I think we're live. Hello everyone, I'm Robbie Marcus, the Med Tech Analyst at JP Morgan. Thanks for joining here before lunch. Happy to have our next company, Dexcom. Going to introduce the CEO, Kevin Sayer, for presentation, then we'll do some Q&A after. Kevin?
Thank you, Robbie, thank everyone for coming today. For those of you who know me, I've been in the diabetes business since 1994. That's when I saw my first glucose sensor. It was hardwired and attached to something that looked like a crude high school basketball scoreboard and dipped in a beaker of glucose solution. It showed the number, I thought the technology was done. My little naive financial mind wasn't quite where it was supposed to be 'cause it's taken a long time to get where we are today. Oh, how things have changed. Back then, all we wanted to do is display that data on a pump. Now we display that data on a phone, it goes to the cloud. When it goes to the cloud, others can see it. It can be shared.
It goes from the cloud to software that physicians use to monitor patients. If you wanna hear about telehealth stories during COVID, call our doctors because Clarity provided a tremendous platform for them to monitor and see their patients. We don't just display on a pump. With sophisticated algorithms, we control insulin delivery and have people safer and happier and better than they've ever been before. We've done a great job in diabetes, but as we look forward, as we go forward, that's not gonna be enough. We're barraged with requests to use this product in Type 2 diabetes and health and wellness in the hospital for pregnancy. We've changed our core mission statement. We've gone from empowering people to take control of diabetes, which we will always focus on, but a broader definition in health.
Let's take a look at the progress we made along that path in 2022. It was a great year for us. Our organic growth was 19%, we finished revenues at approximately $2.91 billion for the year. That growth was fueled by, again, another strong presence in the U.S. and faster than, you know, accelerated growth in our own U.S. markets. Our patient base is now 1.7 million customers globally. On the scale side, we picked up over 500 basis points of leverage on the operating expense line. More important on the scale side, as you got up every morning and read about customers with supply chain problems not meeting their deliveries or their commitments to their customers, we met all of ours. Nobody went without a Dexcom.
Some of our big wins this year were on the access front, internationally, where we got a lot more coverage, and also with the recent CMS recommendation that all insulin users be covered for the use of CGM. Finally, we had two key product launches, Dexcom ONE in Europe earlier in the year, and then upon approval of G7 in Europe, then we got G7 approved. It's here, and we're very excited about what 2023 presents for us going forward. Our guidance for the year is released this morning, revenue growth of 15%-20% for the year, and that's a revenue range of $3.35 billion-$3.49 billion for 2023. Couple things included in that of note, about a third of our new customer adds in Europe are gonna come through the Dexcom ONE platform.
We're very excited about that. With respect to the G7 launch, we're launching that in the U.S. We are gonna have a temporary bridge program for G7 for some time to enable people to get access to that technology while we build out the reimbursement. One of the other questions we'll be taking, I'm sure even more later today, is how does this affect of the basal insulin approval? How does that affect your guidance for the year? We've only got about 1% of our revenue related to that. We expect that approval to come in the second half of the year and grow from there. On the gross margin side, this is very much a transition year for Dexcom as we transition from G6 to G7. Whenever you transition from one product to another, you know there's gonna be hiccups.
This product will cost more to build in the early phases 'cause we're not building it at quantity. Over time, the manufacturing costs come down, and it will be less expensive to build than G6, but not out of the gate. Add to that the fact that we're opening up a 900,000 sq ft plant in Malaysia over the course of the year to start manufacturing from, which will also add cost to the manufacturing line, and you can see how those margins got where they are. We'll also continue our operating leverage improvement with operating margins projected at 16.5%. We will not stop investing in our business on the infrastructure side commercially to get to more patients and get to more customers, but also on the R&D side as we develop new product offerings for the company going forward.
We've sustained quite a growth rate here for several years, and that speaks to some pretty sobering statistics. Diabetes is a crisis that still is not at all under control. In 2000, there were 150 million people diagnosed with diabetes around the world. As you look at 2021, it's over 500 million. As we get to 2045, it's approaching 800 million people. As staggering as the number of patients who have diabetes is, the cost of controlling them is even more staggering. An individual with diabetes costs the system nearly 2.5 x more than somebody without it. Many of us over the next several days are gonna stand up at this microphone and tell you about all these great diabetes technological advancements on the pharmaceutical side and the device side.
