Corporate Speak at its best!

Corporate Speak at its best!

Diabetic Investor just loves it the lengths to which companies will go when trying to explain nicely how they have just canned a bunch of people. Yes in these politically correct times we live in it is no longer acceptable to say something like; “As everyone knows the glucose monitoring market is headed down the toilet, the days of fat and happy are over and with payors demanding and receiving price concessions we can longer support the bloated and very costly infrastructure we created when times were good. Therefore we’re laying off even more people until we can dump or spin off this once great unit. To those we are laying off today and to the many we have laid off in the past we are truly sorry that management totally screwed this up, failed to adapt to the changes that everyone saw coming and as a result many fine people became unemployed, that is except the management team.”

Nope instead we get some truly classic examples of corporate speak and today we got one worthy of Hall of Fame status, as Roche who released full year results today stated on a slide that will be used during the company’s presentation later this morning; “Ongoing structural adjustments in Diabetes Care to adapt to continuing challenging market environment.” Honestly Diabetic Investor just loves this statement as in one sentence in captures the essence of what’s happening in BGM without offending anyone – this my friends is corporate speak.

Does it really matter what the numbers were, down again if anyone cares, as we all know that sooner or later Roche will either spin off this unit into a separate privately held company or if they are extraordinarily lucky the will find an entity crazy enough to spend a few billion to buy this dog of a unit.

Frankly there is no reason to review how Roche got here, how they went from being the undisputed leader in BGM to being an also-ran, how they failed to adapt to changing market dynamics and quite honestly did something that most thought impossible – they turned a billion dollar business into a million dollar business- that my friends takes true talent.

Honestly Diabetic Investor takes no pleasure in watching this market collapse or commenting on the numerous mistakes made by the players in the market. BGM has gotten to the point where it’s like watching your favorite team beat the snot out of an opponent. Yes we all like it when our team wins but let’s be honest we’d rather see them win a close game than a blowout as its more exciting watching a close game. In branded BGM Johnson and Johnson (NYSE:JNJ) is beating the snot out of the competition with Roche now a very distant second.

We’ll see more evidence of this tomorrow when Abbott (NYSE:ABT) reports. It’s also likely we’ll see or at least hear more corporate speak for how poorly their diabetes care unit is doing.  Perhaps like Roche they will move on from complaining about competitive bidding to coming up with creative corporate speak to explain in nice PC terms just how bad things really are.

One last thing before we head off to listen to what we’re sure will be a very boring Roche call, we just love it as all the BGM companies basically blamed competitive bidding for their problems rather than actually acknowledge they competitive bidding was more like the straw that broke the camel’s back. Competitive bidding merely hastened the demise of BGM it did not create the problem however. This is like saying the iceberg jumped in front of the Titanic, that the captain knew the iceberg would jump in the ships path but couldn’t react fast enough to save the ship and avoid the death of most of the passengers and crew.

The truth is anyone with half a brain, which rules out most in diabetes management, saw what was going on in BGM. How this market was transforming from a medical device market to a commodity market where all that mattered was price. That the majority of patients really didn’t care which meter they used and most really didn’t have a choice in the first place as they went with whatever meter had favorable formulary position. That patients didn’t care about whiz bang way cool technology or pretty colors but wanted a device that simple to use.

The fact is competitive bidding came along AFTER the market was headed down the drain. It’s also true that the branded players seriously miscalculated the impact or how the bidding process would play out. Most reasoned that there would a 25% to 30% cut in Medicare reimbursement and built their models accordingly, what they didn’t anticipate was how aggressive the non-branded no name off shore players would be which ultimately resulted in a 72% cut in reimbursement.

The bottom line competitive bidding did not bring this market to its knees nor does it absolve management at these companies from the many mistakes they made.