On August 2nd, 2016, Dexcom held a conference call to present its quarterly financial report. The company’s business quarter had ended on June 30, twenty days after an FDA advisory committee recommended that the FDA allow the Dexcom G5 continuous glucose monitor (CGM) to be used by patients for insulin dosing.
(While many CGM users already do this, it is not technically an allowed use for the device, according to FDA labeling.)
Not surprisingly, a good deal of the discussion revolved around the possibility of the FDA moving forward with that recommendation. If so, this would lead to Medicare-contracted insurance plans covering the cost of CGMs as reimbursable durable medical equipment.
EU regulators cleared the G5 for the same use in 2015.
Dexcom officials estimate that between 15 percent and 20 percent of people with Type 1 in the U.S. use a CGM. Based upon independent market data, they believe that the company supplies 70 percent of the CGMs in use, with Medtronic being its chief rival. Despite Dexcom’s dominant market share, Dexcom CEO Kevin Sayer considers the CGM market to be highly competitive.
Based on the August 2nd earnings call and Dexcom’s follow-up communications, here’s a rundown on the company’s plans for the next two years:
- The FDA advisory committee vote represents a substantial shift in the regulatory environment. Standards for use of CGMs to make treatment decisions do not yet exist, and new performance standards would need to be written as part of final regulatory clearance. There would also be a need to create new educational resources for endocrinologists, certified diabetes educators, and general practitioners; Dexcom foresees it will be heavily involved in both endeavors.
- The company is building capacity for expected growth. Dexcom reported 55 percent growth this past year, between U.S. and international sales. If the CGM becomes covered by Medicare, demand for CGMs could spike even further. Earlier this year, Dexcom officials announced plans to build a new factory in Arizona, adding 500 employees during 2017 to expand manufacturing capacity.
- Dexcom officials hope to submit its next generation CGM, the G6, for pre-market clearance in 2017. The goal is for the G6 to have a sensor that can be worn for up to 10 days and require only once-a-day finger stick calibration.
- Last August, Dexcom formed a partnership with Verily (formerly Google Life Sciences) to employ Verily’s nanotechnology expertise in developing a reduced cost mini-sensor unit, which company officials hope to roll out in 2018. Such a device would be targeted toward the Type 2 market.
- Last April, Dexcom acquired its European distributor of six years, Nintamed, possibly giving it enhanced infrastructure to grow foreign sales.
It should be noted, of course, that all investor communications and earnings calls are designed to make as good an impression as possible while still being truthful. While it appears that Dexcom is well positioned for continued growth, there can always be unexpected hurdles (Dexcom recently had to issue a recall of some Dexcom G4 and G5 devices because of faulty alarms, for example). Still, such information provides a good roadmap for Dexcom’s game plan in the near term.
Insulin Nation did not receive compensation, sanction, or guidance for this article.
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