Time To Buy Medtronic? Watch Diabetes Segment Transformation

Summary
Medtronic is confident of filling the supply-demand gap in its diabetes franchise by end of FY 2018.
The company plans to launch next generation professional CGM device for type 2 diabetes patients in fiscal year 2018.
Partnerships with clinics and hospitals for diabetes management and prevention are expected to help Medtronic offer integrated care to patients.
The company has also entered intofavorable relationships with major payers in USA.
However, investors should be aware ofcertain business risks of the diabetes segment.
Medtronic (MDT) is one of the few medical device companies with product portfolio vastly diversified across therapeutic areas and geographies. The inversion deal with Ireland based Covidien has not only helped the company to shift to lower-tax base but has also vastly expanded the company’s geographic and therapeutic footprint. And then the recently concluded divestiture deal with Cardinal Health of non-core and low growth assets for a consideration of $6.1 billion has truly landed this company in an enviable spot.
Once Medtronic manages to put to rest the supply constraints it is facing in its diabetes business, I believe that the company can easily reach the 12-month consensus target price for Medtronic, of around $91.11.
The diabetes group currently contributes only about 6.3% to Medtronic’s total revenues. However, it is on a cusp of major transformation, one that is capable of lifting or dragging both investor sentiment as well as share price of this diversified medical device player. It should be noted that the lower-than-anticipated Continue reading

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Abbott shares jump after approval for diabetes monitor; competitor DexCom crashes on surprise news

Abbott Laboratories stock jumped after the Food and Drug Administration approved the company's FreeStyle Libre glucose monitoring system, more than a year earlier than Wall Street anticipated.
While Abbott shares jumped 4 percent Wednesday after the surprise FDA call, competitor DexCom saw its shares crater by more than 36 percent.
Abbott's Libre is the first glucose monitoring system that adult diabetic patients can use to make treatment decisions without using a fingertip blood system. Analysts at J.P. Morgan say Abbott's aggressive distribution strategy has "the five largest pharmacies" ready to begin selling the device in the U.S. as early as December.
J.P. Morgan, which downgrades shares of DexCom to neutral from buy on the news, also said Abbott's pricing for the device is "even more aggressive than our expectations." Abbott will charge an effective rate of around $4 per day for Libre, lower than the $6 analysts at J.P. Morgan anticipated.
DexCom is no longer the sole competitor in manufacturing glucose monitoring systems, J.P. Morgan said. With new, low-priced competition, the firm says DexCom now must innovate under pressure to discount its hardware, which previously made margins of 45 to 50 percent per device. But all is not lost for DexCom, as J.P. Morgan says its "technology is superior to Libre."
"Before long, DexCom should be able to surpass the Libre offering," J.P. Morgan said. "But it will be at a lower price point and likely less attractive economics than we've all been expecting."
The technology still has a distance to go before widespread adoption, accord Continue reading

Humana makes strategic investment in connected diabetes management company Livongo

Livongo, the mobile-enabled diabetes management company, has raised a strategic investment from Humana to support the company’s growth. Update: Humana invested $5 million in Livongo.
Prior to this investment, Livongo has raised at least $82.5 million to date. Just last month, the company announced a $44.5 million raise. Existing investors include Merck Global Health Innovation Fund, Cowen Private Investments, Sapphire Ventures, Zaffre Investments, the investment arm of Blue Cross Blue Shield of Massachusetts, Wanxiang America Corporation, General Catalyst Partners, Kleiner Perkins Caufield & Byers (KPCB), and DFJ Venture.
“Our industry’s continued shift to value-based care provides impetus for everyone to work together to reinvent healthcare, and our partnership with Livongo Health is a direct example of how collaboration between companies can work to move the needle,” Sarah Ahmad, VP and Head of Innovation for consumer health solutions at Humana, said in a statement.
Livongo Health’s offering, called Livongo for Diabetes, consists of connected devices, a smart cloud, and a virtual care team. The device, called In Touch, serves as both a connected glucometer and a pedometer and will allow easy sharing of the data. It’s a standalone device with a color touchscreen that is cellular-connected. The offering also offers unlimited test strips at no extra charge.
Livongo CEO Glen Tullman told MobiHealthNews last month that the company will use some of the funds from its most recent round to hire people for operations to handle growth — Livongo grew from 5,000 users l Continue reading

Private Equity-Like Fund Aims to Speed Up Diabetes Research

Dave Johnson says his immediate reaction to his daughter’s diagnosis of Type 1 diabetes at age 4 was typical of any father’s.
“It was my baby girl, and my response was I’m going to fix it or pay someone to fix it,” said Mr. Johnson, president and chief executive of the hotel management company Aimbridge Hospitality. “I dove in, spoke to some smart people. But then, I was hit between the eyes that there wasn’t a lot that I was going to be able to do.”
That was 22 years ago, and what he did do was volunteer with gusto, organizing fund-raisers in the Dallas area where he lived and working his way up to membership on the executive committee of the international board of the Juvenile Diabetes Research Foundation, the main nonprofit group making grants and evaluating research on the disease.
But recently, Mr. Johnson did something that appealed to his business side: He and his wife gave $1 million to a new nonprofit organization, the foundation’s T1D Fund, which invests in companies doing research into Type 1 diabetes. Any financial returns are used to make more investments.
“The fund is extremely transparent and crystal clear in its mission,” Mr. Johnson said. “We have a quarterly call and get updates when we’re making investments. It’s run similar to a for-profit.”
Structured like a private equity fund, the T1D Fund has a minimum donation of $500,000. The fund, which received $32 million in seed funding from the foundation, has a goal of reaching $80 million. It already has $55 million.
Type 1 diabetes is an autoimmune disease that attacks the panc Continue reading

Pharmaceutical giant Novo Nordisk to invest £115m in a new UK drug research centre in post-Brexit 'vote of confidence'

Danish pharmaceutical giant Novo Nordisk is to invest about £115m over 10 years in a new research centre in Oxford, in a move described by the government as a “vote of confidence” in post-Brexit Britain.
About 100 scientists will work at the centre, investigating new approaches to treating type-2 diabetes.
David Gauke, chief secretary to the Treasury, said that the move was a “vote of confidence in the UK’s position as a world leader in science and research,” according to the BBC.
Novo Nordisk’s executive vice-president and chief science officer Mads Thomsen said Britain’s vote to leave the EU was “unfortunate” but should not affect the collaboration between Oxford and the company.
“Obviously we think the Brexit decision was unfortunate. That being said, Oxford University has been around for 800 years so the academic excellence and our company's ability to turn that into medicines hasn't really changed,” Mr Thomsen told the BBC.
John Bell, a medicine professor at Oxford, said the new set-up, which will allow for daily interactions between academic and industrial scientists, underlined the importance of sharing research and cutting-edge science across sectors.
The UK’s decision to leave the EU has raised concerns in the science sector over a potential gap in funding and sparked concerns amongst drugmakers over future regulation.
The European Medicines Agency, a body based in London and responsible for the scientific evaluation and safety monitoring of medicines, warned it is likely to leave after Brexit.
Mr Thomsen told the BBC: “We are very happy Continue reading