Abbott and Medtronic Announce Strategic Global Partnership Integrating CGM and Insulin Delivery Technologies

Aug 09, 2024 17:44 CST Updated 17:45

Abbott

Provider of Health Diagnostic Products and Health Diagnostic Management Solutions

Medtronic

Medical Device Manufacturer

August 7,Abbott andMedtronicAnnounced Global Partnership Between Abbott CGMs and Medtronic Insulin Delivery Systems. This collaboration is based on Abbott's systems, integrating Medtronic's automated insulin delivery technology with continuous glucose monitors and smart insulin pen systems.

The purpose of this collaboration is to work together on Abbott's system, utilizing Medtronic's automated insulin delivery technology with continuous glucose monitors (CGMs) (the latest generation isMinimum 780 grams) and smart insulin pen systems, such asInPen SystemMedtronic's system previously used its own CGMs, such as the Guardian 4 and Simplera platforms, and the company intends to continue using these systems as part of a comprehensive CGM portfolio.

Medtronic's Simplera CGM Also Received FDA Approval This Week, adding another boost to its investment portfolio.

Combining Abbott's CGM with Medtronic's automated insulin delivery algorithm can automatically adjust insulin to keep blood glucose within a certain range. This collaboration arranges for Abbott to develop the sensor and Medtronic to sell the sensor. It is only compatible with Medtronic devices.

The two companies declined to disclose the financial terms of the collaboration, as well as the timeline for commercial availability.

Investors reacted positively to Abbott and Medtronic, with both companies' shares slightly rising by the end of Wednesday's trading. However, their competitors experienced declines, with Tandem Diabetes Care closing down nearly 15%, Dexcom dropping about 8%, and Insulet falling 3%.

Abbott and Medtronic Leadership Show Positive Attitude Towards Collaboration

Que Dallara, Executive Vice President and President of Medtronic's Diabetes Division, stated:"Our collaboration with Abbott enables us to expand access to our advanced automated insulin delivery and smart [multiple daily injection] systems, which leverage the world's most widely used CGM to deliver top-tier outcomes." "We are committed to simplifying diabetes management and providing a more seamless transition to automated technology for those looking to achieve greater success in diabetes care."

Abbott stated that this collaboration marks another step forward in its effort to connect CGMs with insulin delivery systems. Jared Watkin, Executive Vice President of Abbott's Diabetes Care division, said, "This partnership brings together two global leaders in glucose sensing technology and insulin delivery." "Libre technology has set the standard for accurate, convenient, easy-to-use, and reliable continuous glucose monitoring. Connecting this CGM, built for Medtronic's insulin delivery systems and algorithms, can allow people to spend less time thinking about their diabetes and more time living."

Analyst's Viewpoint

BTIG analysts Marie Thibault and Sam Eiber stated,The news of the collaboration initially came as a surprise to them. However, they believe that this move will help both companies tap into the diabetes market while maintaining a "co-opetition arrangement." The CGM systems developed through the collaboration can only work with Medtronic devices, meaning they cannot function as standalone systems.

Analysts expect Medtronic's fiscal year (ending May 2025) will not receive FDA approval or CE marking. Truist analysts stated that later in the 2026 fiscal year is the "best-case scenario" for what they believe to be a win-win deal for both companies.

Regarding the competition in this field, analysts believe that cooperation is a way for Medtronic to retain its existing pump users (they estimate there are about 700,000 globally) and attract new users who may have previously been dissatisfied or wary of Medtronic's internal CGM.

Analysts said they do not see any major threats to Insulet, the leader in automated insulin delivery with its Omnipod patch pump.

"Considering the very different form factors and business models, we tend to believe that the type of patients considering tubular pumps generally do not deviate from patch pumps like Insulet's Omnipod 5," the analyst said. "Therefore, we believe that Insulet's business is under minimal threat."

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