What Should Investors Know About The Risks Associated With Dexcom (DXCM) Stock?

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Manufacturer DexCom Inc. (DXCM) has long been the sole provider of a continuous glucose ‎level monitoring system. This generated strong sales and rapid stock growth for the company. ‎DexCom, however, has faced serious competition from other suppliers of medical equipment in ‎recent years. How serious are those risks?‎

Today, the G6 device, first launched in 2018, is sold by DexCom. With it, diabetic patients, ‎without finger punctures and test strips, can track their glucose levels in real time. The 10-day, ‎one-time sensor transmits signals every five minutes to mobile devices (tablets, smartphones or ‎smart watches) and can also predict a potential spike in glucose levels, helping user to prevent ‎emergencies. The G6 model specifically describes the criteria that have allowed it to gain FDA ‎approval for use in conjunction with other diabetic products, such as insulin pumps.‎

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The G6’s high accuracy, as well as the convenience of the display, provided strong revenues and ‎market leadership for DexCom. However, the company had significant rivals a few years ago ‎who could claim a portion of the DexCom business. First of all, we are talking about the glucose ‎monitoring system produced by Abbott Laboratories (ABT) FreeStyle Libre 2. The system has ‎been licensed in Europe since 2018, and has been authorized for sale in the United States since ‎last quarter. In Europe, Abbott is also in the process of releasing FreeStyle Libre 3. In certain ‎ways, such as the length of work, Abbott’s approach is better than DexCom’s. The main benefit ‎of DexCom G6 at this point, however, is the ability to function together with an insulin pump.‎

Nonetheless, serious rivalry pushes DexCom to search for ways to improve the product’s ‎attractiveness. The business expects to launch a new version of its G7 monitor next year. ‎DexCom has not yet announced the features that its G7 will get, but says it will work to develop ‎its solutions technologically.‎

At the same time, the company anticipates price competition, among other items, so that it ‎works to minimize production costs in order to have greater flexibility in decreasing prices ‎while retaining profits. DexCom also tries to strengthen the distribution network, which also ‎gives space for reasonable rates to be handled.‎

The accumulation of user experience is an important benefit of DexCom. In its cloud system, ‎the organization has collected a large amount of data from linked devices, and can use this ‎knowledge to create customized diabetes care plans by analyzing patterns.‎

But the organization will still remain a strong player even if DexCom struggles to retain its ‎leadership position. The demand for treating diabetes is rising rapidly. Most monitors are now ‎focused on type 1 diabetes patients. But, increasingly, businesses are starting to place their ‎devices for type 2 diabetes patients, which is a huge market, and the number of patients ‎worldwide is growing. This means that many companies that manufacture glucose monitors will ‎function on the market successfully.‎

The DexCom Inc. (DXCM) shares were up 1.54% to $354.23 on Tuesday.‎

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