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U.S. Diabetes Glucose Self-Monitoring Devices Markets
Frost & Sullivan, March 2003
Test Strip Margins and Revenues Decide Profitability in 'Free Meter' Market
Often described as a 'free meter market', the glucose self-monitoring business is characterized by heavy discounts for the meters component of the self-monitoring kits. Manufacturers accept this market dynamic as an industry norm. They expect the sales of test strips to generate revenues and profit margins that compensate for the cost of meter discounts. For manufacturers, the challenge lies in identifying 'ideal' diabetic patients when giving away the meters, those who will use the meter to test frequently and generate repeat sales of test strips. In addition, both manufacturers and healthcare professionals need to continue to educate patients about the benefits of glucose self-monitoring in order to develop more 'ideal' patients.
This Frost & Sullivan study analyses the North American market for diabetes glucose self-monitoring devices. It provides a valuable analysis of market drivers, restraints and forecasts, identifying the areas of growth. The study covers self-monitoring meters and test strips, along with new non- and minimally invasive technologies.
Consumer-driven Marketing and High Cost of Business Transform Competitive Landscape
Research has shown that while health care professionals are highly influential in the initial purchase decision, subsequent upgrades or purchases are often based on multiple influences that include the media, says the author of the study. Today, companies such as TheraSense, LifeScan and Roche spend considerable amounts in direct-to-consumer advertising to generate recall and recognition for their brands. It allows them to communicate their differentiation to a high percentage of consumers that self select glucose self-monitoring kits. As more and more companies advertise direct-to-consumers, marketing prowess is becoming a key success factor.
Need for Expensive Research and Development (R&D) Capability Drives Consolidation Within the Industry
Besides a stellar marketing effort, a state-of-the-art R&D capability is crucial to success in a market where four key participants hold almost 90 percent of the share. Smaller companies, finding it difficult to allocate limited funds between R&D and marketing, are looking for opportunities to partner / merge with larger companies in order to take advantage of their distribution channels, marketing muscle, and R&D resources. Two notable consolidations in 2001 were the acquisition of Amira Medical by Roche and Inverness by LifeScan (J&J).
The convenience of self-monitoring, the development of alternate site testing, medicare reimbursement for Type 2 diabetes and promotional offers on kits are among the many factors driving the adoption of self-monitoring devices. With Type 2 Diabetes growing at an unprecedented rate, product innovations and the emergence of non-and minimally invasive technologies are making the glucose self-monitoring business a promising, high growth market.
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