient, the end user, and the health care professional.
Diabetes product market
Diabetes is ranked as the third leading cause of death in the United States. The National Center for Health Statistics, Hyattsville, Md., estimates 25.6 out of every 1,000 Americans, or approximately 6 million Americans, have diabetes. An additional 5 million have diabetes but go undiagnosed, and each year more than 500,000 new cases are identified.
The total economic costs to society from diabetes is conservatively estimated at over $14 billion annually, according to Market Research Intelligence Corp., Mountain View, Calif. This figure includes medical products consumed by diabetics, loss of work due to related illnesses, and problems resulting from diabetic complications.
The insulin pen market is highly competitive, with two major manufacturers and a handful of minor ones vying for a market of approximately 1.5 million Type 1 diabetics. Of this 1.5 million, only 20% to 40% are suitable candidates for the pen, said Richard Cunningham, vice-president of marketing for Ulster Scientific, Highland, N.Y.
Insulin pens resemble a fountain pen and hold cartridges of insulin. These devices reduce the amount of supplies a diabetic has to carry around when a multi-dose regimen is required. They can be used to deliver single-dose insulin with convenience.
“The insulin pen is a consumer-driven product,” Cunningham said. “As a consumer-driven product, it is important that the channels of product information reach the diabetic patient directly to cue them on the attributes of the specific product.”
Ulster markets the Autopen, a cartridge pen injection device. It sells for $49.95 and requires a pre-determined dose of 2 to 32 units of insulin in 2 unit increments. “Not all diabetics can use the pen, specifically those who require a hybrid insulin mix” added Cunningham. The pen replaces the manual intermittent random access injection.
The Autopen does not require a prescription but is recommended to the patient by both physicians, diabetologists, and diabetes educators, according to Cunningham. Consequently, Ulster’s 32 sales reps must target these three distinct markets.
The sales rep must emphasize the convenience, cost-effectiveness and reliability of the pen to professionals who largely rely on patient education to emphasize adherence to an insulin regime. Reps also provide such value-added services as patient education literature and in-service training on the product.
The product has been displayed at various trade shows, including those of the American Diabetes Assn., the American Assn. of Diabetes Educators and the Endocrine Society. It has also been advertised in journals devoted to both the physician and the diabetes educator.
The other major player in the pen market is Novo-Nordisk of North America. The NovoPen, which sells for $39.95, and the Novolin Pen, $95.00, are designed for Novolin Human insulin and deliver doses in 2-unit increments. A single unit may be delivered but only after an even number of units has been dispensed. All Novo-Nordisk pens can only use insulin manufactured by Novo-Nordisk. According to a competing manufacturer, this allows Novo-Nordisk to underprice their pens to get more market share for their insulin.
Novo-Nordisk’s pens are sold through its own sales force and distributor Bristol-Myers-Squibb. The pen has been exhibited at the national diabetes trade shows, the Endocrine Society, and local and state association shows, said Cecelia Weisenberg, marketing services administrator. It has been advertised in clinical journals devoted to the study of diabetes, endocrinology, and diabetes patient education.
To differentiate its pens from those of its competitors, Novo-Nordisk created the Novo Diabetes Care Program. This program is a value-added service that includes continuing education credits for pharmacists, symposiums for physicians, and patient education materials for use in the office.
Ambulatory or wearable insulin pumps provide continuous, subcutaneous insulin delivery to the wearer. Most pumps weigh less than six ounces and can be programmed to deliver variable rates and large doses of insulin. The pump is generally placed around the waist or chest and pumps insulin through the jugular vein in the neck region or a vessel near the arm.
Advantages associated with the pump include tighter control of blood glucose levels, increased flexibility regarding mealtimes, exercise regimes, and work schedules, and stricter blood glucose control for pre-pregnancy and gestational diabetes. Disadvantages cited include the need for extensive training, possibility of hypoglycemic comas and difficulties in kinked tubing. Some diabetics also do not want to be attached to a piece of equipment.
About 10,000 MiniMed 504-S pumps are in use today and sell for approximately $3,400, according to MiniMed.
They are sold by MiniMed’s sales force to both physicians and patients. The sales rep is responsible for educating the physician on the attributes of the product and creating product awareness among diabetic patients. This two-pronged sales effort is part and parcel of a market driven by both the needs of the consumer and the health care professional.
The 504-S has been displayed at the national diabetes show and at the annual convention of The Endocrine Society. In addition, it has been advertised in Diabetes Forecast, Diabetes Educator, Diabetes Care, and local and regional diabetes publications.
As with other manufacturers of products in a highly competitive market, MiniMed attempts to differentiate its products on both a price and service level. As part of its value-added program, it publishes a semi-annual newsletter for users of its pump, supplies a training video to be used by both patients and health care professionals, publishes patient education literature, and sponsors a 24-hour hotline to answer questions from users of its pump.
Future of the market
CPI’s announcement of its withdrawal from the insulin pump marketplace has left MiniMed the primary manufacturer and distributor of insulin pumps. How this will effect the market for insulin pumps is still an open question.
Many professionals and patients are seeking to align themselves with full-service diabetes companies that provide post-sales support to customers, educational programs on diabetes care, management assistance to professionals, and a wide product-mix of diabetes products and services. How well the market plays out in terms of potential revenue may determine whether MiniMed stays in the market.
As a manufacturer of pacemakers and pumps, MiniMed is not known as a “diabetic product” company. Therefore, its reputation as a “full-service” diabetic care company will not be tarnished if it opts out of the insulin pump market. However, if it elects to remain in the business, it can create a niche for its insulin pump and establish barriers to new entrants.
The pen market is more competitive and has greater potential for revenue. With two major players in the market, price competition may prove to be futile since one can follow the other’s lead.
An increased emphasis on information and service will set one company apart from the other. Health care professionals require continuous in-service training, literature, and materials for patient education. The company in the best position to capitalize on these trends will emerge as the market leader.
Not all diabetics are candidates for future “cures,” and these consumers will continue to depend on reliable and cost-effective products. In addition, more people will continue to be diagnosed as diabetics at even higher rates than they were previously, because of increasing awareness of the disease.
Manufacturers of pens and pumps, once the prime alternative to daily injections, will have to find a way to deliver more than just their product to the market. With new products on the horizon – nasal sprays, oral medications, and pancreatic islet cell transplantations and implantations – competition for a limited but growing market will be fierce.
COPYRIGHT 1990 J.B. Lippincott Company
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