Abbott's ABT recent alliance with insulin management system maker, Insulet Corporation PODD, is expected to fortify the company’s Diabetes Care business. The agreement aims at integrating Abbott’s continuous glucose monitoring (CGM) technology with Insulet's Omnipod Horizon Automated Insulin Delivery (AID) System, in order to provide improved insulin delivery.
This combined system is claimed to be the first with a fully-disposable wearable sensor and pump. However, financial terms of the deal remain undisclosed.
Is the Integration Strategic?
Under the integrated platform, the Omnipod Horizon System will provide a new feature combining Insulet’s tubeless insulin delivery Pod and Abbott's next-generation FreeStyle Libre sensor — the FreeStyle Libre 2 system.
This integrated system will always be in automated insulin delivery mode and can be controlled through a smartphone app, such that the user can manually take dose of fast-acting insulin or bolus before meals. Per both companies, this will help the system deliver an optimal performance.
Both companies will utilize their ability to sell products through the pharmacy via pay-as-you-go model. This, while easing out product delivery complicacy, is expected to boost customer adoption rate.
In this regard we note that Abbott’s FreeStyle Libre 2 system offers increased accuracy and optional glucose alarms at no additional cost compared with the first-generation one. Already approved in Europe, itis in the process to seek approval in the United States as well. Meanwhile, Insulet is running trials for its next-generation Omnipod Horizon AID System.
Diabetes Management Market at a Glance
Diabetes Management Space: Plethora of Prospects
Per a report by Markets and Markets, the global digital diabetes management market is anticipated to reach a worth of $19.9 billion by 2024 from the $6.8 billion in 2019, at a CAGR of 23.8%.
The key driving factors are growing incidences of diabetes, steadily-rising investments in the manufacture and adoption of digital platforms, and technological solutions for diabetes management. Favorable reimbursement policies, increasing awareness on self-diabetes management and government programs have also fueled growth.
Undoubtedly, the latest development by Abbott to integrate glucose sensing and insulin delivery technologies is well timed. In this line, the company earlier made two back-to-back alliances with Sanofi and Tandem Diabetes Care.
Share Price Performance
Over the past year, Abbott has been outperforming the industry. The stock has rallied 15.6% compared with the industry's 9.5% rise.
Zacks Rank and Key Picks
Abbott currently carries a Zacks Rank #3 (Hold).
Two better-ranked stocks from the broader medical space include Patterson Companies, Inc. PDCO and DENTSPLY SIRONA, Inc. XRAY, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Patterson Companies has an expected long-term earnings growth rate of 6.4%.
DENTSPLY SIRONA has a projected long-term earnings growth rate of 11.6%.
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