Abbott Invests €440 Million and Adds 1,000 Jobs to Expand FreeStyle Libre CGM Production in Ireland

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Recently, the Instrument Family learned that,Global medical device giant Abbott to invest €440 million (RMB 3.042 billion) to expand its operations in Ireland. The investment includes building a new 250,000-square-foot manufacturing plant in Kilkenny and further funding the company's Donegal Diabetes Care Center, which is expected to create 1,000 new jobs across the two regions.

It is reported that Abbott will make new plans for its new factory in Kilkenny to significantly increase the production of its FreeStyle Libre CGM. This device is mainly used for blood glucose management in diabetic patients.It is one of Abbott's key products, with a global user base exceeding 4 million.In addition, in May this year, the FDA also approved Abbott's next-generation FreeStyle Libre 3 14-day CGM, the world's smallest and thinnest CGM sensor.

01

Build New Manufacturing Plant, Increase Diabetes Investment

Abbott, founded in 1888 and originating from pharmaceuticals, has developed over a century into a diversified healthcare company with a rich portfolio of products, including cardiovascular products, in vitro diagnostic products, medicines, and nutritional products. In 2017, Abbott acquired St. Jude Medical, further solidifying its leading position in the fields of cardiovascular and neuromodulation. In the same year, Abbott successfully acquired Alere, making it a leading enterprise in the global point-of-care diagnostics technology field and further enhancing the company's layout in the diagnostics sector.

In the field of diabetes care, Abbott is the world's leading powerhouse, capturing nearly half of the CGM market, with its FreeStyle Libre series dominating the CGM arena.Since 2019, Abbott's CGM product, FreeStyle Libre, has continued its growth myth, becoming the "cash cow" of Abbott's diabetes management business. According to data from Abbott's annual report, FreeStyle Libre generated $1.8 billion in revenue in 2019, $2.6 billion in sales in 2020, and $3.7 billion in revenue in 2021, representing a year-over-year increase of 36.8%.Q1 2022 contributed another $1 billion in revenue, a year-on-year increase of 20%.

As for this 4.4 billion euro investment, Abbott has already developed a specific plan, primarily focused on building production capacity for its continuous glucose monitoring technology. In fact, Abbott established operations in Ireland as early as 1946 and currently employs 5,000 people locally.

It is reported that Abbott will build a new manufacturing plant covering an area of 250,000 square feet at the IDA Business and Technology Park in Loughboy, Kilkenny, in the southeast of Ireland, to increase the production capacity of its flagship product in the diabetes division, the FreeStyle Libre CGM system. This device, primarily used by diabetic patients, is one of Abbott's key products, with a global user base exceeding 4 million.

In addition, it will further invest in the company's Donegal Diabetes Care Center and add 1,000 new jobs between the two locations.Founded in 2006, the center has become the sole manufacturer of FreeStyle series diagnostic strips, addressing the rapidly growing demand for diabetes care driven by the global increase in both the incidence and testing rates of diabetes.

In this regard, Irish Prime Minister Taoiseach Micheál Martin said: "Abbott's new investment in Donegal and Kilkenny is very welcome news. Abbott has a long and successful history, having first established operations in Ireland in 1946. This new investment is a strong vote of confidence in the workforce here and in this country as an investment destination."

02

"Three Best" CGM, Impacting the Market

Abbott's new manufacturing plant in Ireland will increase the production capacity of its CGN products, further boosting its global market share. On May 31, Abbott's latest generation Continuous Glucose Monitor (CGM), FreeStyle Libre 3, received FDA approval for use in diabetes patients aged four and above.

FreeStyle Libre 3 has "three bests," claiming to feature the world's smallest, thinnest, and most accurate 14-day glucose sensor currently available, with a size equivalent to two stacked coins.

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The accuracy of CGM technology is based on a standard called Mean Absolute Relative Difference (MARD), with lower values indicating higher accuracy. The FreeStyle Libre 3 system has a MARD of 7.9%, making it the first CGM with a MARD below 8%. The system automatically sends real-time, minute-by-minute glucose readings to compatible smartphones.It is worth mentioning that the Bluetooth range of Libre 3 is also the largest on the market, reaching up to 33 feet (10 meters), which is 50% more than other CGMs on the market, according to Abbott.

As a device that needs to be worn continuously and closely, comfort is the most concerning issue for users.The volume of Libre 3 is equivalent to just two stacked U.S. pennies, making it the world's smallest and thinnest 14-day continuous glucose sensor.

Affordable Strategy Expands Market Share

CGM can detect hidden hyperglycemia and hypoglycemia that are not easily detected by fingertip blood glucose testing, and it also eliminates the daily pain of finger pricking for patients, significantly improving blood glucose management. However, its penetration rate remains low.

The United States represents the most mature diabetes market. However, as of the end of 2020, the penetration rate of the U.S. CGM market was only about 25%, which is still relatively low compared to the over 90% penetration rate of BGM (fingerstick blood glucose monitoring).The CGM market penetration rate outside the United States is only about 10%, with the most important reason being that CGM is more than ten times as expensive as fingerstick blood glucose meters.

Notably, despite a series of upgrades to the product, the pricing for Libre 3 remains the same as its predecessor, Libre 2. According to Abbott's previous statements, this price is one-third of other CGM products on the market.It is reported that Walmart currently sells the Libre 2 receiver for $69.99 and offers sensors for around $35.99 (updated 2~3 times within a month). The price would be even lower after deducting the portion covered by medical insurance.

As the global leader in CGM, Abbott has initiated a price war with an affordable marketing strategy, dropping another deep-water bomb into the already turbulent diabetes market.

