Ten months after spinning off from BD, Embecta CEO Dev Kurdikar lays out what the future holds for the diabetes technology company.
When Embecta became a standalone company in April 2022, CFO Jake Elguicze said he felt it was “uniquely positioned.”
As a pure-play diabetes technology developer, its beginning phase hardly mirrors a normal startup. The former diabetes arm of BD brought with it nearly a century of experience in the space.
Elguicze said Embecta had scale at about $1.2 billion in annual revenue. It also kicked off with a strong geographic reach and no ties to any one product.
Still, CEO Devdatt “Dev” Kurdikar last week told Drug Delivery Business News that the past 10 months still involved a lot of work around the spinoff. But, the future looks bright for Embecta, he says.
“We’ve taken a business that was part of a much larger business for close to 100 years,” Kurdikar explained. “Now, we’re doing the work of separating it. There is a lot of work in standing up your own independent company. So, our team has been hard at work on that.
“There have been just a number of global operating challenges. So in addition to all the work related to the spin, my team has been navigating through all those challenges as well.”
Embecta starts 2023 off right
The company kicked off its first full calendar year as a standalone company by opening up its new headquarters. The 55,600-square-foot office suite offers employees both tools and flexibility to collaborate.
It includes ample open workspace, spaces for video conferencing, huddle rooms and reservable private spaces. The Embecta headquarters also has a showroom for product demonstrations and on-site customer meetings.
Kurdikar explained that the Parsippany, New Jersey, location, near BD’s Franklin Lakes headquarters, offers all kinds of features conducive to innovation.
“We love the space,” he said. “I can just see it becoming a hub for the kind of activity we want to encourage, which is constantly innovating, constantly thinking about what can we do as a company to make life better for those living with diabetes.”
The company ended 2022 with its first full-year fiscal results, which pleased Kurdikar and the team, he said. Embecta topped its financial guidance and set itself up for a big 2023.
It still must implement its own distribution network and enterprise resource planning (ERP) system globally. The company also must manage the shutdown of a plant in China as it transfers ownership of the entity from BD.
“As a young company, it’s the kind of start you would want,” Kurdikar said. “But, at the same time, we recognize there is a lot of separation and standard work to be done. … There are a lot of big projects ahead of us that the team has been hard at work on.”
What is the company looking forward to?
Kurdikar said Embecta’s current estimates figure that 500 million people live with diabetes and that may grow to around 800 million in the next 25 years.
He believes most of the company’s growth lies in emerging markets. Its aim — for now — is to diversify its product portfolio and bring market-appropriate products to the right people.
“The needs in India and China are going to be different than the needs in us in Germany,” Kurdikar explained. Right. “What we are doing is laying the groundwork for the products we can add to the portfolio that can serve the people in emerging markets where there is going to be growth in the number of people with diabetes.
“But, at the same time, find people in developed markets that we can bring advanced solutions to. That’s going to be a mix of many product licensing/partnership opportunities as well as internal R&D.”
Embecta formed a U.S. partnership with automatic push-button fingerstick glucose reader developer Intuity Medical. It also has partnerships in China and France over different technologies.
The company is also developing its own insulin patch pump for the type 2 diabetes market. Kurdikar said all its moves at the moment lay the groundwork for understanding the company’s own strengths.
“Our core strengths are high-volume manufacturing and distribution,” he said. “Then, we have a great commercial channel. How do we add products to the portfolio to allow people with diabetes to have more access to products — through us — other than just injection devices? That’s sort of where we’re headed.”
About the Embecta insulin patch pump
Questions arose at the end of 2022 around the development of Embecta’s insulin patch pump. Prior to the company’s fourth-quarter earnings report, analysts maintained their neutral rating for Embecta. They plan to reevaluate the company when it releases more details on its attempted entry into the insulin patch pump market. However, the analysts weren’t expecting much.
“Any meaningful update on development stage or timelines for potential FDA submission would be a positive for EMBC shares, in our view,” they wrote.
In the earnings report, Kurdikar called 2023 a “critical year” and mentioned that growth opportunities include the “further development of our type 2 closed-loop insulin delivery system.” The closed-loop system Kurdikar mentioned utilizes the company’s proprietary patch pump. It carries FDA breakthrough device designation.
Kurdikar told DDBN that Embecta is designing the patch pump to address the unmet needs of type 2 diabetes. He said those with type 2 diabetes require more insulin today than type 1. Because of this, the company designed the pump with an increased reservoir capacity.
A major aim for the technology centers around simplicity. Kurdikar said Embecta designed it with the notion in mind that type 2 often comes in the form of a progressive disease diagnosed in adults. That factors into the design of the alarms and user interface, in particular.
“We’re designing it for the user needs of type 2,” Kurdikar said. “The type 1 market penetration in the U.S. is somewhere in the 35% to 40% range. Type 2 is much less. We certainly think the reason for that is that these pumps have been designed for type 1. If we design a pump for type 2, it will certainly unlock an opportunity for us.”
Kurdikar is looking forward to bringing the pump through Embecta’s retail channel as well. The timeline for the system, however, still remains unclear.
“We have some but not all of the infrastructure already in place,” Kurdikar said. “We’re very excited about it but did not say anything about timing. We want to get further ahead on development before we get specific on timing, but we’re very excited about the progress.”
Innovation in diabetes
Embecta has already inked partnerships with a handful of companies developing promising diabetes technologies. Kurdikar said the company sees “lots of smaller companies coming up with innovative solutions.”
He said Embecta represents a “great partner to consider” with its commercial channel. According to Kurdikar, the company can put these innovators’ products into the hands of people around the world.
“We are in a strong enough position with a very stable core business,” Kurdikar said. “It’s provided us a good platform to make sure we’re putting the right building blocks in place.”
Over the coming years, he expects to transform Embecta’s product portfolio, whether through its own developments or through working with these companies. It’s going to take time, Kurdikar admitted, but Embecta remains poised to positively impact the diabetes community.
“In our view, there is so much unmet need in this space,” Kurdikar said. “Innovation, whether it’s done by established companies or by smaller companies, is going to advance science and make life easier for people with diabetes. We welcome that.”