BANGALORE (Reuters) - Even as reduced consumer discretionary spending eats into its business and competition looms large, insulin pump maker, Insulet Corp (PODD.O), expects to turn profitable within two years, its chief financial officer said.
The company is also looking to expand both into overseas markets and the usage of its wireless pump to other therapies beyond insulin delivery.
“We took into consideration as we planned into 2009 and into 2011 and 2012, what the economy may do to our business... We still feel pretty good about being able to get to profitability by the end of next year, or the very beginning of 2011,” CFO Brian Roberts told Reuters in an interview.
This is despite a slowdown in growth and an increase in patient attrition for its insulin pump, OmniPod, as unemployment levels rise.
“(OmniPod) is still a step up in monthly costs for a patient as compared to a box of syringes,” Roberts said, but the company continues to see growth of 65 percent to 70 percent growth in fiscal 2009.
The company will also soon see direct competition for its wireless insulin pumps from Medtronic Inc (MDT.N), the market leader in traditional pumps, which is set to release its version in 2010.
“The traditional insulin pumps are still only 25-30 percent penetrated in the U.S. So there is plenty of room for more than one player in the space,” Roberts said.
“(Medtronic) are a great marketing machine. They know how to market to their base. That will make it a little bit tougher for us but we certainly think we can compete. We think we will have a better product,” Roberts said.
Insulet is counting on design simplicity and the addition of a continuous glucose-monitoring feature in a next generation device, also set to be launched in 2010, to keep OmniPod competitive.
Insulin pumps are primarily used by patients with Type 1 diabetes and traditional insulin pumps have several feet of tubing that patients typically conceal under clothing, while OmniPod adheres to the skin and delivers insulin via a tiny tube.
Insulet is also comfortable with its cash position and is not looking at raising cash in the near-term, Roberts said.
As of March 31, the maker of disposable insulin pumps had $68.2 million in cash and cash equivalents and $32.5 million available through a credit facility with Deerfield Management.
“We have access to about $100 million between those two, which puts us in a pretty good position,” Roberts said.
The company is in discussions with “partners of various sizes” and expects to sign deals to distribute OmniPod in Europe and Asia over the next few months.
OmniPod received approval in Europe at the end of April and Insulet expects to launch the product there by the end of this year.
The Swiss drug maker Ferring Pharmaceuticals is also developing the OmniPod system for the delivery of its fertility drug and is expected to file for marketing approval for that indication in Europe next quarter.
If approved, the product should start contributing revenue by end of year, beginning of 2010, Roberts said, adding that “it is a relatively small product but it is a great proof-of-concept for us to show that OmniPod could be used outside of insulin delivery as well.”
Insulet also announced in March that it signed an agreement with a major pharmaceutical company for a healthy patient study for an approved drug.
“The drug in question is given via injection and has several side effects. The study will hopefully show that the side effects can be lessened if the drug is given to a patient using the OmniPod system over an extended period of time,” Roberts said while declining to give additional details.
Reporting by Jennifer Robin Raj in Bangalore; Editing by Anthony Kurian