Specialist
Former regional leader at Abbott Laboratories
Agenda
- Recent trends and developments within the broader diabetes and CGM (continuous glucose monitor) industry
- Comparative analysis of Dexcom’s (NASDAQ: DXCM) G7 and Abbott’s (NYSE: ABT) FreeStyle Libre 3 franchise
- Sensor usage timeline and cost-reduction advantages of extending wear time
- Type 2 diabetes awareness and adoption strategies utilised by organisations to drive further CGM penetration
- Relative sales force reputations and execution in CGM product placements
- 2023 M&A outlook, untapped growth opportunities and strategic assessments
Questions
1.
What are some of the major trends and developments you’ve been following in the diabetes care space over the past year or so, particularly relating to CGMs [continuous glucose monitors]?
2.
How has the type 2 diabetes opportunity for CGM players shifted post the local coverage determination from CMS [Centers for Medicare & Medicaid Services] in October 2022? How much incremental market value could that regulatory development unlock?
3.
What avenues are being explored to increase awareness and adoption of CGMs in type 2 diabetes populations in the US? How are you viewing the success in these initiatives to increase type 2 adoption more broadly for Dexcom and Abbott?
4.
What do you think is a realistic US CGM penetration percentage by 2024, perhaps in light of the CMS developments and some of the awareness initiatives you discussed? Do you see 65% penetration as realistic, up from 60% pre-local coverage determination? Why or why not?
5.
As we shift to CGMs becoming the standard of care, as you noted, how do you see reimbursement evolving over the next several years? We’ve seen relatively friendly attitudes from payers towards CGMs, but how might this evolve as governments in the US look to lower diabetes treatment costs and promote more affordability? How stable is the reimbursement outlook?
6.
Abbott’s FreeStyle Libre 3 now performs the same push notifications and has similar functionalities to the Dexcom G7 device, with some interconnectivity drawbacks. Abbott’s device costs about 40% of the G7. How are payers thinking about reimbursement for each of these products? Could you expound on why the G7 enjoys a premium reimbursement position compared to the FreeStyle Libre 3? How might this shift over time?
7.
On the product side, what’s your assessment of Dexcom’s newest iteration of its CGM, the G7? This was unveiled in limited European launches earlier in 2022 and is anticipated to reach its first US patients by the end of 2022. What milestones or benchmarks should we be monitoring to gauge the commercial traction of the G7?
8.
How would you compare the G7 against the FreeStyle Libre 3? What are the puts and takes of the G7’s relative innovation moat, product capabilities and some of its digital health initiatives against the FreeStyle Libre’s more attractive price point?
9.
The G7 boasts a form factor that’s 60% smaller than the G6 and the G7 sensor accuracy improves to a mean absolute relative difference of 8.0 for adults and 8.2 for children vs the G6’s 9.0 and 9.3, respectively. The FreeStyle Libre 3 has a mean absolute relative difference of 7.6 for adults. How meaningful is that discrepancy in terms of patient preference? How would you weight sensor accuracy against other device capabilities such as sensor replacement, form factor, etc?
10.
What are some of the challenges or pain points for Dexcom in its commercial transition to lower costs in the pharmacy channel? The company noted a 10-15% pricing headwind in its Q3 2022 earnings call. To what extent could this transition lag on ASPs over the next year or so?
11.
Looking broadly, how much pent-up demand could there be in the US as patients wait for the newest technology with the G7? To what extent could this pent-up demand lead to a meaningful uptake in sales?
12.
What are the switching costs for clinicians and/or patients to move between CGM devices, thinking about G7’s ability to make up ground against the FreeStyle Libre 3, which has been on the market longer? How common is it for someone to switch from the FreeStyle Libre 3 to the G7 when both are fully approved and commercialised?
13.
Could you expound on the relative digital programmes and software offerings that Dexcom and Abbott are providing to patients and clinicians to improve the standard of care? Could you expand on how Dexcom’s strategy is evolving in that area, and why you believe it’s superior to Abbott’s?
14.
What’s the difference in patient healthcare cost savings over the patient lifetime on the G7 vs the Freestyle Libre 3? Could you give any directional colour here?
15.
Could you help us better understand the opportunity that CGM alignment or integration with insulin pumps provides for companies such as Dexcom and Abbott? What’s important for us to understand about their relationships with the pump manufacturers?
16.
How would you evaluate Dexcom and Abbott’s respective pump manufacturer relationships? We mentioned Dexcom’s advantage, but could you quantify the company’s edge in device interconnectivity and/or pump partnerships over Abbott?
17.
How are Abbott and Dexcom’s sales forces viewed by clinicians and other key decision-makers in the marketplace? How important is sales rep reputation in driving purchasing decisions?
18.
What’s your updated perspective on Medtronic’s competitive positioning in the CGM market in light of some of its recent struggles around the safety and efficacy of its Guardian 3 CGM? What would it take for the company to regain a foothold in this market?
19.
How are you viewing the overall unmet need for a longer sensor wear time? You mentioned the G7 being able to extend its wear time to around one month. Could you quantify the cost reduction potential that presents for Dexcom from less frequent sensor changes and/or materials costs?
20.
How vulnerable are Dexcom and Abbott to upstarts promoting implant products where change is not needed as frequently, ie Senseonics? Is there a tangible competitive threat to the CGM incumbents’ positionings here?
21.
What are the keys to penetrating untapped international markets such as China and India? Bloomberg estimates that the CGM market potential in China and India could be around USD 6bn-7bn, on top of an initial USD 10bn global opportunity. What are the barriers to entry when penetrating these markets, and how do you assess Dexcom’s ability to make up ground on Abbott’s first-mover advantage internationally?
22.
How do you anticipate the acquisitive appetites of Dexcom, Abbott and even Medtronic to evolve in 2023? Where might we see these companies looking inorganically to improve the value propositions of their respective diabetes franchises?
23.
Looking ahead, you touched on value-based care. What do diabetes care and CGMs look like in a value-based world? What do you anticipate as the major shifts to reimbursement as well as commercial strategies to capitalise on this broader shift?
24.
Is there anything we haven’t touched on that might be especially important to highlight when thinking about the CGM industry?
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