Tandem Diabetes Care targets 1 million clients by 2027

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Dive brief:

  • Tandem Diabetes Care predicts its global customer base to triple to 1 million by 2027 as the insulin pump maker launches several new products and user growth is expected to increase over the next five years among diabetic patients type 1 and type 2.
  • CFO Leigh Vosseller said at a virtual R&D event on Monday that the company’s target customers will primarily come from capturing market share among Type 1 users as adoption by this specific population continues. to grow. Tandem executives also said that a group of new product releases and an increased focus on type 2 patients would help fuel the company’s growth projections.
  • Reaching 1 million installed units means around $ 1.5 billion in sales by 2027, compared to around $ 700 million in sales the company projected for 2021, analysts at Craig-Hallum said in a note from Tuesday. Despite the expected growth for insulin pumps and continuous glucose monitors, analysts at SVB Leerink were more cautious about Tandem’s growth plans, giving rival Insulet the competitive edge as the market for diabetes technology continues to grow. expands. After slipping 1.75% at the close of the market on Monday, Tandem’s stock price climbed more than 8% on Tuesday.

Dive overview:

The diabetes tech space has experienced strong growth in recent years as patients continue to increasingly adopt wearable medical devices and rely more on digital health monitoring or treatment. Over the past two years, CGM and the insulin pump manufacturers have driven user and revenue growth as other medical technologies have been hit hard by the pandemic.

Tandem reported third quarter revenue of $ 492.8 million, about 50% growth from the first nine months of 2020. The company updated its year-end forecast in November and now expects a range of $ 685 million to $ 695 million in sales, which would represent year-over-year growth of nearly 40%.

Insulin pump use is only expected to increase in the future. Elizabeth Gasser, chief strategy officer for Tandem, said on Monday that the company expects global adoption of pumps in patients with type 1 diabetes to increase by one million users over the next five. years, with penetration in the US and international markets reaching approximately 65% ​​and 20%. by 2027, respectively.

While expectations are that the users of diabetes technologies will increase steadily overall, the competition in the space is increasing, especially among the insulin pump players. Smaller companies like Tandem or Insulet compete with Medtronic, which has less market specificities but much more capital and resources.

Insulet is expected to take market growth over the next several years as more patients turn to pumps and automated insulin delivery systems (AIDs), which automatically coordinate with CGMs to deliver blood. insulin to patients.

Tandem and Medtronic have beaten Insulet in the market with pumps that can be part of AID systems. However, Insulet’s next pump with AID system capability, the Omnipod 5, has been touted throughout the year as a device that will dominate the market and even increase the overall adoption of the pump.

Insulet announced last week that Omnipod 5 approval is not likely until Q1 2022, after the company originally expected a decision and an FDA launch in the first half of the year. . The movement gives Tandem a little relief, but not a lot.

Growing competition and the expected future success of Insulet from the Omnipod 5 launch is the main reason for SVB’s skepticism following the Tandem R&D event.

“Despite today’s positive update and our bullish outlook on the insulin pump market as a whole, we remain somewhat skeptical that TNDM may continue to increase the scale of sales in the short to medium term. that investors have become accustomed to as a new competitor product launch, including [Insulet’s] next Omnipod 5 in 1Q22, “analysts wrote.

Craig-Hallum analysts said the event did little to change the immediate market landscape, but was a bit more bullish on Tandem than SVB analysts, writing that the company deserves a valuation closer to its competitors. and that short-term competitive concerns “are overstated”.

A key aspect of Tandem’s growth will be driving the introduction of new products, which include a pump patch to match Insulet’s Omnipod 5. A competing product, however, is not likely to be on the market anytime soon, as the product is still in the early days of development. . SVB analysts wrote that they “expect a truly competitive patch pump offering to be more likely in the later stages of the 2022-2027 period.”

Tandem also highlighted the growth among patients with type 2 diabetes, a population that the entire diabetes tech space targets because of its size. CGM maker Dexcom has made Type 2 patients a key growth driver for the future, and CEO Kevin Sayer has been openly optimistic about the opportunity on several occasions.

Patients with type 2 diabetes are a more limited growth engine for insulin pump manufacturers because most patients generally do not need to manage insulin levels as intensely as patients with diabetes. type 1. Nonetheless, Tandem joins Insulet and Dexcom to focus more on expansion within this group.

The company predicted on Monday that the global Type 2 insulin pump market would grow from just 5% penetration to around 15% by 2027. However, because the Type 2 market is so large, Gasser said the growth at 15% penetration equates to approximately 325,000 additional pumps. users.

Tandem did not give a detailed look at the 2022 projections, but Vosseller said the company expects sales growth of at least 20%. More precise guidance will be given in the company’s next earnings call early next year.

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