Here we go again
Back in 2001 Johnson and Johnson (NYSE:JNJ) acquired Inverness Medical for $1.3 billion. Here we are nearly ten years later and it looks like JNJ is getting set for another acquisition. As Diabetic Investor has reported the company has an agreement with an Australian company, Universal Biosensors, to develop and produce a new line of glucose monitors. The two companies recently launched the One Touch Verio in the Netherlands and are setting the table to bring the Verio to the US.
Universal recently published their annual report and by the looks of things everything is falling in place for history to repeat itself. Diabetic Investor suspects that once Universal perfects manufacturing and the Verio moves into the US market, JNJ will do what they do best and acquire Universal. A move Diabetic Investor even more likely given the agreement recently signed by privately held AgaMatrix and Sanofi-Aventis (NYSE:SNY).
While AgaMatrix can produce monitors for Sanofi, Diabetic Investor believes a more likely scenario is that Sanofi will acquire either Roche’s or Abbott’s (NYSE:ABT) diabetes device unit and apply AgaMatrix’s technology to the acquired product line. It’s no secret that Sanofi’s recent moves and public statements are designed to sell more insulin, in particular their short-acting insulin Apidra. They are also aware that insulin using patients are the key to BGM market. Finally, given the recent attention to meter accuracy it provides some insight into the AgaMatrix agreement.
Although the majority of patients could care less about meter accuracy, this information is important to insulin using patients who use this information to determine how much insulin to dose. Based on various studies AgaMatrix monitors are some of the most accurate available and in a strange twist the company likely benefited from LifeScan’s emphasis on accuracy.
The odd man out here appears to be Bayer, a situation they are trying to remedy by replacing LifeScan who’s agreement with Medtronic (NYSE:MDT) expires next year. Bayer currently has an agreement with Medtronic for ex-US business and is now angling for a global agreement. As we have noted on several occasions insulin pump patients account for almost 25% of all test strips sold and Medtronic maintains an almost 70% share of the insulin pump market. It is also true that relationship between LifeScan and Medtronic has been a rocky one and no one has ever really understood why Medtronic made this deal in the first considering JNJ also owns Animas, Medtronic’s biggest competitor in the insulin pump market.
As we noted earlier this week the wacky world of diabetes devices appears to be setting itself up for another round of consolidation and change. But some things won’t change and the folks at Universal Biosensors are grateful for that.