In September, Johnson & Johnson’s diabetes franchise, LifesScan/Animas posted its strongest growth quarter since 2005. LifeScan sales of $585 million rose a whopping 16% from last year. This growth is being fueled (unfortunately) by more patients with diabetes and fortunately (we hope) by more patients thinking more about how to use tools like blood glucose monitoring and insulin pumps appropriatley. Note that J&J has a very strong international diabetes business with sales of $264 million, an increase of 17% over a year ago – as we understand it, they are working particularly hard in developing countries, which we think is very good since that is the part of the globe that needs better diabetes care the most. That said – so does that US, where sales were $321 million (up 15% from a year ago.).
For us, the most exciting part of the call was that J&J announced the opening of the J&J Diabetes Institute to be headed up by Former Acting Surgeon General RADM Dr. Kenneth Moritsugu. Branches of the institute will initially be launched in Japan, China, France and the US with the first four centers expected to open by mid 2008. We interviewed Dr. Moritsugu in Orlando, when he was the keynote speaker at a Children with Diabetes conference. Here’s an excerpt: “Standing in his white gold-braided navy uniform, his chest bedecked with ribbons, Moritsugu slipped his Animas insulin pump out of his pocket to show the children that he was one of them. “ I am also a patient," he said, stressing that everyone – including himself – needs to better understand health literacy.” Those interested in learning more about Dr. Moritsugu can see this interview here.
We also loved this part of the conference call (conference calls are held for analysts who follow J&J to assess business and ask questions – but anyone can listen! Information is always on the J&J website under “investors”). Nick Valeriani, who leads J&J’s medical devices and diagnostics segment, stated that J&J was committed to a vision of restoring the joys of life – there is a new consumer campaign, as we understand it with the tagline “Life Wide Open,” which we are very eager to see. He mentioned that over four million people use the OneTouch Ultra products and that 100,000 lives had been improved by their gastric band technology. He didn’t give an estimate of Animas pumpers –we would guess that would be over 30,000 and growing every day – we think their strength in pumps is really understanding patients and how patients want to use technology.
A few quick sound bites:
Pump sales rose 30% - Medtronic is probably not being overly affected by market share being gained by Animas – in fact, we think Medtronic, Insulet, and J&J/Animas are all expanding pump use among patients as the use of physiologic therapy becomes easier and as the benefits become more well-known. Smaller companies like Deltec are more likely to feel the pinch although we know Deltec has had great business with children on pumps historically.
LifeScan’s integrated insulin pump/meter is on track for 2008 regulatory submission in the US and Western Europe – looking forward to more news on that as we weren’t aware of this product in the works.
The OneTouch Select will be LifeScan’s new meter to be rolled out end of 2007. It’s a mail order meter that uses non OneTouch Ultra strips so we assume the angle they are going for is cost effectiveness for the user – making it easier for uninsured and underinsured patients to use LifeScan products.
Management touted J&J’s Ethicon Endo-Surgery as the only company in the world with a complete portfolio for the surgical treatment of obesity. The recent FDA approval (remember paitents don’t get words like clearance) of the REALIZE Adjustable Gastric Band in September 2007 completes the companies portfolio. We believe there will be over 200,000 surgeries to reduce obesity in the US alone in 2007.