Dive Brief:

• Abbott and Medtronic said Wednesday they will partner to create an integrated continuous glucose monitor that works with Medtronic’s diabetes technology.
• Abbott will develop glucose sensors that only work with Medtronic’s insulin pumps, pens and automated insulin delivery (AID) algorithms. The companies did not disclose financial terms or commercial timing. 
• The partnership comes as Abbott is making a push into AID partnerships and Medtronic looks to turn around its diabetes business after resolving a Food and Drug Administration warning letter.

Dive Insight:

Abbott will supply Medtronic with a continuous glucose monitor that will only work with Medtronic devices. The CGM will be sold exclusively by Medtronic.

“While we were initially surprised by the headline, we think this will help open the market for both companies given their respective competitive positions and installed base in the Type 1 CGM and AID market,” BTIG analyst Marie Thibault wrote in a research note. She added the agreement is still very much “coopetition,” with Medtronic still working to advance its own CGM technology.

Along with announcing the partnership, Medtronic said Wednesday it received FDA approval for its Simplera CGM, which does not require fingersticks or overtape, unlike the company’s previous sensors.

The Simplera Sync sensor, which is designed to work with Medtronic’s automated insulin delivery algorithm, is under FDA review separately. 

Medtronic was the first company to get FDA approval for an AID system in 2016. Since then, the medtech firm has largely focused on pairing its own glucose sensors and insulin pumps. 

Medtronic has held a leading share of the insulin pump market but has a smaller share of the CGM space. The company fell behind after receiving a warning letter in 2021 for problems with its Minimed 600 series insulin pumps, hindering its ability to bring new diabetes devices to market. The FDA lifted the warning letter last year. 

Meanwhile, Abbott, which competes with Dexcom to lead the CGM market, has recently emphasized partnerships with insulin pump firms to bring in more users with Type 1 diabetes. Abbott in January integrated its FreeStyle Libre 2 Plus sensor with Tandem’s t:slim X2 insulin pump. In February, patch pump company Insulet received a CE mark to pair its Omnipod 5 pump with Abbott’s CGM.

“Now that we've got the regulatory clearings and connecting to all the different pump manufacturers, I think this is a great opportunity for us, and I think it's good for patients,” Abbott CEO Robert Ford said in a January earnings call.

Overall, the partnership should be a “win for both companies since it can help drive increases in their respective installed base without stepping on each other's toes,” Thibault wrote. “It's also a win for patients who will now have more choices to mix and match devices from competing manufacturers.”

The AID system will need to go through normal regulatory procedures, and approval is not expected to take place in Medtronic’s current fiscal year, which ends in April, Thibault added. 

Medtronic expects the agreement to be accretive to its diabetes revenue and neutral to its gross margin.