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Tandem Diabetes acquires AMF Medical SA: A new competitor in the diabetes patch pump market?



On the 23rd of January this year, many in the diabetic community were excited to find out that one of the leading insulin pump manufacturers, Tandem Diabetes, had acquired a start-up who have been spending the last 7 years developing their own patch pump device. Target company, AMF Medical SA based in Switzerland, was purchased for $66.9 million cash in addition to a previous $8.57 million strategic investment and future earnout payments of up to $138.9 million upon reaching certain development milestones. Their ‘Sigi’ patch pump obtained FDA breakthrough device designation in 2021. They claim it will be smaller and more ergonomic than the ‘Omnipod 5’, with rechargeable insulin pods which don’t need to be replaced as often. Buyer, Tandem Diabetes has a market capitalisation of $2.8 billion and a long-standing reputation with diabetic patients worldwide. However, without any patch pumps in their product portfolio, they’ve been struggling to compete. This combined with pressures from the Covid-19 pandemic forced them to reduce their economic outlook for 2022.


Insulin patch pumps are relied upon by 25,000 people with diabetes worldwide. They’re small electronic devices which regulate a patient’s insulin levels. By attaching directly to the skin without any tubing or external devices, they’re seen to be far more convenient than regular pumps. Despite being a rapidly growing market, going from $1.18 billion in 2022 to $1.28 billion in 2023, the market is currently dominated by one product: the ‘Omnipod 5’ by Insulet. It is one of the only insulin patch pumps with FDA approval and had been in development for over 15 years.


The deal should accelerate the time-to-market for a new competitor in the insulin patch pump market. By combining AMF Medical SA’s 7 years of product development with Tandem Diabetes’ R&D facilities and technology, their device should be able to receive full FDA approval sooner. Not to mention, Tandem Diabetes’ well established distribution network. AMF Medical SA is a small private company of just 20 employees. Hence, they will benefit from these supply chains and pharmacy deals in 20 different countries, which have been used to sell Tandem Diabetes’ tethered pumps up until now. Similar types of deals have proven to be successful for many biotech companies in the past; where small technology start-ups are acquired by much larger companies and as a result, benefit from increased R&D funding and access to the market.


However some analysts are concerned with the deal’s risks. This deal is heavily reliant on the development of one product. Patch pumps are highly complicated devices. There is potential for AMF Medical SA to fall behind their development schedule. Not to mention, the ‘Sigi’ patch pump is vulnerable to the current semiconductor shortage. Kickstarted by the Covid-19 pandemic and fuelled by ongoing geopolitical uncertainties, it has resulted in an 8% increase in semiconductor prices between 2021 and 2022. Once development of the pump is complete, Tandem Diabetes may struggle to sufficiently scale up production to compete. Whereas their main competitor, Insulet, has spent far longer producing and developing the ‘Omnipod 5’. With stockpiles of semiconductors and metals, they’re far better prepared for the current shortages.


As more and more diabetic patients switch over from tethered pumps to patch pumps, the opportunity for organic growth in the market increases. Despite this, very few companies are able to exploit it. Only a handful of patch pumps have received full FDA approval, resulting in limited choice for diabetic patients looking to improve their quality of life. So far, feedback on the ‘Sigi’ patch pump has been widely positive. However, due to ongoing shortages and falling 8 years behind from the current market leader, it still has a long way to go. But if Tandem Diabetes and AMF Medical SA are successful in developing the ‘Sigi’, it should be highly beneficial for both their shareholders and the diabetic community worldwide.





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