Has Roche Given Up On Diabetes Devices
Sometimes a message is sent by what’s not said rather than what is said. Today Roche is holding their investor day and when Daniel O’Day, Chief Operating Officer Diagnostics approached the podium and spoke on what’s going on at Roche Diagnostics there was no mention, not even a slide or even a picture on a slide of any diabetes device. Listening to Mr. O’Day speak one would never know that Roche is even in the business of diabetes devices.
Granted this unit has struggled mightily over the past few years and faces a multitude of issues going forward, still even with management running this unit into the ground the company remains a major force in the diabetes device market. While they have fallen into second place in the US glucose monitoring market, Roche is still number one globally. Although the insulin pump unit is an after- thought here in US, overseas the unit is a factor.
It seems strange that Roche did not use today’s forum to at least acknowledge they are taking steps to fix the problems here in US or at minimum give some insight on where they will be going in the future. Just by way of example the company recently launched a new glucose monitor in the UK, the Accu-Chek Mobile, a system that comes with a test strip cartridge containing 50 test strips. The premise of this system is that it makes glucose monitoring more patient friendly and therefore increases the sales of test strips. The company could have used this system as an example of how they are trying to turn things around. Considering the theme of today’s event was “Diversity of approaches to Innovation”, the Mobile could have been an example of this “innovation”.
Instead Roche remained silent on diabetes devices and Diabetic Investor believes this lack of information is sending a very clear message- Basically, Roche has no idea what to do with this unit, nor are they willing to acknowledge this unit even has issues. This is like an alcoholic continuing to visit bars and wondering why they can’t stop drinking. Anyone who is familiar with the problems of addiction knows that ultimate definition of stupidity is doing exactly the same behavior and expecting a different result.
Diabetic Investor believes the decision has already been made for the company to exit the US insulin pump market and cut costs where they can in the BGM unit. The company hasn’t been helped any by the FDA’s focus on PQQ, an enzyme used in numerous Roche monitors. Although the FDA has not yet banned the use of PQQ, after listening to two days of presentations on glucose monitor accuracy, this move would not surprise Diabetic Investor. Already hospitals are beginning to abandon PQQ systems and Roche, until this issue came to light had a strong presence in the hospital market. Given what was said over the past two days at the FDA meeting no hospital in their right mind would use a PQQ system.
The saving grace for Roche just may be they have yet to screw up their global market position and someone like Sanofi-Aventis (NYSE:SNY) could come along and acquire the unit. Sanofi has publicly stated they are looking to enter this market and as Diabetic Investor has previously noted the easiest way to do this is to buy an established player in the market. Frankly this would be the smartest move for Roche as they seem incapable of acknowledging they even have a problem with this unit. However, given their history in diabetes devices the company is not known for making smart moves.
