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Dexcom: The Challenges behind the New Medical Device Revolution
Release time:2017-11-9 16:26:17      Click Times:159

Dexcom is a medical device company that has made a big breakthrough in home-use diabetes devices. Since its establishment in 1999, Dexcom has been working on the development of continuous glucose monitoring (CGM) products for individual users. Currently FDA approved and Medicare reimbursed is the Dexcom G5 Mobile CGM, a subcutaneous detector built into the device that continuously monitors user blood glucose changes over seven days, sending real-time data to a user's handset or to a Dexcom receiving device on.

Medicare reimburses this product on the condition that the user must have Type 1 or Type 2 diabetes, currently using traditional in-home blood glucose monitoring (finger-sticking), testing at least 4 times a day and using insulin injections as directed Dexcom's products may be used as a routine test replacement and reimbursed by Medicare. Reimbursement is Medicare pay 80%, users pay 20%. Currently only one product, Dexcom G5 Mobile, is included in Medicare payments. Among commercial insurance customers, Dexcom said 98% of its commercial insurance already includes its products in reimbursement.

Dexcom's products bring the revolutionary no doubt. First of all, Dexcom's subcutaneous implantation is less painful to the user, allowing for 7 days of testing with a subcutaneous detector, eliminating the pain of having to finger blood sugar several times a day. In the meantime, blood sugar data obtained in the past by means of fingernails can only represent one point and can not show trends or changes. Dexcom's data is real-time continuous, you can see the user's blood glucose changes at different times of the day, especially diet, exercise, sleep changes in blood glucose. Based on real-time changes in these data, Dexcom can alert (such as low or high blood sugar) of the occurrence of dangerous values. Finally, the fifth generation of Dexcom products has greatly improved the accuracy of previous products, past products need to refer to blood correction, and sometimes need blood correction twice a day, while the current product mainly in the obvious data errors or instructed Only need to be corrected when. This greatly facilitates the user.

Dexcom's total revenues in 2016 and 2015 were $ 573 million and $ 400 million respectively, up 55% and 43% from the previous year's growth rates respectively. Dexcom's gross margin was high at 34% and the company's net loss for 2016 was $ 65.6 million. From Dexcom's cost perspective, sales, marketing and administration are the biggest contributors, accounting for 50% of revenue, a 54% and 45% increase over the past two years respectively. In addition, Dexom's research and development costs account for 27% of total revenue.

Dexcom as an innovative medical device company, the problems faced by several aspects. First of all, Dexcom products have been paid by the payer's approval, but whether to choose to use this product, the right to open this prescription lies in the doctor. Traditional pharmaceutical companies and medical device companies have spent a large number of ground-based teams educating doctors and promoting their products to users, and in the process these companies have also established a strong push channel. However, Dexcom is in short supply at this stage. As its business grows, Dexcom will face the risk of pushing its teams bigger and bigger and spending more and more.

Medtronic received FDA approval for a similar continuous glucose test in 2016 and is expected to be available in 2017. Medtronic, a traditional company, outperforms Dexcom on the advantages of physician-end channels and educational resources. Although the latter has the preconceived advantage as a start-up company and at the same time has made some breakthroughs in accuracy, as the big players enter the market, competition in the channel can not be avoided, which means higher costs.

Second, Dexcom's data consistency is a clear advantage over traditional fingerprinting methods, but the high volume of data that Dexcom brings about also means that doctors need to spend more time and effort looking at the data, and from the current Feedback from the doctors shows that some doctors do not have time or interest to learn the modules of data analysis. Some doctors think that the lack of professional data analysis software and the complexity of data analysis affect their work and are therefore unwilling to use it. The large amount of data generated by Dexcom products also means that physicians need to use their motivation to interpret and use these data. In the future, it will be a development direction to cooperate with data providing analysis tools. If the data can not be conveniently and quickly combined with the clinician's clinical diagnosis , Will hinder the promotion of this product.

In addition, as an innovative product, the function of the product still has some drawbacks. In 2016, Dexcom recalled a number of products and was listed by the FDA as the highest severity of a recall due to the lack of sound in Dexcom products for alerting of dangerous blood glucose data, which could lead to Dexcom being too low or too high Patients who did not receive a blood glucose alert received an alert, resulting in delay or even death. Although Dexcom handled the recall relatively smoothly, such mistakes still have a severe blow to the brand image and user trust in new products.

In the process of using, there are still many problems that users feedback. Such as subcutaneous implantation is not suitable for thin patients, and another more common problem - sensor error. In addition to wear discomfort, loss or data error is also a common problem in use. This means that such new technology companies in the future R & D investment will remain high to continue to lead the market.

In general, the new technology has revolutionized and outperformed traditional products in many aspects. However, in the process of commercialization, it has to face the long cycle of capital recovery, the increase of product cost, and the entry of giant companies in the same field. Challenges for competition.

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