Changes at Roche and what they could mean for their diabetes devices unit.
This morning
Roche announced several changes to their Corporate Executive Committee.
According to a company issued press release “Daniel O’Day (45),
currently Head Roche Molecular Diagnostics, is appointed Chief Operating
Officer (COO) Diagnostics Division and Member of the Executive Committee.
Burkhard Piper, Head Roche Diabetes Care, reports to Daniel O’Day.”
These
personal changes could be just the first of many changes for the diabetes care
unit. For the past six months or so, rumors have been swirling that Roche is getting set to throw in the towel on their
struggling insulin pump unit and exit the US market. These rumors have intensified
recently and are just the latest setback since the company acquired Disetronic
back in 2003.
With
Medtronic (NYSE:MDT), Animas and Insulet (NASDAQ:PODD) dominating the domestic
market sales of the Accu-Chek Spirit have been less than the very low bar
Diabetic Investor set for the product when it came to market. Given the high
cost to maintain sales and support functions and the continued dismal
performance of the Accu-Chek line of glucose monitors the company probably sees
no point in spending even more resources towards insulin pump sales when these
resources are desperately needed elsewhere.
The only
question that remains is how long the unit can survive overseas. Once the
dominate player, Medtronic is making some serious inroads and is one of the few
areas where Medtronic is actually growing share. The fact is even with their
new Combo product which is available in the United Kingdom; the Accu-Chek
Spirit is subpar technology. Considering that of there are only 500,000 or so
insulin pump users worldwide and 375,000 reside here in the United States it’s
a wonder the company just doesn’t exit the market entirely.
Should these
rumors turn into fact it would mark the second insulin pump company to throw in
the towel. It also makes one wonder why so many companies want to enter the
market. For years Diabetic Investor has been stating that the insulin pump
market is not large enough nor is it growing fast enough to support the
existing companies in the market let alone the many who want to enter the
market.
The fact is
just as the blood glucose monitoring market has undergone dramatic changes the
insulin pump market is experiencing similar changes. Medtronic remains the
undisputed king of the market but has a serious battle on their hands against Animas
and Insulet. Looked at realistically the Disetronic unit even with a serious
overhaul faces an uphill battle. It’s doubtful given the current market
dynamics that such an effort would yield the necessary return on investment.
As we noted
earlier these are just rumors but when it comes to the diabetes device market
rumors have a strange way of becoming fact.
