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How Medtronic Is Dominating the Insulin Pump Market

Medtronic's insulin pump offerings also include the MiniMed Connect system, which links Medtronic's diabetes products to smartphones.

Medtronic plc

Medtronic appears to be throwing its weight around, though it may yet have to reckon with the diabetes patient community.

Chris Newmarker

Medtech giant Medtronic recently scored a major coup after UnitedHealthcare announced that the company will become the preferred, in-network durable medical equipment (DME) provider of insulin pumps.

"Our goal is to provide the opportunity for a better care experience by providing our members with access to advanced diabetes technology and comprehensive support services while learning how advanced technology can be applied to improve outcomes and reduce costs," UnitedHealthcare said in its Network Bulletin for May.

When the news got out on Tuesday that one of the largest health insurers in the United States was preferring Medtronic insulin pumps, it sent shares of insulin pump competitor Tandem Diabetes Care down about 20% in value. Another competitor, Insulet, saw shares drop about 10%.

"Having diabetes isn't a choice. How people manage it should be," said Kim Blickenstaff, president and CEO of Tandem Diabetes Care. "Insulin pumps are not a one size fits all solution. Selecting which pump is the best fit for a person to manage their therapy needs should be a decision made between a person and their healthcare provider."

Medtronic's win with UnitedHealthcare could be a good example of why medtech companies are increasingly merging. Medtronic itself become one of the largest medical device companies in the world through its roughly $50 billion merger with Covidien early last year.

Says EP Vantage of UnitedHealthcare's decision: "One of the arguments underpinning the wave of consolidation in the medtech sphere--that increased size allows a company to offer its wares more cheaply while still turning a profit--seems to have worked nicely in in this case."

Medtronic had already been forecast to become the top insulin pump provider by 2020, but its sales growth was nevertheless slower than its smaller competitors, according to data compiled by EvaluateMedTech.

UnitedHealthcare, though, has been receiving widespread backlash from the diabetes patient community, according to Qmed's sister media outlet MD+DI.

"Based on the backlash UnitedHealthcare has received from the online-diabetes community in the past few hours, we would not be surprised if the company eventually reverses its decision," Gregory Chodaczek, an analyst with Stern Agee, said in a Tuesday morning research note cited by MD+DI.

EP Vantage suggests one way Medtronic might be able to get its way no matter what: "Neither Tandem nor Insulet is profitable, and their shares were down 12% and 13% respectively so far this year even without [Tuesday's] drops. Their lower valuations might even see a buyer step in--and there is a chance that this buyer could be Medtronic."

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