Collaborate with the No. 1 Weight Management Company in the United States

In addition,On August 4, Abbott also announced a strategic partnership with WeightWatchers (WW) to help people with diabetes better understand and manage their diabetes and weight.This collaboration combines WeightWatchers' diabetes-tailored weight management program with Abbott's FreeStyle Libre® product portfolio.

Abbott's FreeStyle Libre Continuous Glucose Monitoring System will share information with the WeightWatchers mobile app, allowing people with diabetes to view their glucose data alongside WeightWatchers' diabetes-tailored plans.Create a seamless mobile experience that provides people with diabetes with the information and insights they need to make healthy food choices, improve their blood sugar levels, and ultimately gain better control of their health. This collaboration will initially focus on delivering solutions for people with diabetes in the U.S. by 2023.

It is reported that Weight Watchers (Weight Watchers International Inc.), established in 1963, is the top weight management institution in the United States.Headquartered in New York. With over 50 years of experience in healthy weight loss. Its core concept is to achieve natural weight loss through a balanced diet and moderate exercise, without relying on external equipment or medication.

Regarding this collaboration, Jared Watkin, Senior Vice President of Abbott's Diabetes Care business, stated: "Everything we do is centered around our customers, including this strategic partnership with WeightWatchers to provide new services and products that will significantly improve the quality of life for people with diabetes. By combining the FreeStyle Libre blood glucose monitoring technology with WeightWatchers' top doctor-recommended weight loss program, individuals with diabetes, particularly those with type 2 diabetes and those with less medical oversight, can achieve better control over their health."

03

Blue Ocean Market Worth Hundreds of Billions

Diabetes is one of the most prevalent chronic diseases globally. According to the IDF 2021 Global Diabetes Report,The number of people with diabetes worldwide has reached 537 million, with 141 million in China. It is estimated that by 2030/2045, the global number of people with diabetes will reach 643 million/783 million, and the number of people with diabetes in China will reach 174 million by 2045, remaining the highest in the world.

In 2021, the total global medical expenditure on diabetes was $966 billion.Among them, the total medical expenditures for diabetes in China and the United States were $165.3 billion and $379.5 billion, respectively. The compound annual growth rate of diabetes-related medical expenditure in China reached 31.4% between 2007 and 2021.

CGM, which monitors glucose concentration changes in subcutaneous interstitial fluid through a glucose sensor, is an emerging blood glucose monitoring method that is more real-time, comfortable, and accurate.It can detect hidden hyperglycemia and hypoglycemia that are difficult to detect with fingertip blood glucose testing, eliminating the daily pain of finger pricking for patients, and significantly improving blood glucose management.However, the penetration rate is not high; yet it has the world's largest group of chronic disease patients, which is still increasing rapidly; such a huge market naturally becomes the best driver for corporate competition.

The blood glucose monitoring market size reached 26.8 billion USD in 2020, accounting for up to 54.0% of the global POCT market, making it the largest segment.The CAGR (Compound Annual Growth Rate) for 2020-2030 is expected to reach 10.7%, growing to USD 73.8 billion by 2030. This indicates that the CGM market overseas is about to enjoy significant market dividends, and various signs in the CGM track suggest that the window period has arrived.

Currently, the global CGM market is mainly divided among three leading companies: Abbott, Dexcom, and Medtronic. According to calculations based on company financial reports,In 2020, the global market shares of Abbott, Dexcom, and Medtronic were 46%, 34%, and 19%, respectively.Dexcom mainly focuses on the U.S. market, holding a 56% share in the U.S., while Abbott, with an international approach, occupies more than half of the market outside the U.S.

From the Chinese market perspective,Abbott's Freestyle Libre accounts for 78% of the share,However, currently only FreeStyle Libre1, also known as the first generation of FreeStyle Libre, is sold in China. Although Medtronic's Guardian Connect™ has been launched in the Chinese market, its market share is only 11%.The remaining CGM accounts for a total of 11%, including domestically produced CGM and some overseas CGM, such as Dexcom.

Dexcom Products

Due to the monopoly by foreign enterprises, high prices are a major industry pain point for CGM (Continuous Glucose Monitoring) devices at this stage. Currently, the annual cost of finger-prick blood glucose meters for diabetes patients is around 1,000 RMB. Taking Abbott's FreeStyle Libre as an example, the average monthly usage cost is about 1,000 RMB, resulting in an annual expense of approximately 12,000 RMB—12 times higher than that of finger-prick blood glucose meters.

In this case,Chinese manufacturers such as Meiqi, Yiyu, Guiji, and Wetai have also started developing CGM. In 2019, Yiyu received NMPA approval for market launch; on November 4, 2021, products from Guiji and Wetai were successively approved. Additionally, Yuwell Medical, a leading company in China’s blood glucose monitoring sector, invested over 400 million yuan to acquire CareT, entering the CGM market.

Among them, MicroTech Medical independently developed,China's first "14-day, calibration-free, real-time" continuous glucose monitoring system AiDEX G7 obtained the EU CE registration certificate in September 2020.It is the second approved calibration-free real-time continuous glucose monitoring system in the world, marking that Chinese technology companies have successfully broken foreign technical barriers through their own efforts and become leaders in the field of continuous glucose monitoring.

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This time, Abbott has invested more than 3 billion yuan to expand its CGM production capacity, which is expected to further increase its market share; at the same time, it continues to make strategic moves in the diabetes field. As the global leader in continuous glucose monitoring (CGM), this move undoubtedly declares to the market its firm commitment to CGM. The future CGM market may become even more competitive. Who will eventually dominate the market? We will wait and see.