Is this just the beginning?
Yesterday Sanofi-Aventis (NYSE:SNY) announced they had agreed to buy consumer health care company Chattem, Inc. (NASDAQ:CHTT) for nearly $2 billion. According to the company OTC is one of their 5 top priorities for growth. Besides OTC, the company listed emerging markets, vaccines, new products and diabetes products as the 4 other top priorities. Although Chattem is not involved in the diabetes sector they do bring with them a host of experience in the consumer product arena.
As Diabetic Investor has previously reported rumors have been swirling that Sanofi-Aventis was considering entering the blood glucose monitoring market. Given how this market has transformed from a medical device model to a consumer health care model, today’s move by Sanofi just might be the first step towards the company entering the BGM market.
It is also well known that insulin using patients are the most coveted patients for BGM companies. The company already has a strong presence in the insulin market with Lantus, the world’s number one selling insulin. Adding BGM to their portfolio seems fits squarely into the company’s stated priorities.
Some might see this move as a non-starter given the dismal outlook for the BGM market. While Diabetic Investor does see market conditions continuing to deteriorate, the fact is whoever controls the insulin using patient can still make a tidy little profit. Unlike other consumer product companies who do not have a diabetes presence, Sanofi-Aventis would not have to hire additional sales and support staff to enter BGM. As we have reported before the day is coming when physicians no longer prescribe insulin from one company, an insulin delivery system from another and yet another company for glucose monitoring. The day is coming when physicians will prescribe a diabetes management system that includes everything the patient needs all in one nice neat little package.
In the past we thought this would be accomplished through partnerships, not unlike what Johnson and Johnson (NYSE:JNJ) and Novo Nordisk (NYSE:NVO) years ago when they partnered on the now defunct InDuo device. Ahead of its time the InDuo allowed the patient to monitor their glucose levels and deliver their insulin all in one device. Given the increasing popularity of insulin pens, Diabetic Investor can see the day when a patient would receive a pen that communicates with a glucose monitor. Think Animas and their Ping system only instead of communicating with an insulin pump, the meter communicates with an insulin pen.
With a BGM unit Sanofi-Aventis would have almost all the elements they need to provide a Sanofi-Aventis diabetes management system. Add in an insulin pump and perhaps a continuous glucose monitor and the kit is complete. Basically all the physician and patient would have to choose is which insulin delivery option they want, pen or pump. Instead of calling three different companies if support is needed, all this could be handled under one roof. The same can be said for reimbursement, instead of filling three different claims the patient and/or physician would only have to do paperwork once.
It’s no secret that Novo Nordisk has looked into developing an insulin pump, a pump that just might come pre-filled with Novo’s insulin. It’s also no secret that the BGM companies are struggling mightily. Finally, while we’re not of the woods just yet deal flow is improving.
With the New Year just around the corner, healthcare reform moving from a dream to reality and deal flow improving the table is set. All that’s missing is a company with the vision and capital. The question is; is Sanofi-Aventis that company.