The fact is, over the past two years, the global diabetes-related health expenditures are up 27%. It's getting more and more expensive. We believe at Dexcom we are definitely part of the answer to this situation, not part of the problem. This gives us really an opportunity to make a big impact going forward. Let me give you a couple examples of how we make an impact. This is a typical intensive insulin user from the past who stuck their finger. Woke up in the morning, sitting at 80, doing pretty well. Spike right before or after lunch 'cause they didn't take enough insulin after breakfast 'cause I was so low. Come down. Pretty good day. Patient will be very happy with this.
When this patient puts on a CGM, it's a completely different story, as this patient spends 13 .5 hours above the recommended range of 140 on this chart and spent the entire night pretty much 80 and below. Somebody who has glucose values like this might have an A1C that looks reasonable, but the fact is it's not. Quite, you know, simply, all this time spent low is very dangerous. One of the new measures in our industry now is called Time in Range, and that's the time you're within the target range recommended by professional societies. This patient spent less than 20% of their day in range. If you think this technology is valuable for intensive insulin patients, let's take a look at somebody who's not on insulin, a Type 2 patient.
My mother suffered from Type 2 diabetes for a long time. She knew I was in the diabetes industry. Anytime I went to visit, she would stick her finger and show me between 7 and 7:30 A.M. every morning that she was in control. Yeah, she really wasn't. Very similar to this patient, this is what her life was. 17 hours of the day is spent above the target range. Now, Type 2 patients don't typically have the risk of going low and don't have that acute risk of being hospitalized for going low. This time spent high is extremely dangerous over the long term. This is what contributes to cardiovascular disease, kidney issues, amputations, blindness, you name it, across the board. These high glucose values are very dangerous. We can do more to help across the board.
We can do more to help in Type 2 diabetes by giving people information. We can do more in Type 1 by driving more automated systems. Dexcom can do more to make this better, that is how we're gonna grow in the future, by doing more, and our G7 platform really gives us the opportunity to do that. You know, as you look at our industry since I've been involved at Dexcom, that's been an 11-year timeframe, pretty much every significant technological advantage in the industry has come from within the walls of our company. The first reliable, accurate sensor that somebody can make decisions on came from us. The first ICGM standard meeting sensor with the FDA came from Dexcom. The first product directly to a phone came from Dexcom. Sharing data came from us. Integration with other systems came from Dexcom.
This is our next big thing and our next big advance within our company. There are a lot of great things with respect to G7 that we're very excited for. Over time, as I said earlier, manufacturing costs come down, it will be less expensive to build. It also is a 50% smaller plastics footprint with respect to the environment, which we think will be very important for us going forward in many reimbursements areas. It is the most accurate CGM ever launched on the market, the performance will show that as patients use it. One of our core values at our company is to listen, we listen to our customers in great detail as we got ready to launch this product. This is what they're saying now. G7 is truly living up to expectations in the marketplace.
People absolutely love the app. It provides more insights. Time in Range data is included in our software app, so you can see how you've done for a day, for three days, for a week, for a couple of weeks. That's a great feature for people. The 30-minute warm-up is something that's wildly accepted. People used to tell us the two hours they waited for the next sensor to warm up were the worst two hours of their month or their week or what have it. The accuracy is greatly appreciated, but the number one feature people come back to us with is, "You have heard us. You have made this much more simple." There's really only, I think, three steps to putting one on, and the small form factor, 60% smaller than G6 was.
All these things make this a more simple platform, then we can move on, and we can do other things with going forward. It is absolutely meeting the expectations that we hoped it would meet. What's next? We've launched in six countries in Europe. We've rolled it out. We're now gonna roll out more aggressively in those countries as we're through the holidays. We have waves planned for the rest of EMEA and those markets for 2023, and then rolling out into APAC in early 2024. With respect to the U.S. right now, the key thing for us is to build access and to gain reimbursement for our customers. The first channel where we'll have reimbursement will be the commercial DME channel, and our G6 contracts can migrate to G7 quite quickly. We've already filed the necessary paperwork for CMS to approve G7.
We expect that approval probably end of first quarter, sometime early in the second quarter, that should come. Last, the DME commercial, I mean, the pharmacy commercial channel in the U.S., where you have to go back and speak with payers, the PBMs, and everybody else to get through that channel. We expect broad reimbursement by mid-2023. In the meantime, we will do a bridging program to allow patients to buy this for cash, they have access to that technology. We don't wanna deprive it from anybody. You know, when I say the word building, in addition to building access, we're building inventory.
