Today, we will break down Dexcom. Founded in 1999, Dexcom makes best-in-class continuous glucose monitors to help diabetics manage their blood sugar levels. With close ties to growing obesity rates, the diabetes market is big, expensive, and expanding. In the US alone, one-third of Americans are diabetic or pre-diabetic, and the cost of treating diabetes is expected to double over the next decade.
To break down Dexcom, Zack Fuss is joined by Aneal Tenjarla, an associate portfolio manager at Sofinnova BioEquities and an investor in Dexcom. During our conversation, we discuss how Dexcom's continuous glucose monitors have materially changed treatment, we cover the structure of the market and Dexcom’s competitors, and we discuss where the business may have future runway inside and outside of diabetes care.
I hope you enjoy this breakdown of Dexcom.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Show Notes
[00:02:37] - [First question] - What is Dexcom, their core product, and the size of their market
[00:04:43] - Overview of the expenses that diabetics accrue annually
[00:06:36] - Why continuous glucose monitors (CGMs) are important for diabetes management
[00:09:57] - Dexcom’s unit economics and their current revenue model
[00:14:10] - Whether or not there is a tech and regulatory barrier to entry
[00:16:18] - How a diabetic or prediabetic finds their way to a Dexcom device
[00:17:41] - Their current customer base and their revenue streams
[00:19:31] - What dictates if a practitioner will refer patients to Dexcom or Abbott
[00:21:56] - Why the problem Dexcom aims to solve is so culturally relevant today
[00:25:12] - What the next chapter for Dexcom’s business could be
[00:28:51] - Sizing the opportunity and optionality in this industry
[00:32:11] - Thoughts on Dexcom’s capital allocation decisions
[00:34:22] - Reasons why Dexcom could potentially fail in the future
[00:37:59] - Competitors arising in the wearable CGM space
[00:39:49] - Overview of their management team and what a good one looks like
[00:42:52] - Whether or not they plan on stepping into the pump and insulin space
[00:45:20] - Other externalities that consumer-friendly CGMs could create for consumers and insurance companies
[00:48:56] - Lessons for builders and investors when studying Dexcom’s story
[00:53:21] - A future where CGMs could be mostly implants
[00:54:18] - The value unlock consumer-friendly monitoring will provide
