The potential of using bioartificial pancreas, for treatment of diabetes mellitus, based on encapsulating islet cells within a semi permeable membrane is extensively being studied by scientists. These devices could eliminate the need for of immunosuppressive drugs in addition to finally solving the problem of shortage of organ donors. The use of microencapsulation would protect the islet cells from immune rejection as well as allow the use of animal cells or genetically modified insulin-producing cells. It is hoped that development of these islet encapsulated microcapsules could prevent the need for the insulin injections needed several times a day by type 1 diabetic patients. The Edmonton protocol involves implantation of human islets extracted from cadaveric donors and has shown improvements towards the treatment of type 1 diabetics who are prone to hypoglycemic unawareness. However, the two major hurdles faced in this technique are the limited availability of donor organs and with the need for immunosuppresents to prevent an immune response in the patient's body.
Several studies have been dedicated towards the development of bioartificial pancreas involving the immobilization of islets of Langerhans inside polymeric capsules. The first attempt towards this aim was demonstrated in 1980 by Lim et al. where xenograft islet cells were encapsulated inside alginate polylysine microcapsules and showed significant in vivo results for several weeks. It is envisaged that the implantation of these encapsulated cells would help to overcome the use of immunosuppressive drugs and also allow the use of xenograft cells thus obviating the problem of donor shortage.
The polymers used for islet microencapsulation are alginate, chitosan, polyethylene glycol (PEG), agarose, sodium cellulose sulfate and water-insoluble polyacrylates with alginate and PEG being commonly used polymers.  
With successful in vitro studies being performed using this technique, significant work in clinical trials using microencapsulated human islets is being carried out. In 2003, the use of alginate/PLO microcapsules containing islet cells for pilot phase-1 clinical trials was permitted to be carried out at the University of Perugia by the Italian Ministry of Health. In another study, the potential of clinical application of PEGylation and low doses of the immunosuppressant cyclosporine A were evaluated. The trial which began in 2005 by Novocell, now forms the phase I/II of clinical trials involving implantation of islet allografts into the subcutaneous site. However, there have been controversial studies involving human clinical trials where Living Cell technologies Ltd demonstrated the survival of functional xenogeneic cells transplanted without immunosuppressive medication for 9.5 years. However, the trial received harsh criticism from the International Xenotransplantation Association as being risky and premature.
However, even though clinical trials are under way, several major issues such as biocompatibility and immunoprotection need to be overcome.
Potential alternatives to encapsulating isolated islets (of either allo- or xenogeneic origin) are also being explored. Using sodium cellulose sulphate technology from [https://austrianova.com/ Austrianova Singapore] an islet cell line was encapsulated and it was demonstrated that the cells remain viable and release insulin in response to glucose. In pre-clinical studies, implanted, encapsulated cells were able to restore blood glucose levels in diabetic rats over a period of 6 months.