Memorandum
In a recent letter to US pump trainers, Roche shared that as of this month, it will “no longer be proactively upgrading or acquiring new pump patients” in the US. In a follow-up email exchange, Roche conveyed that it will indeed “re-prioritize” its US efforts, though it is not exiting the US pump business altogether – current Accu-Chek Spirit and Accu-Chek Combo US patients will still receive supplies and service. The move does not come as a surprise: Roche has a very small share of the US pump market (2% in the dQ&A panel, <1% in the T1D Exchange); has now seen its North American Diabetes Care business (BGM + insulin delivery) come in under 100 million CHF ($100 million) for six out of the past seven quarters; and lacks pump-CGM integration and a publicly disclosed pipeline to automate insulin delivery. As we noted in our 2016+2017 Reflections piece, the pump market has never been more fragile: from Medtronic’s exclusive deal with UnitedHealthcare to become the single preferred durable pump supplier (effective July 1, 2016) shutting out other manufacturers, very challenging third quarters for Tandem and even Medtronic (disruption following the 670G approval), continued sluggish sales for startups like Cellnovo, and continued discussion of adoption challenges and questions we’ve heard for years. Roche’s appropriate response to this weakness is to shift its focus to the 2017 US launch of the next-gen Accu-Chek Guide BGM and the controlled European rollout of its Accu-Chek Insight CGM. We see this deeper focus on glucose monitoring, particularly in the US, as a positive, since it’s more of a strength for Roche than insulin pumps and since CGM is expanding. For now, this doesn’t impact Roche’s EU pump business, though we’ll be interested to see how it moves forward with the Accu-Chek Insight pump with prefilled cartridges. We look forward to hearing more in Roche’s upcoming 4Q16 call or at ATTD next month.
-- by Brian Levine, Adam Brown, and Kelly Close