A sign of the times
Diabetic Investor has learned that Abbott (NYSE:ABT) will be moving their FreeStyle test strip manufacturing overseas to Ireland. Abbott officials have confirmed this process will take place over the next 14 months and obviously will impact the number of employees at their Alameda facility. Abbott maintains that the Navigator which is also made at the Alameda facility will continue to made their, that amusing of course they keep the Navigator afloat.
This move should shock no one as its just one more piece of evidence of just how much the blood glucose monitoring market has changed. Already all the major players have implemented several cost cutting measures as they try and maintain margins. All the major players understand that pricing pressure will continue and market growth will remain in low single digits. The order of the day is cut cost and then cut cost even more.
After all these cost cutting moves are exhausted and there’s nothing left to cut, look for the next logical moves; consolidation followed by exiting the market entirely. It may have seemed unimaginable just a few short years ago when the market was growing at double digit rates but the fact is the number of BGM players will dwindle even further.
For anyone who doubts this Diabetic Investor recommends looking at what happened in the personal computer market that was once filled with players. As computers became a commodity item we are left with just a few players that battle for every inch of market share. This is exactly what has happened to the BGM market where the strong players will remain; the weaker will either consolidate or just exit the business through a sale.
On a separate note Diabetic Investor would like to remind everyone that the ADA Scientific Sessions is just about a month away and as has been our custom we are accepting meeting requests. We strongly recommend anyone who is interested in meeting with Diabetic Investor to get your request in as soon as possible. Although the conference is still a few weeks away our schedule is getting filled up early.