Last, the biggest question we get is, "When are you gonna connect to my pump?" That will come at the pace of our pump partners, but that should happen over the course of the next couple years. You'll hear from Tandem and Insulet later on at this conference. We've been preparing for this day for a long time. We needed G7 to get here. Even with all the advances we've made in this market, in our core intensive insulin market in the U.S., only 50% of patients have CGM right now. By getting this basal access that CMS has now approved, we're actually doubling the size of our addressable U.S. reimbursement market. Reimbursed market today. We've never had a smaller penetration number in the U.S. than we have right now, once this thing gets approved.
We will have a lot of room to grow in the U.S., and we're very excited about it. We've been planning for this for quite some time. Our commercial efforts is very much focused on making our products simpler to prescribe. As we've gone down the pharmacy channel, we've done that. We work at every opportunity also to decrease paperwork on the DME side. With respect to pharmacy coverage, 75% of our commercial business now comes through the pharmacy channel, and 70% of those people pay equal to or less than they pay for our biggest competitor, a common misconception among many of you and even physicians and patients out there. On the DME side, we are working to expand and grow and make it more efficient in that channel as well.
Many of our commercial patients still go through DME, and almost all of our Medicare business goes through there, including the basal insulin opportunity that will come going forward. For all of us, with an ICGM product, Medicare reimbursement is equal, and the amount of copay by a patient is also equal. The perception that we haven't dealt with or addressed copays is not a good one. We've done a very good job of that going forward. Dexcom is the number one covered and reimbursed CGM on the market today. I talked about us planning for this for a long time, I wanna take you back a few steps. Many years ago, we started the MOBILE study to provide the data that's the primary data for covering CGM for basal patients. That was a Dexcom study.
On top of that, in 2021, we doubled the size of our U.S. sales force because we know most of these new patients on that graph are gonna come from primary care offices, not necessarily from DME. I mean, not necessarily, excuse me, necessarily from the endocrinology office. We've introduced our sampling program. We have great electronic tools to show these physicians and these healthcare professionals how easy we can get the product to them. We've had great results. We've doubled our prescriber base on the PCP side and the number of patients that come from that over the past couple of years. We're not gonna stop there. We'll continue to grow internationally. Our first focus in the international market will be in existing geographies where CGM is well known and reimbursed.
We've picked up a lot of business in those countries as we had accelerated growth in 2022. One of our key efforts is to reduce administrative barriers to get our product. We've started from next to nothing over there and we've grown, we've had to get rid of a lot of paperwork that held us back from getting to many people. I'll talk a bit more about some of the reimbursement we've gained later. We've also leveraged an e-commerce platform to great length in some of the international markets, and we've gone direct in strategic markets on an O.U.S. basis where it made sense. If you again go through our history, we've gone direct. We've gone from just Germany to Germany, the U.K., Benelux. We went direct in Spain. We acquired our distributor in Australia. We're direct in Canada.
Many direct efforts by us to position us better, to grow infrastructure overseas. One of the things that we are very excited about is our new product portfolio strategy that we really rolled out in 2022. As we looked at markets O.U.S. , there are some that have very broad reimbursement. For those, our G-Series product will be the product of choice, giving patients all the features and warranty and service that we've done in the past, we will continue to do. Other markets where we can't make an investment 'cause there's just not enough infrastructure for us and where there won't be the support necessary for a G-Series product, we can launch the Dexcom ONE product on an e-commerce platform and get that going.
One of the best things that happened in our e-commerce launch of Dexcom ONE earlier in 2022 is two of the four countries, after seeing the demand, approved it for reimbursement because we can grow those markets and gain traction. Across many of the mature CGM markets in Europe, it is a two-tiered system. There are patients that are identified as high-risk patients who need a G-Series product that will attach to a pump or a pediatric patient, or they're hypoglycemic unaware, and they need the flexibility, the alerts and the alarms that we offer more than anything else. There's another category that we've not been able to participate in before, and that's just what I call regular CGM. Dexcom ONE is designed for that other category. With this product portfolio strategy and our other efforts, we've gained a lot of access in our U.S. markets here.
