U.S. Markets closed

Insulet and West Pharma Proven Winners in Growing Wearable Devices Market

- By Barry Cohen

With rapid growth projected for the market for wearable drug delivery devices, investors would be wise to consider some of the key players in the business.

Two standouts are Boston-area-based Insulet (PODD) and West Pharmaceutical Services (WST), which is headquartered in Exton, Pennsylvania. These companies don't make the drugs. They develop the devices patients wear that deliver the medications.

Both firms have rewarded shareholders handsomely. Insulet, which is worth more than $6 billion, trades at more than $103. That's up more than 150% during the past five years. West has been even more generous to its faithful. Shares of the company have soared more than 175% to $116 since May 2014, giving the company a valuation north of $8 billion.

Both Insulet and West may be a bit pricey for the short term. Each is now near its 52-week high and bumping against analysts' target prices. The investment community is more optimistic about Insulet. Of the 17 analysts following the company, 10 rate its shares a strong buy or buy, with the remainder pegging it as a hold. Four of the West analysts have it as a strong buy or buy, two rate it a hold and one a sell. Over the long term, both stocks look like winners.

During the first quarter, Insulet absolutely crushed the Zacks estimate for earnings per share. On a revenue gain of nearly 30% from a year earlier, the company earned 7 cents per share; Zacks projected earnings per share of 2 cents. In last year's first quarter, Insulet lost 11 cents. For 2019, the company raised its revenue expectation, forecasting that its top line would grow between 18% and 22% from 2018, to between $667 million and $690 million.

Wearable drug administration devices provided by Insulet and West typically deliver medication to patients over a period that can range from minutes to hours, according to a June 2018 article in Pharmaceutical Commerce. They're becoming more popular for a variety of reasons, including ease of administration and reduced pain.

A good example is Amgen's (AMGN) single-dose monthly injection option for the cholesterol drug Repatha. The drug-device combination, which was approved by the FDA in 2016, uses West's wearable infuser with a prefilled cartridge called Pushtronex. Amgen also markets an on-body injector that delivers a drug aimed at reducing the side effects of chemotherapy.

The global wearable injectors market is growing rapidly and is expected to reach more than $9 billion by 2026, according to a report from Transparency Market Research. The rapid growth is attributed to an increase in incidence of cancer and diabetes, and the emergence of advanced technologies.

In addition to Insulet and West Pharma, three other drug-delivery companies were cited as being among the top five in a late 2017 article in BiosSpace. They were Becton, Dickinson (BDX) and the Bespak subsidiary of U.K.-based Consort Medical (LSE:CSRT.L). The third was Enable Injections of Cincinnati.

Last October, Enable closed a Series B financing round that was expected to net the startup $50 million. The round was led by Sanofi (SNY) and included previous investors lORI Healthcare Fund, CincyTech, Cincinnati Children's Hospital, Ohio Innovation Fund, Cintrifuse, Cleveland Clinic and others. The company is going to use the money to scale up manufacturing of its enFuse drug delivery system.

Disclosure: The author holds a position in Amgen.

Read more here:

AstraZeneca Needs New Breast Cancer Drug to be Blockbuster

Heed Analysts' Advice on Lundbeck: Sit Tight

Genfit, Cymbay Hope to Crack Large Liver Disease Market

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.