Abbott's (ABT) FreeStyle Libre Gains Canadian Reimbursement

Abbott (NYSE:ABT) has been hogging the limelight for developments in its flagship, sensor-based continuous glucose monitoring (CGM) system — FreeStyle Libre System. Recently, the company achieved another major milestone with this device following the receipt of public reimbursement in the two largest provinces of Canada, namely Ontario and Quebec.

With this reimbursement approval, FreeStyle Libre becomes the first sensor-based glucose monitoring system to be listed by any provincial health plan in Canada.

Under the eligibility criteria, Quebec residents who are 18 years or older and have two years of experience in diabetes self-management as well as use insulin multiple times a day are qualified for reimbursement. While regarding the residents of Ontario, those using insulin only are entitled to reimbursement under the public programs.

Developments in FreeStyle Libre

With its proven accuracy and easy-to-use features, the FreeStyle Libre system seems a perfect substitute for traditional blood glucose monitoring and allows patients to dose insulin based on the results.

Following the receipt of both the FDA nod and the Health Canada License in 2017, Abbott has been steadily progressing with its Diabetes Care segment.

The same year, U.S. Centers for Medicare & Medicaid Services (CMS) granted FreeStyle Libre for Medicare coverage. Post this approval, FreeStyle Libre become the only no- user calibration CGM device under the Medicare coverage, available for around 30 million diabetic patients in the United States. At present, alone in the United states, Libre is reimbursed for approximately 75% of people with private pharmacy benefit insurance.

The company also announced the receipt of national reimbursement for FreeStyle Libre in the U.K., marking another milestone.

Currently, this device is recognized as the best sensor-based glucose monitoring system in use worldwide. To date, this CGM system has been used by 1.5 million people across 46 countries.Notably, the FreeStyle Libre system is partially or fully covered in 33 countries including France, Germany, Ireland and Japan.

Of late, the company is seen investing heavily in its manufacturing capacity expansion for Libre to meet the buoyancy in demand worldwide. The first wave of that expansion will come online shortly.

Market Potential

An ageing population, unhealthy lifestyle, rising awareness and expenditure in healthcare are likely to drive growth further in the diabetes market. Moreover, per a Mordor Intelligence report, the global market for diabetes care devices is estimated to reach a value of $30.25 billion by 2021 at a CAGR of 5.93%. Given the bullish market sentiments, we believe, the recent reimbursement coverage for FreeStyle Libre has come at an opportune moment.

Share Price Performance

Abbott has been gaining investor confidence from consistently positive results. Over the past six months, the stock has outperformed its industry. It has gained 7.7% versus the industry’s 6.1% decline.

Zacks Rank & Key Picks

Abbott carries a Zacks Rank #3 (Hold). A few better-ranked stocks from the broader medical space are Baxter International Inc. (NYSE:BAX) , GW Pharmaceuticals PLC (NASDAQ:GWPH) and Neurotrope, Inc. (NASDAQ:NTRP) .

Baxterhas a Zacks Rank #2 (Buy) and a projected long-term earnings growth rate of 12.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GW Pharmaceuticals’ third-quarter earnings growth rate is estimated to be 72.8%. It currently sports a Zacks Rank #1.

Neurotrope has a Zacks Rank of 2 and an expected third-quarter earnings growth rate of 27.7%.

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