Abstract
This evaluation essay aims to focus on promoting financial sustainability of a new technology developed by Echo Therapeutics, a prestigious health technology company. Currently the glucose monitoring devices market is getting more and more saturated. The major product feature of Echo’s new product is needle-less so diabetes patients do not have to exact a drop of blood each day for testing. In fact, Echo’s new product, Symphony will replace the “poke” with a “patch”. in order to make sure this new technology survive in the vigorous competition, alternative solutions and recommendations have been proposed accordingly.
Introduction
Diabetes self-care is a painful experience to all patients. Every day, they have to take a drop of blood for glucose testing. The need of daily insulin shots may even increase the risk of infection in that poking. In this light, it is important to find an alternative solution to help diabetes patients to monitor the blood glucose(BG) level and meanwhile completely remove the need for skin pricks and shots(MacRae, 2018). Echo Therapeutics, headquartered at Philadelphia, U.S, has developed a new technology to replace the “poke” with a “patch” as shown in the figure below(MacRae, 2018). This new technology will provide reliable and accurate on-demand blood glucose data conveniently and less costly. In fact, all of the current glucose monitoring systems are needle-based, which requires to insert a glucose sensor into the patient’s skin. The SymphonyTM transdermal continuous glucose monitoring system, or more known as tCGM system, is made up of four major parts, including the PreludeTM skin penetration, transdermal sensor, wireless transmitter and wireless remote monitor(MacRae, 2018). SymphonyTM incorporates Echo’s patented PreludeTM feedback mechanism to use its transdermal sensor to detect glucose trend. The PreludeTM Skin permeation system will painlessly remove the stratum corneum or the outermost layer of epidermis. It will enhance the accuracy of Symphony’s transdermal sensor to read the analytes as the sensor is much closer to interstitial fluids and molecules under the epidermis(MacRae, 2018). So far, Echo Therapeutics’ new product has been tested successfully when performing several home and hospital pilot studies. It shows a great potential to be commercialized in the near future.
Source Credit: EchoTX.com
Fig one: tCGM system
Focus of the analysis
Even though Echo Therapeutics’ new products and technology has many advantages, the market of blood glucose monitoring system is getting more and more saturated. If Echo’s new technology could not prove to patients that it is more inimitable and better than the products of major competitors, it is difficult for Echo Therapeutics to gain more market share and secure the financial sustainability in the long run.
Table 1: Echo Therapeutics’ major competitors
Source Credit: Diabetesnet.com
Currently, Medtronic MiniMed is now taking the lead in the U.S and global market for providing continuous glucose monitoring system. It occupies over 75% market share. In other words, it is difficult for Echo’s new product to easily shake the market status of Medtronic. In order to address this problem, Echo Therapeutics will have to develop a new technology or product which is significantly differing from the rest competitors. For instance, it tries to conduct a more accurate transdermal detection and introduce needle-free feature into its new product.
Exploration
As shown in table 1, besides the need-free feature, there is no remarkable differences between Symphony and other products. In other words, the high degree of availability of substitutes make it very difficult for Symphony to compete with the rest and secure its financial sustainability. In addition, Medtronic, DexCom and Abbott have very similar offerings. Each requires the patient to insert the sensor probe under the epidermis(Echo Therapeutics, 2018).. The reason why Medtronic is taking the market lead is that it offers a continuous glucose monitoring system with its Paradigm insulin pump. However, other competitors such as Animas is also going to develop glucose monitoring system by integrating its insulin pump with DexCom’s Seven plus. In other words, the market status of Medtronic is not unshakable(Echo Therapeutics, 2018).
When the first ambulatory continuous glucose monitor was approved by Federal Food and Drug Administration in 1999(Echo Therapeutics, 2018). However, the first monitoring system was large and bulky. Most importantly, these devices were always generating inaccurate results. Later, the size of the glucose monitoring system has become smaller and smaller due to technological improvement. However, traditional glucose monitoring system is a very small electronics device and measure the glucose level through a single drop of blood. Now the products have been designed in a way to provide quick and easy views of glucose trends and level at different time intervals, usually after 1hour, 3 hour, 6 hour, 12hour and 24 hour. Currently, as the aforementioned, many glucose-monitoring products tend to have very similar specification and features. In order to survive in the glucose monitoring market, Echo Therapeutics and many other firms would have to develop new products to suit the customer’s deeds. The major impact of vigorous competition, therefore, is to promote product development and innovation. Company such as Echo can produce unique and inimitable products. Otherwise as the switching cost is very low, customers may shift to other brands very easily.
Possible solutions
Two possible solutions have been proposed to address this problem. First, Echo Therapeutics could prove to all stakeholders including patients that its new products are inimitable through conducting pilot testing and pivot study. If the results are complying with the requirement of Federal Food and Drug Administration and hospitals, patients will be more convinced that Echo’s new technology and product have superior quality and switch back to Echo.
The advantage of this solution is that statistics collected from these researches are more reliable and tangible than word-of-mouth. If Echo’s new technology is proven to be more reliable, accurate and less costly, patients will be incentivized to use its BG monitoring system. As it also has product features such as needle-less, customers will be more interested in this new technology as it is less painful than other related technologies. However, the potential disadvantage is that positive clinical outcomes could never be assured. Usually two or three pilot studies will not be sufficient to test the reliability of the new technology. And it is often costly to invite hundreds of research participants in pivot and pilot studies.
Another possible solution is comparative advertising. As the aforementioned, the glucose monitoring device market is getting very saturated. Many products have very similar specifications. Hence, in order to make sure that patients are fully aware of the technological highlights and features of the new health technology, comparative advertising might be a viable option. The basic idea is to deliver the message to customers that Echo’s new technology is much superior. The advantage of this solution is that customers or patients will immediately know why Echo’s Symphony is better(Putrevu&Lord, 1994). They can easily do a mental calculation and derive a conclusion that it is worthy buying Echo’s products. The disadvantage of comparative advertising is that Echo might be sued by its competitors for unfair competition. It may also lead to the problem of price competition among major competitors.
Recommendation
In order to promote financial sustainability, it is advisable for Echo Therapeutics to employ the first solution, which is to conduct pilot and pivot studies in order to widely commercialize its new technology. In fact, according to the study of Bogan, Johnson & Mhlanga (2007), high level of competition will actually negatively affect the financial sustainability of a company. In fact, the feasibility for Echo Therapeutics to gain more market share is high. Echo has already conducted three small pilot studies. Before conducting the final pivot test, Echo Therapeutics is deciding to have the fourth pilot test by recruiting more than 350 patients to try its new glucose monitoring device(Echo Therapeutics, 2018). However, even though many researchers believe that the outcome may be positive but many factors may lead to potential failure.
Reference
Bogan, V., Johnson, W., & Mhlanga, N. (2007). Does Capital Structure affect the financial sustainability of MicroFinance Institutions. Retrieved on, 7(04), 2013.
MacRae, M (2018). Top 5 Medical Technology Innovations. ASME Retrieved from:https://www.asme.org/engineering-topics/articles/bioengineering/top-5-medical-technology-innovations
Echo Therapeutics, Inc.(2018). Equity Research. Boenning & Scattergood. Retrieved from:https://www.healthline.com/hlcmsresource/images/diabetesmine/wp-content/uploads/2009/12/ecte-initiation-boenning1.pdf
Putrevu, S., & Lord, K. R. (1994). Comparative and noncomparative advertising: Attitudinal effects under cognitive and affective involvement conditions. Journal of Advertising, 23(2), 77-91.