LifeScan deal challenges Abbott, Dexcom for CGM market

Dive Brief:

Former Johnson & Johnson unit LifeScan has teamed up with Sanvita Medical to launch a continuous glucose monitor (CGM) system in North America and some European countries beginning next year.
The deal moves LifeScan into a fast-growing field, potentially helping it to offset the market pressures that contributed to a 16% drop in diabetes sales at J&J from 2015 to 2017 and led to the divestiture last year.
However, LifeScan will face stiff competition for the market, which is fought over by a clutch of well-established companies like Abbott and Dexcom.

Dive Insight:

LifeScan became a big player in the blood glucose monitoring market by producing test strip-based devices under the OneTouch brand. Those products remain big sellers for LifeScan but the company faces competition on two fronts. Many patients are switching to more convenient CGM systems. At the same time, rivals with test strip-based devices are creating pricing pressure.

Over time, these forces threaten to significantly shrink sales of OneTouch products, particularly in Western markets. In response, LifeScan, which is now owned by a private equity group, has allied with Sanvita in search of growth.

Sanvita, a subsidiary of Nova Biomedical, will work with LifeScan to introduce CGM systems to North America and select European countries starting around the middle of next year. LifeScan will design the devices to integrate with its portfolio of OneTouch Reveal blood sugar management apps.

In a statement, LifeScan said the CGM systems will help to address “a huge unmet need in diabetes management.” The challenge for LifeScan is that multiple other companies are working to address that unmet need and are already carving up the CGM market between them.

CGM specialist Dexcom generated sales of $1 billion in 2018, up 44% from the prior year, and may have its Verily-partnered, seventh-generation device on the market by the time LifeScan gets clearance to sell its product. Dexcom faces competition from Abbott, which reported 70% growth in sales of its FreeStyle Libre device in the first quarter to bring in $379 million.

If LifeScan’s pitch for the CGM market is to succeed, it will need to find a way to differentiate its device from these well-established products and others sold by fellow challengers including Medtronic and Senseonics.