I did research into this exact project for my final year dissertation at university.
What you are proposing is continuous blood monitoring, and then a device which processes the readings and administers insulin accordingly? Ie. An external pancreas.
For your friends I suggest looking into two products already on the market:
-Insulin pumps - small device to keep in pocket that gives small doses periodically, saves carrying needles with you at all times, you just adjust the dosage easily whenever you eat.
-continuous glucose monitoring patch - small patch that gives you read outs of your glucose level, you can then use this info to guide the pump dosage.
For the project you are proposing - to do this as a closed loop, automatic procedure - there is a lot of work being done by advanced research departments at Cambridge University. And I am sure the Big Pharma companies are also looking into it. The main problem with closed loop glucose monitoring and administration is that if it goes wrong, then the user can die!
To get this to market would require many years of red-tape and meeting standards, and I image a few million dollars as well...
Google "closed loop glucose monitor" to see where research into this currently stands.
It's definitely a good product idea, and whoever gets it to market will make a $hit tone of money!