In late September, Abbott Laboratories (ABT -1.92%) shared encouraging results from a study that tracked the efficacy of its FreeStyle Libre continuous glucose monitor (CGM) device for type 2 diabetes.

What were the results from the study that amounted to such great news for Abbott and type 2 diabetes patients? What impact could this have on the future sales of the franchise? Let's dig into the study's findings and the CGM market to answer these questions.

A device with life-changing results for patients

Abbott retrospectively observed 5,933 patients diagnosed with type 2 diabetes via the French national health claims database between Aug. 1, 2017, and Dec. 31, 2018. These patients followed a once-daily basal-only insulin treatment plan and used the FreeStyle Libre system to monitor their blood sugar (glucose) levels.

A basal-only insulin regimen is often prescribed by a doctor when oral medications are unable to regulate glucose levels efficiently. The FreeStyle Libre system is a minimally invasive sensor applied to the back of the upper arm, allowing a patient to check their glucose at any time. And that's without the inconvenience or finger-prick pain often associated with glucose meters.

Abbott's study followed a select group of patients 12 months before FreeStyle Libre initiation and up to 24 months after FreeStyle Libre initiation to assess the frequency of acute diabetes-related events (ADEs), which are emergencies warranting hospitalization. These include severely low glucose levels (hypoglycemia); severely high glucose levels (hyperglycemia); a life-threatening condition called diabetic ketoacidosis, characterized by high glucose levels for prolonged periods; and comas.

The findings of this study were truly remarkable. Patients were 67% less likely overall to be hospitalized due to an ADE one year after initiating the FreeStyle Libre treatment. And this reduction was sustained over a two-year period, regardless of whether patients received care from a general healthcare practitioner or a diabetes specialist.

In diabetes care, more information can give patients and their doctors a better understanding of how their condition is trending. This is critical in helping doctors to advise patients on lifestyle and medication changes necessary to control their condition better if it is unfavorably progressing. That's the secret sauce behind how the FreeStyle Libre system has been so miraculous for diabetes patients.

A doctor talks with a patient.

Image source: Getty Images.

Plenty of room for future growth

FreeStyle Libre has already established itself as an essential device in recent years. And the franchise will only become more important with each passing year.

Rising global obesity rates will likely push the number of patients with diabetes higher over time. In fact, the International Diabetes Federation anticipates that the prevalence of diabetes will soar more than 50% from 463 million people in 2019 to 700 million by 2045.

As it stands, the global CGM market was already worth $6 billion in 2021. With more patients being diagnosed with diabetes and turning to CGMs, Polaris Market Research expects the global CGM market to compound at 10.1% annually to reach $14.8 billion by 2029.

FreeStyle Libre is on track to generate around $4 billion in sales for Abbott in 2022. For context, this is approximately 10% of the $43.2 billion in total sales analysts expect from the company for the year. Yet, thanks to growing demand, the revolutionary CGM should have no trouble continuing to post double-digit annual sales growth moving forward.

The Dividend King is a buy

With 50 years of dividend hikes to its credit, Abbott is a Dividend King. And with the company's dividend payout ratio clocking in at 36%, Abbott should have the flexibility to continue building on its dividend growth streak in the years ahead.

Income investors can snatch up shares of Abbott and its 1.9% dividend yield at a forward price-to-earnings ratio of 21.8, just slightly below the medical devices industry average of 22.6. The stock is a buy for investors seeking a decent starting income with future growth potential.