DexCom (DXCM - Free Report) , a player in the glucose monitoring market, recently reported that it received a CE Mark for its 4th generation continuous glucose monitoring system. This recognition for the DexCom G4 system permits its launch in EU as well as certain Latin American and Asian nations, where the CE Mark is recognized.
Diabetes is a chronic condition, and a major cause of fatality and disability, which affects over 350 million individuals across the globe, as per the International Diabetes Federation. It can lead to serious negative outcomes such as end-stage renal failure, blindness and amputation of limbs. The DexCom G4 is intended to aid diabetics to better monitor their glucose levels.
The company stated that the DexCom G4 system’s strong performance is duly evident in the information recently submitted by it to the American Diabetes Association’s 72nd Scientific Sessions. DexCom is developing a plan for a phased product commercialization in overseas markets.
The diabetes market is large and growing. An important component of effective diabetes management is frequent monitoring of blood glucose levels. DexCom’s ambulatory product has a comparative advantage in terms of both patient convenience and quality of data generated vis-à-vis traditional diagnostic tests.
We believe DexCom is poised to gain a share of the glucose monitoring market driven by sustained product development initiatives, collaborations, favorable reimbursement and increased need for continuous glucose monitoring. Increased awareness and acceptance of the need for continuous glucose monitoring and more favorable reimbursement coverage should help drive sales for DexCom’s products.
In addition to upgrading and enhancing the functions of existing products, DexCom has also been active on the collaboration front, through which it is looking to leverage its technology with its collaborator’s product offerings.
We believe that the company’s move to buy healthcare IT company SweetSpot Diabetes may allow it to compete more effectively with Medtronic (MDT - Free Report) through better data management systems.
However, competition in the glucose monitoring market is fierce. Moreover, DexCom has incurred losses since inception and its efforts are made more difficult by a stringent regulatory environment. We are currently Neutral on the stock, supported by a short-term Zacks #3 Rank (Hold).