Bristol sells diabetes portfolio

Bristol sells diabetes portfolio

Some may recall back on November 13, when Diabetic Investor penned a piece entitled; “Perhaps We Spoke To Soon”  in this piece we discussed Bristol Myers Squibb (NYSE:BMY) possible divestiture of their diabetes portfolio and mentioned that such a move would actually beneficial. Well here we are barely a month from that piece and this move has become a reality. According to a BMS press release:

“Bristol-Myers Squibb Company (NYSE:BMY) today announced that it has signed an agreement to sell its global diabetes business that was part of its collaboration with AstraZeneca. Under terms of the agreement, AstraZeneca will make an upfront payment of $2.7 billion to Bristol-Myers Squibb, with potential regulatory- and sales-based milestone payments of up to $1.4 billion and will make royalty payments based on net sales through 2025. In addition, AstraZeneca will make payments of up to $225 million if and when certain assets are subsequently transferred. The Bristol-Myers Squibb Board of Directors has approved this transaction.”

As we stated back in November we applaud this move but not for the same reasons Wall Street might. The fact is Bristol never knew what to do with their diabetes franchise after they acquired Amylin. They never developed a cohesive or comprehensive strategy. Quite frankly the only thing they did right was sell the company and now it’s Astra’s turn to take a whack.

The question now becomes will Astra be able to fix the mess that Bristol created.  Honestly Diabetic Investor isn’t sure if Astra is up to the task as the only thing Bristol did really well was screw things up big time. Perhaps a better way to view this might be to ask is the diabetes franchise Humpty Dumpty, an organization so broken that it cannot be put back together again. Or is it like Apple, a company that once was on the brink of disaster, but is now the envy of the tech world.  Given the damage inflicted by Bristol’s mismanagement of the franchise, and we’re being kind here, Diabetic Investor believes the answer as always lies between the two extremes.

Frankly it’s fitting this move comes in 2013 for as we have stated before this has been one of the wackiest years ever.  Honestly Diabetic Investor can’t imagine 2014 being wackier than 2013. The fact is the entire diabetes market is changing before our eyes. Once dominate players such as Johnson and Johnson (NYSE:JNJ) are dismantling their diabetes franchises, while others such as Lilly (NYSE:LLY) are completing revamping their portfolio’s to deal with the challenging reimbursement environment.

Looking ahead a little Diabetic Investor believes the theme for 2014 will be consolidation and capitulation. The fact is the seeds for the changes that lie ahead were planted long ago and it will be interesting to see which companies adapt and which fall by the wayside. One thing is certain, while it may not be as wacky as 2103, 2104 will see its fair share of wackiness. As about the only thing we can count on is in the wacky world of diabetes anything can and usually does happen.

Happy Holidays everyone.