An additional 3.5 million people in the international markets will have access to Dexcom technology than had it before. We've really done this through a number of factors. I talked about our direct business and going direct in some of these countries earlier. We provided great clinical evidence. Many studies that we've run have gone to drive reimbursement in these countries. The two-product strategy is gonna be very good for us. All these things have helped us expand access in the international markets, and they'll provide a great growth opportunity for us going forward. We're very excited about it. That's not it. That's not all. We're not gonna stop with just the international growth and the Type 1 intensive insulin growth and basal growth in the United States.
We've had an eye on Type 2 diabetes for a very long time. All the studies we've done irrefutably say this product makes a huge difference in Type 2 diabetes. A huge difference. Whenever we talk to patients after a study and after they've used this, and they've seen great improvements in their A1C and their life, we ask the question, "What happened?" They all point to the CGM. "The CGM gave me the information I've never had." Somebody with Type 2 diabetes is told, as my mother was, "Eat less, exercise more, and take your meds," never knowing the effects that those things have on their metabolism. CGM opens up that window. We know it's a different market. We know it's a different consumer. We know it's a different customer.
Channels may be different, in fact, we know there's three things we have to do to be successful here. The first one is user engagement. One of the key learnings of the MOBILE study, all the patients who did the best were the ones who wore the sensors all the time. In these programs that we have run, continuous sensor wear leads to much more engagement and people doing much better. We have to provide outcomes. If the cost of a patient is 2.5 x more with diabetes than without it, we can't just throw another cost on the pile and say, "Pay for it." We have to provide good outcomes with CGM. We're very confident that we will, and there has to be a return on investment.
Many of these programs have shown cost savings to the tune of $400 a month with Type 2 patients who wear continuous glucose monitors. I don't think you can show me a program that does better than that. We have to drive that, and we'll drive that in the future going forward. Even as you get into health and wellness, we're seeing a lot of these programs that you read about incorporate CGM into their platforms, their software platforms, even some who are putting patients on diabetes drugs to lose weight. Over and over again, the response is the same: "I couldn't figure out what was going on in my life and with my metabolism until I got put on a CGM." Connectivity is very important for us going forward. We aren't smart enough to have the answer for everything.
Some of these software apps may, in fact, provide better experiences than we can. We connect with our direct customers on the pump side, on the pen side, and we offer several digital apps access to our data. It's important that we remain connected with caregivers in the system and medical providers, and we'll continue to do so. Connectivity is gonna be very important for us going forward, and we offer several connectivity solutions, not just one. As you look at our map and look at us trying to take control of health, what we do today in Type 1 diabetes, Type 2 intensive insulin therapy, and the basal market is a great business, and we are very bullish on what we'll be doing in these markets going forward.
Where we're headed, these opportunities are huge, and we are very excited to go after that. The G7 will make a big difference in giving us a platform with size and performance that will get us there. Everybody who goes to work at Dexcom every day knows why they go. We go to get a kid to go to their first sports camp. We're gonna go to help somebody with Type 2 diabetes actually have hope that they can do better. We come to work that someday will be in the hospital, and you don't have to get your finger stuck every 30 minutes for five days. That's 48 fingers, six days for five days. Do the math. It's awful. We go to work to integrate with other systems. Thank you very much.
Well, you guys, pre-announced fourth quarter results earlier today, and you gave some 2023 guidance, so I wanna start there. Fourth quarter beat the street by a little bit, maybe not as big as the third quarter, but still really good trends. You know, what kind of color can you give us in terms of how new patients trended? Was there any impact from G7 deferral, or as people are thinking about getting a G7, any U.S. versus international commentary?
You want me take that?
Yeah, go ahead, Jereme.
All right. Yeah. Early on, I think the feedback was certainly it looks like strong unit volume growth, consistent with what we saw in prior quarters. Certainly we were happy to see that. That would indicate that it's a strong patient quarter. Now, we don't have the numbers yet. We're tabulating those. It's a little bit early to do so. But unit volume growth, which is a good indicator of underlying patient base, was strong.
When you factor that into where folks were getting their product, we did see a lot of folks going to the pharmacy. That continued move to the pharmacy is continuing to play out. Kevin mentioned 75% of our patient base is now getting access through the pharmacy. All in all, I think it was strong unit volume, strong patient, strong pharmacy coverage or strong pharmacy access, and all in all, pleased with the quarter and the performance.
Occasionally you guys will give us a year-end patient number. The patient numbers are a lot bigger now, so might be a little more difficult to get to at this point, so soon after the quarter. any-.
