Hance Speaks on Innovations in Diabetes Management

Robert (Chip) Hance, President of Abbott Diabetes Care (ADC), addressed a group of MBA students on the topic of diabetes care and the blood glucose monitoring industry, speaking on a number of issues he and his industry face, such as how to balance marketing and R&D investment in a unique medical device space driven not only by technical innovation but also promotional campaigns such as direct-to-consumer advertising.

On Monday, March 3, Robert (Chip) Hance, President of Abbott Diabetes Care (ADC), addressed a group of MBA students on the topic of diabetes care and the blood glucose monitoring industry. This event marks yet another in a series of speaker events hosted by the Healthcare Club featuring a high-profile leader in the healthcare industry.

Mr. Hance, an alumnus of the Class of 1988, introduced himself as an anomaly of HBS: he is perhaps the only member of his class still working for the same company as that in which he started post-graduation, and also one of the few people in his class that initially took a job as a salesperson. Hance has had broad range of experiences with Abbott in sales and marketing roles, leading commercial groups in Europe, the Middle East, and Africa, as the President of the Vascular Division during the Guidant acquisition, and now in Diabetes.

The speech started with an overview of Abbott Laboratories’ business that includes pharmaceutical, medical device, diagnostics, and nutritionals groups and a corporate strategy to focus on competitive advantage through investing in research and innovation while spinning off more mature business units (such as Hospira in 2004). His Diabetes Care division, formed through the integration of MediSense (acquired in 1996) and TheraSense (acquired in 2004) is one of the fastest growing division in the company with annual revenues of about $1.25B.

Hance’s discussion focused on several key opportunities and challenges in the $7.2B worldwide blood glucose monitoring market that he has been focused on, most notably the uniquely brand- and marketing-driven nature of diabetes products. While competitors such as Roche and Johnson & Johnson’s Lifescan division have focused investment in direct-to-consumer advertising and other promotions, ADC and its predecessors have traditionally been focused on driving innovation through R&D investment and technology leadership. Hance anticipates increased emphasis on marketing initiatives as the types of products currently on-market become increasingly similar and commoditized.

In addition to today’s standard of discrete or episodic testing (i.e. use of one or more single-measurement test strips per day), ADC expects very soon to see approval by the FDA of its FreeStyle Navigatorr continuous glucose monitoring system that is expected to have tremendous benefits to Type 1 diabetes patients that compose the $2.5B intensive diabetes management market. ADC plans to integrate this technology, which provides near-real-time blood glucose data (and hence greater ability to manage the disease), with insulin pumps over the next few years, and hopes ultimately to provide a closed-loop system described as an “artificial pancreas.”

Nonetheless, regulatory approval and reimbursement for such new technologies have been great challenges for Hance and the company. While patient advocacy is great among this highly prevalent disease (the Juvenile Diabetes Research Foundation has raised hundred of millions of dollars), the FDA has committed to fast-track status for diabetes products, and diabetes is the focus of one of the largest congressional caucuses, the regulatory environment for in vitro diagnostics has been particularly challenging in recent years and insurers have demonstrated considerable resistance to reimbursing for new higher cost technologies despite the potential for more effective disease management.

After completing his presentation, Hance entertained questions from the audience and encouraged students interested in healthcare to consider Abbott Laboratories to explore summer and full time employment opportunities. Mr. Hance later joined a group of past, future, and candidate Abbott employees for dinner in Harvard Square.

March 10, 2008
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