The good news for America's 17 million diabetes sufferers is that the disease is no longer an early death sentence. Careful monitoring of blood glucose
by Brook Raflo
April 1, 2003

The good news for America's 17 million diabetes sufferers is
that the disease is no longer an early death sentence. Careful
monitoring of blood glucose — and careful attention to the
early warning signs of complications — can ensure a long,
healthy life for people with diabetes. The bad news for
diabetes-management advocates is that nearly 6 million Americans
with diabetes do not even know they have the disease, according to
the American Diabetes Association.

Fortunately, clinicians and the federal government are beginning
to understand the benefits of early diagnosis and disease
management, and this growing awareness means huge opportunities for
the manufacturers and providers of diabetes-management
products.

“Ten or 15 years ago, doctors were much more likely to
tell someone, ‘You have only a touch of
diabetes,’” says Mark Samuels, chief executive officer
of SpectRx, a company whose new glucose monitor tests interstitial
fluid instead of blood. “Today, they realize that if you have
diabetes, you'll be subject to kidney failure, blindness,
non-traumatic amputation and other complications. [Consequently],
people are living longer and being much more aggressive about
managing blood glucose.”

But awareness is not the only engine driving what the experts
say is a 10 to 20 percent annual growth rate in the
diabetes-management market. Demographics also are playing a role.
“The substantial growth of Type 2 diabetes has more to do
with diet and exercise issues,” says Kevin Seifert, vice
president and general manager of Beckton Dickinson's consumer
health care division. “This is true not only for Americans
[but also] for other countries that are becoming more
Westernized.”

Adding fuel to the fire are changes in the ethnic diversity of
the U.S. population and a rapidly growing aging population,
according to Jennifer Hahamian, senior vice president of sales and
marketing for Metrika, a company that recently introduced a
handheld A1C testing device. “The number of diagnoses will
continue to increase as we get older and fatter — and as we
increase in ethnic diversity,” she explains.

Blood-Glucose Monitoring: Price and Innovation are Key

On a field where big players dominate and everyone bats 1000,
blood-glucose monitor manufacturers have to work hard to stand out
from the crowd, according to Tom Panik, vice president of sales and
marketing at Home Diagnostics. “The quality of the product is
basically equal today,” he says. “So the market favors
some of the larger players [like Roche, Johnson & Johnson, and
Abbott Laboratories], because they have big sales organizations to
educate health care professionals.”

Today, high-quality blood-glucose monitors are plentiful and
affordable, and consumers are making the buying decisions once
reserved for clinicians. Consequently, “in this industry, you
truly have a medical device and a consumer market blended into
one,” Seifert explains. “Brand recognition plays a
role, but this is not a cola war. At the end of the day, there
still need to be real product features that create market
differentiation.”

In many cases, price is the distinguishing factor, Panik says.
Medicare reimbursement profit margins are narrow, private payers
are becoming more cost-conscious and “eighty percent of
diabetics make less than $30,000 per year,” he says.
“We put out a high-quality product that's very affordable.
Most of our products are co-brands, sold under the label of
providers and pharmacies such as Express-Med, Medline and
Walgreens.”

Another way for a product to distinguish itself is through
innovation, the experts agree. However, “for small companies
to take market share without a large partner, they need to offer a
significant advance,” Samuels says.

The Holy Grail of innovation, according to Seifert, is the
elimination of pain. “It's all about less pain,” he
says. “When you have a smaller lancet and a smaller sample,
you have less pain. [Beckton Dickenson] is the only company that
has a 3-microliter sample size and a five-second read
time.”

But SpectRx is taking a different approach to reducing the pain
of blood-glucose monitoring, by developing a device that monitors
glucose continuously. “If you take a small blood sample,
you're just making a single measurement, and blood tends to
clot,” he explains. “We think interstitial fluid
— the fluid between the cells, which carries glucose from the
capillaries to the cells — is a good testing medium. [Our
device] pulls the fluid outside the skin, because the body
naturally wants to attack something that's inside the
skin.”

Currently, most continuous glucose monitors require a
traditional finger-stick calibration every four to five hours,
Samuels admits. But the days of finger-stick monitors are numbered,
he says. “In five years, the diabetes test market will be
dominated by continuous glucose monitoring technology.”

Shifting gears, Metrika has developed a product that does not
measure blood glucose at all. While blood-glucose monitors are
important tools for gauging a patient's day-to-day success at
managing diabetes, they cannot tell a patient whether he or she is
at risk of developing health complications, Hahamian explains.

“Even if you're testing glucose four times a day, you're
still missing something,” she says. “A1C is the only
test that tells you where you're headed, in terms of
complications.”