No, actually, I if I didn't give it was on a slide. We're at 1,000,007.
Approximately 1.2 million.
Approximately, yeah.
Split between U.S. versus O.U.S. ?
We haven't given the split. We typically don't. $1.25 million was the entryway and exiting at $1.7 million, anchored a little bit more on O.U.S. as the O.U.S. is growing at a little bit of a faster clip.
As we take that growth, and I'm not good at mental math, but it's a big number year-over-year.
Yeah.
You're at 75% in the pharmacy. The mix shift headwind in the U.S. is pretty much done on a quarter-over-quarter basis, but still a little bit incremental in 2023 on a year-over-year basis. You know, how do we reconcile that really strong patient growth, which I imagine will continue with all the tailwinds you talked about up here, relative to the 15%-20% sales growth?
Sure, yeah. I think the first thing we would say is, we are very bullish on the business. When we provide guidance, you know, our guidance is around providing at base case, certainly the 15%-20% will represent a base case. Do we expect to continue to grow? Yes, we do. There's a few factors that contribute to why we gave that guidance. I think first and foremost is, we talked about a bridge program. The bridge program we expect to be about a $20 million-$30 million cost in the first quarter. That's something we are going to do. We're going to get folks access to this product, that's what our intentions are.
As you start to contemplate the bridge program, and you start to contemplate timing of basal, which we expect to be in the second half of the year, you factor those in, and that's why you ultimately end up in that 15%-20%. At the end of the day, the underlying unit volumes we expect to be strong. We expect to see the delta over time shrink between unit volume and growth, but we also don't wanna get ahead of ourselves.
No, and Robbie, one of the things that everybody knows is we've looked at selected international markets, for example. If we have the opportunity to reduce price and increase volume significantly, we've taken advantage of that. We'll selectively pick opportunities like that if it improves access enough for us to go do it. We don't expect a year of 15%-20% volume growth, I can tell you that. We expect. While the delta may come down, we're still planning on building a lot more sensors than that 15%-20% will show.
That $20 million-$30 million cost you talked about, is that contra revenue? Is that on the top line that we'll see it?
Right. Correct. Yep.
Okay. Does that go away as you get some of those commercial plans moving forward into the new year?
That's exactly it. Exactly. The thought process is, folks are gonna wanna have access to this. This is our way to ultimately get them access as we're working through those contracts. The expectation is early on, it's bigger. It dissipates as those contracts come through. As Kevin mentioned, we expect to have a majority of the coverage really sitting in place by the end of the second quarter. It should dissipate after the first quarter into the second quarter and beyond.
It doesn't make sense to us if we have coverage and someone can go to. As I said earlier, 30% of pharmacy plans have zero copay. It doesn't make sense for somebody to come in and pay when they have zero copay. As soon as we get coverage, we wanna shift patients into the reimbursed model as aggressively as we can.
Makes sense. Type 2 basal, which is the numbers show a huge new market opportunity for you, just opened up reimbursement or should re-open up end of first quarter or second quarter, you talked about. It looks like there's about a percentage point of growth in 15%-20% for Type 2 basal. You know, how should we think about that? Is that more of a, it's a new market?
It's part of the base case scenario, Robbie. I mean, you know, we try and put a base case together. We estimate a July first approval for that. As you look at July first, the number of users we have today, the number of users we'll have then just as a company and adding it on, for this to make a significant numbers impact is pretty tough in six months. I think over time, it becomes a very significant business, but we kinda have to grow it and get it started. This is a base case. Could we overachieve that? Yes. If it comes earlier, do we overachieve that? Are we ready? The answer to that is yes as well. We're building G7 inventory and getting ready for that.
You know, one of the things we have to have, I didn't show it when I spoke, have to have a receiver from Medicare. I've got my new Dexcom G7 receiver right here. As we can tell, looking at this, I've got the old adrenaline spike going on as I've gone from 90 to 132 sitting here on the stage. If you wanna learn about what speaking at this conference does to your health, just call me.
How should we think about commercial plans moving to basal Type 2? Do you think you'll get as good a kind of a label or an opening from the commercial plans as Medicare gave you?
You know, it took time. The last time Medicare approved this, actually, we were at this conference several years ago, and I said it would take a year and a half, and Medicare approved CGM on my plane ride home. We weren't ready at all. It did take commercial plans almost two years to follow the Type 2 intensive coverage that CMS provided. We would like it to go faster. We'll plan on it taking some time. The difference here is so many of these patients are Medicare patients. Almost half of the basal population is a Medicare patient. We're gonna be able to address the majority of those people very quickly.
