Medtronic is buying Companion Medical, a San Diego-based firm that makes the only smart insulin pen with an integrated diabetes management app approved by the Food and Drug Administration.
Medtronic hopes to expand share of diabetes management market with new acquisition
Companion Medical will help the company expand its diabetes management offerings.
August 12, 2020 at 5:17AM
Terms of the deal announced Tuesday were not disclosed.
The FDA in June expanded Companion Medical's InPen for use in all people over 7 years of age. Through use of the app, patients can receive custom doses of insulin through a more manageable and reusable pen.
"This acquisition is an ideal strategic fit for Medtronic as we further simplify diabetes management and improve outcomes by optimizing dosing decisions for the large number of people using multiple daily injection," said Sean Salmon, executive vice president and president of the Diabetes Group at Medtronic.
"We look forward to building upon the success of the InPen by combining it with our intelligent algorithms to deliver proactive dosing advice personalized to each individual," he said. He added that the system allows people with diabetes to think less about it and live more freely.
Diabetes is the only disease with its own dedicated product group at Medtronic, which is based in Ireland but managed mainly out of Fridley. The company's Diabetes Group accounted for $2.4 billion in sales in the fiscal year that ended in April, which was a 1% decline from the prior year.
Salmon took over as president of the group in October. Geoff Martha, who became CEO of Medtronic in April, told investors last year that reinvigorating the diabetes business is a priority for the company.
Diabetes affects at least 400 million people worldwide, many of whom need to monitor their blood-sugar levels and regularly inject insulin to prevent acute and long-term health problems.
Medtronic sells two major types of devices for Type 1 and Type 2 diabetes: insulin pumps like the MiniMed 670G device, which can automatically adjust a patient's background insulin levels, and continuous glucose monitors like the Guardian Connect, which can predict changes in blood sugar before they happen. Both product lines have faced competitive pressure in recent years.
The company said the acquisition of Companion Medical builds upon the company's purchases of Nutrino and Klue as it builds up technology to design algorithms and artificial intelligence to manage diabetes.
Medtronic also said it will look to expand the availability of InPen globally.
"Simplifying diabetes management to reduce burden and improve outcomes has always been our goal, and through a respected global leader like Medtronic, we'll now be able to take InPen to this next phase of growth, which is great news for people with diabetes who stand to benefit most," said Sean Saint, CEO and co-founder of Companion Medical.
Analysts at Jefferies called Medtronic's acquisition of Companion Medical a bold move to regain market share it has lost to competitors.
"It looks to be at least a year or two before MDT can pull its offering in the [continuous glucose management] market to some level of parity with competitors — and with that show some stability in its pump share," the Jefferies analysts wrote.
The Companion purchase will allow Medtronic to serve the future pump market and also those who choose to continue using pen devices, the report said.
If Medtronic could expand the InPen market by 10% a year, it would represent $200 million in incremental revenue each year, the report said.
Medtronic's stock ended the day at $100.72 a share, up 34 cents.
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