What Abbott & Medtronic's Collaboration Means for Diabetes Tech

Medtronic and Abbott Laboratories, two rivals and heavy hitters in the diabetes tech space, are teaming up.

The two will collaborate on an integrated continuous glucose monitoring system (CGM) based on Abbott’s FreeStyle Libre technology that will connect with Medtronic’s automated insulin delivery (AID) and smart insulin pen systems. Abbott will design the CGM and it will be sold by Medtronic.

Financial terms of the collaboration were not disclosed.

The companies said the integration of Abbott's CGM sensor with Medtronic's AID algorithms will enable automatic adjustments of insulin to keep glucose in range.

"This partnership pairs two global leaders in glucose sensing technology and insulin delivery," said Jared Watkin, executive vice president of Abbott's diabetes care business. "Libre technology has set the standard for accurate, accessible, easy-to-use and reliable continuous glucose monitoring. Connecting this CGM built for Medtronic's insulin delivery systems and algorithms makes it easier for people to spend less time thinking about their diabetes and more time living."
"Our partnership with Abbott allows us to expand access to our advanced automated insulin delivery and smart MDI systems that deliver best-in-class outcomes with the most widely used CGM in the world," said Que Dallara, executive vice president and president, of Medtronic Diabetes. "We're committed to simplifying diabetes management and making the transition to automated technology much more seamless for those who wish to achieve more with their diabetes care."
The collaboration comes as Medtronic has won FDA approval for the Simplera CGM. Simplera is the company’s first disposable CGM and is half the size of the company’s other CGMs on the market.

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Potential Impact of Collaboration

Marie Thibault, an analyst with BTIG, wrote in a research note about what the partnership might mean for the diabetes market.

“While we were initially surprised by the headline, we think this will help open the market for both companies given their respective competitive positions and installed base in the Type 1 CGM and AID market,” Thibault wrote. “However, this is still very much a coopetition arrangement. The CGMs Abbott will OEM to Medtronic will only be operable when paired with Medtronic's AID and Smart MDI systems, meaning that it can't be used as a standalone CGM. Additionally, Medtronic will continue to advance their own CGM platform with Simplera and Simplera Sync while also investing in next-generation sensors.”

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Two of the biggest players in the diabetes tech space that could be impacted by the collaboration are Dexcom and Insulet.

Thibault wrote, “We see this partnership as a way for Medtronic to retain their existing pump users (we estimate ~700K WW) and try to attract new users, both of whom may be less satisfied with or wary of Medtronic's in-house CGM technology. Given the very different form factors and business model, we tend to think the type of patient who is contemplating a tubed pump is not typically straying away from a patch pump like Insulet's Omnipod 5. For this reason, we see a minimal threat to Insulet's (PODD, Buy, $270 PT) business.

Additionally, Thibault wrote, “On the CGM side, the partnership does not impact basal-only adoption, but is specific to the core Type 1 patient population. The exclusivity means Dexcom does not have a chance to convert existing Medtronic users to a Dexcom CGM. We do not see a high likelihood of material impact to Dexcom's existing T1D installed base, since these patients would also need to be using a pump and decide to switch away from their existing device to Medtronic's form factor.”