We have the data capabilities to show what outcomes we're gonna generate within this population, and we'll do that. We can download the data we get from those patients and present a very strong case to those payers. The other piece is, you know, the Medicare Advantage programs are gonna wanna follow along as well because, again, some of these patients are Medicare. I'm optimistic it could go faster. Our previous experience was a couple of years.
Down the P&L, you also gave some 2023 guidance, I believe 62%-63% gross margin, 16.5% operating margin. Both of those came in just a hair below where consensus was. Maybe you could talk to us about some of the things we were overlooking and how we think about the keyness of that.
Yeah. I think first and foremost, I think as you think about the operating margin guidance, it was fully a function of gross margin guidance. If you kinda strip that out, what you're seeing is continued operating expense leverage, just like you saw this year. We continue to do very, very well there. The way ultimately we played out in 62%-63% is there's really two primary factors there. First off, in the first part of the year, as we talked about this bridging program, that does have a bit of a weight on gross margin. The other piece of that is it just so happened in timing of approval and timing when we're gonna launch factories, not only are we launching G7, we're also opening our Malaysia factory all within the same year.
As those economy scales start to grow, we should start to graduate out of that. Kevin mentioned it earlier, the first half of the year, we expect G7 to cost more than G6. That's on a per unit basis. However, exiting in the fourth quarter, we do expect G7 to come under. What you ultimately should then see is gross margins exiting the year should start to come back closer to more our typical norm. The cadence, that helps you kind of understand the cadence on the balance of the year as well.
Your G6 margin's probably pretty good if you strip out all the preparation for G7 that was in there over the past year.
We've continued to do very, very well on design to value, and I think you've seen it over time with prior launches. We launch, you have a little bit of a gross margin challenge as you've built new machinery. Yields aren't quite as high. Ultimately, when you start to get to the throughput, and we get those machines worn in, you start to see those yields go up.
Do we get down as low as the high 50s in maybe first quarter, which is typically the lowest sales quarter?
Yeah. Our expectation isn't to touch a five. It's to still stay in the sixes.
Okay.
But-
Progress sequentially throughout the year?
Right. Yeah.
Same down on operating margin?
Yeah. The operating expense profile, there's nothing in our operating expense profile that would indicate we have different seasonality. From there, that'll help everybody kind of ground. The operating expense profile isn't really impacted all that much by this. It's consistent with how we've run the business and consistent how we're getting leverage in the business.
It is important to note on the operating expense profile, we're not gonna cheat our investments. We need to invest on the commercial side to get more, again, to continue to get ready for this basal opportunity, to be ready for Type 2 diabetes in general. We'll continue to invest on the product development side. In particular, now that we have G7 designed and out and ready to go, we'll be investing on the software side to really develop those apps that can put us in the best place to win over time. We really have some great, neat ideas software-wise. People will love the G7 app. It's just much easier to use, and there's more data in it than we've had before. We're not gonna cheat the investment side either, Robbie. We're gonna do both.
Great. Wanna open it up, see if there are any questions in the room. Okay, I'll keep going. international, you also had a slide about the really good reimbursement improvements you've had over the year. Believe it was a quarter of new patients. Was it overall or just...
1/3 of the international patients-
1/3 of the international
the new international patients will be on the Dexcom One platform.
Thank you. If I think about that third, how does that play into the margin profile we just talked about? Is that a negative, neutral, or positive?
You know, it's about in line because remember, Dexcom ONE's going to be on the G6 platform, where we continue to do product improvements and continue to get yield out of those existing lines. As you think about Dexcom ONE, at least out of the gate, it should be relatively neutral. Over time, Dexcom ONE at once we kinda get to Dexcom ONE on a G7 platform, it should be a little bit less. Overall, from an operating margin perspective, the contribution should be the same over the long term.
Yeah.
When do we think about a Dexcom ONE on a G7 platform?
Every day.
When will we see it in action?
Yeah. We're working on it.
Yeah.
I think the way to think about it is, we gotta get through the G7 launch first, we wanna make sure we build out the capacity and transition. It should be a fast follower, but it's top of mind for us. We won't give an exact date.
It won't be a 2023 event, more than likely.
Right.
