The news: Medtronic is spinning off its $2.8 billion diabetes business into a standalone direct-to-consumer company for its insulin pump and continuous glucose monitor (CGM) devices.

Zooming out on the diabetes tech market: Diabetes device competitors Abbott and Dexcom market CGMs while Tandem Diabetes Care and Insulet sell insulin pumps. But after the spinoff, only Medtronic will make both the insulin pumps that deliver medication and the CGMs that monitor blood sugar changes.

Medtronic is also working with Abbott, striking a deal last year to pair its insulin pumps with Abbott FreeStyle Libre CGM technology. They’re now getting closer to a product. Medtronic applied for FDA clearance last month for an interoperable pump that works with FreeStyle sensors.

Why it matters: Demand for diabetes devices is growing alongside increasing diagnoses, an aging population, and demand for better technology.

• Medtronic’s diabetes business accounts for 8% of total sales, returning to profitability for the past six quarters and now has a 10% annual growth rate, per Fierce Biotech.

Plus, more type 2 patients are using CGMs to track real-time glucose changes. Even people without diabetes are beginning to use the monitors as personal health tracking devices. Abbott and Dexcom both launched over-the-counter CGMs in the past year. Abbott’s Lingo and Libre Rio and Dexcom’s Stelo are designed for people who don’t use insulin.

The takeaway: While it's unusual to spin out a profitable business unit, Medtronic is betting on continued diabetes device growth and building out an independent consumer brand to serve the market. The new Medtronic diabetes company will lean into its unique insulin pump and CGM system, but will likely have difficulty taking market share from established device brands Abbott and Dexcom.

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