And the hits just keep on coming

And the hits just keep on coming

Just when it looked like things couldn’t get any worse in the conventional glucose monitoring space, it did. According to an article posted on the QMED website Johnson and Johnson (NYSE:JNJ) could be in a world of hurt in their patent dispute with Decision Diagnostics. According to the story; “According to a four-judge panel at the United States Patent and Trademark Office, Decision Diagnostics’ counterclaim may be valid. In a prepared statement, the panel noted that it “established a reasonable likelihood” that Decision would win.”

For those who are late to this story Decision had attempted to sell a generic test strip for the popular OneTouch BGM system made by JNJ. Naturally JNJ sued Decision and just as naturally Decision countersued. Somewhat surprising when one considers that patent disputes aren’t always decided by who’s actually right rather who has the money to fight and as everyone knows JNJ is well equipped financially to fight.

Although this case is far from over the possibility that Decision might win brings to mind several interesting scenarios. Will JNJ decided just to buy Decision rather than risk seeing Decision market their generic strips and further erode JNJ’s market share? Will the company continue to fight it out in court hoping to wear down Decision? Will Decision armed with this finding get acquired by a JNJ rival? Will Decision go it alone and use their ultra-low cost strip to dominate the Medicare market?

No matter what the eventual outcome one thing is certain the big loser here is JNJ who needs this problem like a sinking ship needs more water. The company like everyone else in BGM is struggling to deal with the impact of competitive bidding. They are watching the FDA closely concerned the agency will increase their costs even more by requiring meters achieve greater accuracy. They realize with costs already cut to the bone they must find others ways to maintain their once huge but now shrinking margins.

Interesting how this works when David goes after Goliath and David strikes the mightier blow.