Are Medtronic's Competitors Finally Catching Up?

Medical device juggernaut Medtronic is a big player in the world of healthcare, and it holds strong competitive positions in a huge number of diseases including cardiac care, minimally invasive surgery, spinal surgery, and more.

One division that is certainly an important long-term growth driver for Medtronic's business is its diabetes franchise, as the diabetes market is simply huge. The American Diabetes Association estimates that about 29 million Americans had either type 1 or type 2 diabetes in 2012, and the numbers get bigger in a hurry when you include the rest of the world.

Medtronic is currently the leader in selling medical devices that help patients control their blood sugar levels, as the company has long dominated the market for both insulin pumps and continuous glucose monitoring devices. In fiscal year 2015, which ended for the company in April, Medtronic reported preliminary net sales of more than $1.7 billion from its diabetes division, up more than 9% over the previous year on a constant currency basis, making it one of the faster-growing divisions in the company.

Source: Animas.

More recently, diabetes pump upstart Tandem Diabetes announced that the FDA has approved the sale of its t:slim G4 pump that works with the Dexcom's G4 system. Since its launch, Tandem has been attracting customers at a rapid pace, as its sleek insulin pump features a touchscreen interface many patients find appealing.

Source: Tandem Diabetes.

The company has been chipping away at market share of the pump market since its launch, and it managed to ship an impressive 3,331 pumps in the second quarter alone, up a sharp 49% over the year-ago period, and that was without having a continuous glucose monitor hooked up to it. Now that the t:slim G4 insulin pump is approved, Tandem should see sales accelerate from their already torrid pace, which could cause a flood of patients to move away from Medtronic's offerings.

Another player in the space that has been a thorn in Medtronic's side for years is Insulet Corporation , which offer patients a tubeless insulin pump. While it looks like it will still be some time before this company will incorporate a continuous glucose monitor directly into its handheld receiver, they have already announced that they are working with -- you guessed it -- Dexcom on doing just that.

640G insulin pump. Source: Medtronic.

Medtronic fights back

Mind you, Medtronic isn't exactly sitting still as these smaller players offer unique features that set them apart from the giant. It has announced a new system it calls the 640G, which is currently being sold overseas and looks to finally bring the look of the company's pump into the 21st century. It features a brand-new layout and color screen that should appeal to its customers who have been choosing more user-friendly options, though it should be noted that it will not feature a touchscreen.

However, this new pump may still help set it apart from competitors, as it will feature the ability to suspend delivery of insulin as a patient's glucose levels get low, and resume pumping once glucose levels have a chance to recover. If the company can get that approved, it would certainly be an important step in the race to create an artificial pancreas. The pump will also work with a newer version of the company's sensor, dubbed the Enhanced Enlite, that promises greater accuracy and increased patient comfort.

The 640G is currently available for sale overseas, but the device has not yet been submitted to the FDA, as phase 3 clinical trials for the device are currently under way.

Now what?

Competition in the space continues to look fierce as these companies battle head-to-head for dominance in the space. Medtronic is still far and away the leader, and the odds look good that it will continue to hold that title for the foreseeable future, but it's by no means my favorite name for investing in the space. Medtronic investors would be wise to watch these smaller competitors closely.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early, in-the-know investors! To be one of them, just click here .

The article Are Medtronic's Competitors Finally Catching Up? originally appeared on

Brian Feroldi owns shares of Insulet. The Motley Fool owns shares of Medtronic. The Motley Fool recommends Insulet and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More