Are you seeing in markets where there is reimbursement in Europe or outside of Europe that there's a demand for a Dexcom ONE as well, or almost all those better reimbursed markets moving to the G-Series?
No. Actually, what we see, I talked about the bifurcation strategy that we have implemented. We're seeing many of these markets actually want two products. They wanna have a G-Series product for what, again, they call them the high-risk population, which is where we have typically played, in Europe and built our business. Those with interconnected solutions, pediatric patients, hypoglycemia unaware. The criteria are actually well defined on a country-by-country basis. The rest of their populations, they want a less expensive and a less featured alternative.
We have an opportunity now to go after business we never went after before. I think if you look at the U.K., for example, with our recent approval there, those are patients that wouldn't have ever gotten access to G6 before. We've had the same experience in Spain, winning tenders in both Barcelona and Madrid with the Dexcom ONE product offering that we wouldn't have been able to bid on before. We still have the G-Series for that high-risk category. Now we have a lot more market available to us to go after. Those reimbursement authorities are very excited to talk to us and work with us. You got a question.
Oh.
Yeah.
Hi. I'm just curious. Obviously, Type 2 is gonna be a big part of your growth trajectory over the next few years. There's some GLP-1 drugs that are coming out that obviously have an impact on Type 2. Can you maybe just talk about the impact of GLP-1 and maybe just kind of compare and contrast, GLP-1 versus sort of the way you all are attacking the Type 2 market?
I think the GLP-1s are marvelous drugs, and the results and things we've heard are great. It's still helpful for these patients to know where they are and what's going on. Dosing a GLP-1 isn't necessarily easy. Those things can be very difficult for somebody to start up on, so there's certainly a use for a Dexcom in the beginning. As you see the results of your behavior on a GLP-1 by wearing a sensor, it really reinforces the behavior changes that are made. One of the other things on those slides, and again, I'll go back to it, the cost of taking care of people is up 27% in two years. The GLP-1s are very effective. We have to figure out what this cost model is.
We believe that CGM can reduce the cost of taking care of Type 2 patients. I went to a meeting not long ago where somebody actually had recorded a video from their mother who is on an SGLT2 and metformin who has dropped their A1c two points and lost over 20 pounds in a very short period of time because of a CGM. That person might be prescribed a GLP-1, but that would cost a lot more money than being on a CGM. I don't know how it all plays out, but I know all the tools are useful, and I know we definitely fill a role and a purpose in here. That's what we intend to do. I never believed the business model for Type 2 diabetes would be the same.
I've always believed we're gonna get reimbursed less over time because we're not controlling a pump. It's not a life or death decision. We are providing you information that's important to your health. As we go down this curve, basal, that's being reimbursed the same as insulin and that's insulin delivery, and that is great. It's up to us to design new products that will have a lower cost profile, but provide patient engagement and ultimately save the system money. I think we can play right along with them. I think we can be a very important piece of that. It's still new, but it, you know, it is important. It's important for us to note and know and contemplate as we build this business out.
Kevin, with the two minutes left, I'm gonna give you a big question. Take a small one.
Here we go.
You know, G7 just got approved. It may be a little greedy here, what's the future of Dexcom? You know, these devices are getting really small, really accurate. Where do you see the business moving over the next five, 10 years?
We have big plans, and we've never lacked for those. We did just get G7 approved, so we're still focused on execution. We have a lot of great ideas on the product side. I think the biggest change will come on the software and the experience side for users. If we can develop our internal apps that will be more engaging, that's important. Again, we've made it possible for other people if they develop software solutions to have access to our data. I think that will become very much a part of this. We continue to integrate with the Automated Insulin Delivery systems, and I think we see a bright future there for those who integrate and work with us going forward. You know, smaller, we all talk about talking to more things.
I think actually our most acute need, we need to make this thing last 15 days instead of 10. That has benefit for customers, but also benefit for our service models and the number of people that we can serve. That is. We get buried in the acute science frequently, and that's an acute need right now. You know, you can see a day where a CGM is part of your annual physical when you get to be a certain age.
Go wear this for a week and mail it back in, and we'll tell you what's going on. We see things like that, and we talk about that all the time. I mean, I, you know, like I said, I told everybody the adrenaline spike. I'm back down now. I guess I've calmed down. It's important and this is good stuff to know, and very good things to know about your health.
Well, great. We're out of time. Thanks so much, and thanks everyone.
Thank you.