A1C, the hemoglobin that attaches to blood cells, records what a
person's glucose levels have been during the past two to three
months, Hahamian explains. “People with diabetes and their
doctors are told to manage A1C levels below 7 percent,” she
says. “If you keep it below 7, you dramatically reduce the
risk of complications. Until now, patients had to go to a lab to be
tested on a big piece of equipment. But Metrika has developed [the
A1cNow], a miniturized technology with lab-like
accuracy.”

Within five years, Hahamian predicts, “people will be
testing their A1C levels every other month at home.

Diabetic Footwear: An Untapped Market

Nearly two-thirds of people with diabetes suffer from mild to
moderate nervous-system damage — called neuropathy —
that can impair sensation in the feet and hands, according to the
American Diabetes Association. Not surprisingly, these people often
are unaware of minor foot abrasions until the abrasions become
stubborn wounds that refuse to heal.

For many neuropathy sufferers, the result is amputation. Each
year, 82,000 people with diabetes receive lower-limb amputations,
the ADA says.

But preventive care can reverse this trend. “We have not
cured diabetes, but we can manage it,” says Bob Fox, vice
president of sales and marketing for Atlantic Footcare, a diabetic
insole manufacturer. “Once ulcers begin, they're costly to
manage, and they don't heal well. That's why a pressure-reducing
insole is the first line of defense.”

Unlike reimbursement in many sectors of the home medical
equipment market, Medicare's coverage of diabetic footwear is top
notch, according to Charles Dillon, president of MMAR Medical, a
distributor of diabetic footwear. “The diabetic shoe program
is the only program that I'm familiar with where Medicare pays for
prevention,” he says. “Eighty-five percent of people
who have diabetes qualify to receive the benefit, but only about 10
percent of them take advantage of Medicare's foot
program.”

One reason for the lack of participation is that the clinicians
— and the patients they serve — are not aware that such
a benefit exists, Dillon continues. “It's a real awareness
problem. We work with a company [called Acor] that has hired a
certified pedorthist/orthotist to conduct seminars [to raise
awareness] around the United States.”

Another barrier to foot-health management is the lack of
qualified providers of diabetic footwear, Dillon continues.
“The key to growth in this market is the availability of
people who are trained in the Medicare provider business to treat
these patients. It's a very good business for smaller providers,
because it's a way to give an additional service and diversify your
business a little bit.”

Fox agrees that availability is one of the customer's primary
concerns. “They need to know that these products exist and
that they can afford [the products].”

The sky is the limit, for growth in the diabetic footwear
market, but growth requires work on the providers' part, Dillon
says. Many states require providers to become certified pedorthists
as a prerequisite for fitting diabetic patients with therapeutic
footwear, he explains. “But if you become a certified
pedorthist, you can do custom work and work with an array of
private insurance companies. You have to go to school for a minimum
of three weeks and then pass a test,” but the rewards are
well worth the work.

Another unique aspect of the diabetic-footwear business is the
necessity for distributors, Dillon adds. Because every foot is
different, “there are thousands of shoes you have to keep in
stock,” and that is not feasible for many small providers.
“We carry a sport line, a dress line, a casual line and an
indoor/nursing-home line, in an array of styles and colors. We give
providers a central point where they can access a variety of shoes
instead of going all over the country.”

And, that selection is bound to expand and improve, according to
Fox. “Diabetic footwear has been very
therapeutic-looking,” he says. “Now manufacturers are
trying to make [diabetic shoes] look like normal shoes. That will
get more people wearing them.”

Additionally, the materials used for insoles will continue to
improve, Dillon and Fox agree. For example, “Atlantic
Footcare will introduce a new material — ortholite —
with an open-cell, breathable design that takes the shape of the
foot, but bounces back.”

Dillon points to a new P-Cell technology from Acor. “It
did very well in tests for cushioning, abrasion, odor, shock
absorption and durability,” he explains.

The bottom line, Dillon concludes, is that diabetic footwear
presents untold opportunities for providers. “This market is
just sitting there, waiting to be tapped. You don't have to wait
for people to get older. The customers are already
there.”

Experts Interviewed:

Charles Dillon, president, MMAR Medical Group, Houston; Bob
Fox, vice president of sales and marketing, Atlantic Footcare,
Providence, R.I.; Jennifer Hahamian, senior vice president of sales
and marketing, Metrika, Sunnyvale, Calif.; Tom Panik, vice
president of sales and marketing, Home Diagnostics, Fort
Lauderdale, Fla.; Mark Samuels, chairman and chief executive
officer, SpectRx, Norcross, Ga.; Kevin Seifert, vice president and
general manager, Beckton Dickinson Consumer Health Care,
Chicago