March 13, 2023
Michael Cartmill, Co-Founder and Medical Device Analyst
For investors, diabetes remains one of the best secular stories in our sector due to the unfortunate fact of its uncontrollable growth. According to the International Diabetes Federation, as of 2021, approximately 537 million adults live with diabetes worldwide, a number set to rise to 643 million by 2030 and further to 784 million by 2045. This growth is driven by an aging global population, increased urbanization leading to less active lifestyles, higher rates of obesity, and improved detection and diagnosis rates.
Diabetes is not a benign condition. According to the American Heart Association, adults with diabetes are two to four times more likely to die from heart disease than adults without diabetes. Diabetes is also the leading cause of kidney failure in many countries, accounting for approximately 44% of new cases in the US.
The diabetes device market is a growing segment in healthcare, providing essential tools to help manage this dangerous chronic condition. The sector is comprised of continuous glucose monitors (CGMs) an insulin pumps. Despite CGMs first regulatory approval in 1999, the landscape remains an oligopoly with a few key players dominating.
CGMs are wearable devices that measure blood glucose every few minutes via a sensor inserted under the skin. The major players – DexCom, Abbott and Medtronic – account for >95% of global market share. While the technology continues to evolve, the CGM growth story is founded in physicians desire to better track their patient health, where it has become a key part of the tool kit.
Insulin pumps are small, computerized devices that are designed to mimic the way a healthy pancreas works, providing precise doses of insulin based on the blood glucose level. When a CGM is paired with a pump, it is what is known as an automated insulin delivery system, which are changing the way patients with diabetes can live their life. While the market for pumps is slightly more competitive than CGMs, there are only 3 major global players supplying this critical technology.
Due to the enormous size and growth of the diabetes population, and the competitive structure of the market, Cordis continues to invest in the companies that are able to generate strong growth in earnings as they look to make the world a healthier place.
This report was prepared by Cordis Asset Management Pty Ltd ABN 68 637 078 490 a corporate authorised representative (No. 1282680) of Avenir Capital Pty Ltd ACN 150 790 355, AFSL 405469 (“Cordis”)”, the investment manager for the Cordis Medical Technology Fund (“Fund”). Equity Trustees Limited (“Equity Trustees”) ABN 46 004 031 298 AFSL No. 240975, is a subsidiary of EQT Holdings Limited ABN 22 607 797 615, a publicly listed company on the Australian Securities Exchange (ASX:EQT), and is the Responsible Entity of the Fund. This document has been prepared for the purpose of providing general information only, without taking account of any individual person’s investment objectives, financial circumstances or needs. Whilst every care has been taken in the production of this document, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. The information contained in this document is not intended to be relied upon as a forecast and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy, nor is it investment advice. Any forwarding-looking statements or forecasts are based on reasonable assumptions, but cannot be relied upon as guarantees or representation as to what future performance will actually occur. Unless otherwise specified, the information contained in this document is current as at the date of issue and all amounts are in Australian Dollars (AUD). You should consider the Product Disclosure Statement (“PDS”) in deciding whether to acquire, or continue to hold, the product. A PDS and application form is available at www.cordisam.com. Cordis and Equity Trustees do not guarantee the performance of the Fund or the repayment of the investor’s capital. To the extent permitted by law, neither Equity Trustees, Cordis, nor any of their related parties including its employees, directors, consultants, advisers, officers or authorised representatives, are liable for any loss or damage (including consequential loss or damage) arising directly or indirectly as a result of reliance placed on the contents of this report. Past performance is not indicative of future performance. The unit price performance calculation methodology follows the FSC Standard No.6: Investment Option Performance – Calculation of Returns (July 2018). Total returns are calculated based on changes in net asset values, at the exit price after the deduction of fees and expenses. Due to individual circumstances, your net returns may differ from the net returns quoted above.