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For many people the beginning of the year is a time to make resolutions, and naturally better health and lifestyles feature high on the list of priorities. In the UK, about 40 per cent of resolutions are health related. Given the added focus on health at this time of year, the Positive Change Team would like to put a spotlight on our investments in companies addressing diabetes, within the portfolio's healthcare and quality of life theme.
Diabetes: what’s the big deal?
Two healthcare companies entered the Positive Change portfolio in 2024, both of which have or are developing products to tackle diabetes. So why the focus on diabetes?
The answer to that question is 14 per cent.
14 per cent of the global population currently has diabetes. While that proportion is not extremely high, what’s alarming is that in 1990 that figure used to be 7 per cent. What is even more alarming is that the rise has not been uniform across the world, low- and middle-income countries have experienced rising levels of income since 1990 and, in some cases, there has been an explosion in rates of diabetes prevalence.
Take Pakistan for example, where the rate of prevalence among women in 1990 was 9 per cent. Today, that figure is 30 per cent. In several countries the rates of prevalence have increased to over 20 per cent. Experts project that the numbers will only continue to increase, led by low- and middle-income countries.
The impact of diabetes
Diabetes is a relentless condition and the burden of managing it means that it can be challenging to achieve good health outcomes. Careful planning, multiple blood tests and injections can be a feature of daily life. Failing to manage diabetes correctly can lead to the development of cardiovascular disease, kidney damage and potentially sight or limb loss.
By 2030, the global healthcare cost of managing diabetes is expected to reach $800bn, with a wider economic cost of about $2.5tn due to increased mortality and productivity costs.
So, diabetes is growing, and fast. The status quo is not sustainable.
Sparking positive change
Big global challenges demand innovative solutions. Companies that can significantly improve on the status quo can reap rich rewards. Positive Change uncovers and invests in these companies, by tapping into uncommon sources of insight to inform our view of what the future could look like.
The Positive Change Team use a wide range of sources, speaking with companies of all sizes, and industry experts, to find companies on an upward trajectory. We want to help them solve our biggest challenges but also make attractive returns, as these companies scale their businesses and achieve their potential over time. This is the approach that allowed us to find investment opportunities tackling diabetes.
Managing diabetes with 21st century solutions
Two companies in the portfolio, Dexcom and Insulet, are changing the game when it comes to managing diabetes.
Dexcom
Positive Change first invested in Dexcom, a manufacturer of continuous glucose monitors (CGMs), in 2017. At the time, Dexcom had 250,000 people using its CGMs and made just over $500 million a year in revenue. However, the Positive Change Team saw Dexcom’s potential and the opportunity that it had to grow by improving health outcomes for diabetics.
Today, over 2.5 million people use Dexcom’s CGMs. It generates annual revenue of over $4bn and has been one of the most profitable investments in the Positive Change portfolio.
Dexcom's continuous glucose monitoring (CGM) technology allows people to check their glucose levels at any time
© Dexcom
Dexcom’s CGMs are waterproof, offer real-time blood glucose data, communicate with other devices that can be used to manage blood sugar levels and can even be used by children as young as two years old. CGMs provide peace of mind for parents, require no invasive finger prick tests and can monitor blood glucose levels from afar in real-time without interrupting sleep patterns for testing!
Crucially, Dexcom supports better health outcomes through ease of use and precision. Healthcare systems benefit as there are fewer patient complications to treat, so lower costs.
The future looks bright for Dexcom. Further expansion into international markets outside the USA, wider adoption in its core USA market among insulin-intensive type 2 diabetics and prediabetics are significant opportunities within reach, that promise to bring with them rich rewards.
Insulet
Complementing Dexcom's technology is Insulet, a company in which Positive Change first invested in July 2024. Founded in 2000 by a father seeking better diabetes management for his son, Insulet developed the only tubeless insulin pump, the Omnipod.
When we invested in Insulet it had 425,000 patients and revenues of $1.7bn. Insulet's pumps are particularly popular with type 1 diabetics, who make up roughly 10 per cent of all diabetics. Insulin pump penetration within this group is still below 40 per cent, and Insulet has a far bigger market to go after in the type 2 diabetic population. There is a substantial and long growth runway ahead.
Our edge lies in our ability to look to the long-term.
The Omnipod is a game changer, particularly for parents of young children.
It can be controlled with a phone app and communicates with CGM devices such as Dexcom’s to monitor blood glucose levels, automatically delivering the right insulin dosage.
The tubeless design means physical activity, even swimming, is possible as there are no cumbersome tubes, it’s waterproof and can be worn in several areas on the body, unlike tubed designs.
Insulet's Omnipod is a game changer for diabetics
© Insulet
This is an exciting time to invest in Insulet and there is a lot of growth to come. The market for insulin pumps is set for strong growth, with projections indicating a quadrupling to $20bn by 2030. This surge is driven by the increasing prevalence of diabetes and the growing adoption of insulin therapy among type 2 diabetes patients.
The simplicity and convenience of the tubeless design and automatic dosing should see Insulet take a significant share of this growing market.
What about GLP-1s?
Despite recent notoriety as anti-obesity treatments, GLP-1s have been used to treat diabetes for 20 years. We have followed the development of GLP-1 based therapies for some time. While the recent pivot towards treating obesity with GLP-1s has excited the market, Positive Change has remained interested but has not found an investment opportunity in which we have sufficient long-term conviction versus extreme expectations.
It’s crucial that the solutions we choose to commit our clients’ capital to are able to tackle the growing global diabetes challenge meaningfully and sustainably.
Could there be a cure?
Potentially. Vertex Pharmaceutical, which we also added to the portfolio in 2024, is working on a stem-cell therapy-based cure for type 1 diabetes. Early clinical trial results are promising and Vertex has been granted fast-track designation by the US Food and Drug Administration. There is still a long way to go, but this treatment could be on the market in the early 2030s.
Vertex Pharmaceuticals invests in scientific innovation developing groundbreaking treatments for people with severe illnesses © Vertex
We are always challenging ourselves and our holdings on innovative technologies that can disrupt existing profit pools, and hopefully solve major challenges at the same time.
A healthier future
The urgency to tackle diabetes cannot be overstated; however, the pace of innovation offers hope.
By investing in innovative companies through Positive Change, you can play a part in sparking transformative solutions that not only address this growing health crisis but also yield attractive returns.
Join us on this journey towards a healthier future – where your investments can truly make a difference while outperforming the market. Explore our Positive Change fund page for more details on how we are investing to address the biggest global challenges.
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