Going backwards?

Going backwards?

Back in mid-September German media reported that Roche had at long last decided to spin off their diabetes unit. Something Diabetic Investor reported long ago. A move which made sense given that this unit was a mere shell of its former self and had gone from a cash cow to cash drain. We figured that when the company reported results this morning they would make the official announcement. We figured wrong.

Now we have no idea whether the company has reconsidered this move or whether they are actually proceeding with this move. Like everyone else in conventional BGM and Roche is no different results continue to be dismal. This is a market which is on a slow death march to oblivion and there is no hope for a turnaround.

Having followed the company for many years this continued back and forth, this inability to make decisions is nothing new. There was a time when the unit was put up for sale, then taken off the market when the company could not find a buyer. Again no surprise here given the long term outlook for BGM. Frankly there aren’t too many companies who want to enter a market which doesn’t have much of a future. This is why spinning off the unit made so much sense.

Besides BGM Roche does have an insulin pump and is working on a CGM system. However, neither generates much in the way of revenue and for CGM in particular we doubt this product will ever see the light of day. The bottom line here is that the company would be much better off setting this unit free. The reality is even if they invested heavily in the unit there is no guarantee this investment would change anything.

At the end of the day we view this as Roche being Roche. Likely a decision has been made yet in typical Roche fashion they are taking their time before making it official. Frankly there is no rush and knowing Roche as we do they likely want to have all their ducks in a row before making the official announcement.