COVID-19 patients develop type-1 diabetes when the body’s immune system destroys the insulin-producing cells called beta cells in the pancreas. This impairs the production of insulin, which is needed to control blood sugar levels, thus compromising their levels and causing diabetes.

During the SARS 2002 outbreak, researchers in China had found increased evidence of developing diabetes in affected patients.
The study published in The New England Journal of Medicine states, “There is a bidirectional relationship between COVID-19 and diabetes. On the one hand, diabetes is associated with an increased risk of severe COVID-19. On the other hand, new-onset diabetes and severe metabolic complications of preexisting diabetes… have been observed in patients with COVID-19.”
Testing in Mice
Researchers grew miniature pancreas and liver using human pluripotent stem cells and transplanted them to mice. After a couple of months, they found ACE2 receptors on both alpha and beta pancreatic cells. When the mice were infected with SARS-Cov-2 virus, the beta cells were infected which indicates that the virus is capable of damaging the cells that control blood sugar thus triggering the onset of acute type-1 diabetes.
Possible Mechanism
When COVID-19 patients develop diabetes, there are high levels of sugar and ketones in their body. The insufficient insulin compromises the break down of blood sugar, leading to high levels of sugar. When sugar does not get converted to glucose, the body does not get adequate energy which, then turns to alternate sources like ketones. This leads to ketosis which increases morbidity and mortality in COVID-19 patients.
Source-Medindia
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