Bayer throws in the towel

Bayer throws in the towel

According to a story from Reuters Bayer has taken their diabetes device unit off the market. The story states; “ Bayer AG has called off the sale of its blood glucose meters business for now, Financial Times Deutschland reported, citing industry and financial sources.

According to the paper, Germany’s largest drugmaker could not find a buyer who was willing to pay the asking price.”

Diabetic Investor is hardly surprised by this news as the leading candidate to buy the unit, Sanofi (NYSE:SNY) came to their senses and realized it wasn’t such a good idea to throw good money into a very bad market. This news also sends another indicator that Sanofi is not doubling down in diabetes devices and likely signals the end of their quest to become a player in glucose monitoring.  While it is  possible this interest would reemerge should either Abbott (NYSE:ABT) or Roche decided to sell their diabetes devices units but for the moment Sanofi as we noted yesterday is very content maximizing their lone blockbuster in diabetes, Lantus.

The question now becomes what does Bayer do?  Do they stay patient, continue to run the unit and sell at a later date? Do they spin off the unit as a standalone company? Do they reverse course completely and attempt to grow the unit through acquisition?

The harsh reality is that Bayer like so many poker players overplayed what really was only a mildly strong hand. As the hand was being played at one point it seemed as though no one would call their bluff and the company would walk away from the table handsomely rewarded. This strategy backfired when Sanofi decided to fold their hand and walk away from the table. All of sudden Bayer realized there hand wasn’t as strong as they once thought and decided it was time to fold as well.  As the song goes; “You got to know when to hold’em and know when to fold’em.”

The only real winner here is Sanofi, who for once made the correct call. Let’s hope this is the start of something positive for the company and not an aberration or just dumb luck.