The past few days have been quite exciting for investors keen to tap the burgeoning market of continuous glucose monitoring (CGM). A number of bigwigs are inking separate digital diabetes management pacts, setting an all-new trend of diabetes management device interoperability across all platforms.
Abbott Laboratories (ABT - Free Report) , a Zacks Rank #3 (Hold) stock, has partnered with biopharmaceutical major, Sanofi (SNY - Free Report) , per which the companies will integrate glucose sensing and insulin delivery technologies. More specifically, the partnership will combine technologies from Abbott’s FreeStyle Libre mobile app and cloud software, with Sanofi′s future connected insulin pens, apps and cloud software. This will help to further simplify diabetes management.
Meanwhile, Medtronic (MDT - Free Report) inked a deal with Novo Nordisk, the world’s largest producer of insulin earlier this week. Through this collaboration, this Zacks Rank #2 (Buy) company aims at developing solutions to incorporate insulin dosing data from future Novo Nordisk smart insulin pens into its own CGM device, the Guardian Connect system. This association will streamline the distribution of two of the most vital pieces of information required for diabetes management — glucose measurements and insulin doses.
Rise of a New Trend in CGM?
Going by an article published in Glu (an online community for individuals living with type 1 diabetes), these two partnerships indicate the emergence of a new trend of cross interoperability.
The seed of this concept was first sown by the FDA in March last year, when the apex body permitted marketing of Dexcom's (DXCM - Free Report) G6 integrated continuous glucose monitoring (iCGM) system for determining blood glucose (sugar) levels. This was the first approved iCGM in the United States to be used as part of an integrated system with other compatible medical devices and electronic interfaces. Dexcom currently holds a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
By recognizing Dexcom’s G6 CGM as the first iCGM, the FDA gave a roadmap to CGM makers. Per the FDA, this breakthrough streamlined the review pathway for similar devices.
The innovation enabled iCGM device makers to work on different types of compatible devices, leading to increased flexibility in diabetes management tools to cater to individual needs. For instance, Dexcom’s CGM can now connect with Tandem Diabetes’ (TNDM - Free Report) insulin pumps.
The FDA authorization classifies this new type of devices in class II and subjects these to certain criteria called special controls. This classification will enable developers of future iCGM systems to bring their products to market without much difficulty. According to Donald St. Pierre, the acting director of the Office of In Vitro Diagnostics and Radiological Health at the FDA’s Center for Devices and Radiological Health, “the FDA has taken steps to expedite the review process for similar, integrated CGMs and make these types of systems available to patients as quickly as possible while also helping to ensure their safety and reliability.”
Prospects Bright for CGM Industry
Needless to say, FDA’s changed approach on interoperable diabetes devices has been welcomed by the companies within this niche. The FDA’s inclination toward cross interoperability and its changed approach toward regulatory approvals have renewed hopes for a number of bigwigs.
Following Dexcom’s approval, Tandem’s t:Slim X2 insulin pump with interoperable technology received De Novo clearance last February to gain the ACE (alternate controller enabled) infusion pump designation.
Medtronic too has been attempting to keep pace with the cross interoperability trend. Prior to the earlier-mentioned Novo Nordisk deal, it collaborated with Tidepool, a 501(c)(3) nonprofit organization, to create an interoperable automated insulin pump system. Per the collaboration, Medtronic will develop a future Bluetooth-enabled MiniMed pump that would be compatible with Tidepool Loop, a future FDA-regulated, open source automated insulin delivery app for iPhone and Apple Watch.
Investors to Catch Up With the New Trend
Jim Cramer once said “I love behavior-change investing. It can be incredibly lucrative, and when you have a behavior-change theme you can use selloffs to pick stocks based on those changes.”
The scenario discussed above is indicative of an imminent product innovation within this niche, which may become a happy hunting ground for investors who are interested in tapping changing consumption patterns. The new trend can prove to be a rewarding opportunity in the billion-dollar CGM space.
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