Roche Reports – Just when it looked like it couldn’t get worse, it did!
It is becoming increasingly difficult to find the correct adjective to describe the results announced by Roche and today is no different. Rather than try and describe the results Diabetic Investor will let the actual numbers speak for themselves – Diabetes Care down 7% Globally, down 5% in North America, down 11% in Europe and up 5% for the Rest of the World. Things have become so bad that the analysts who cover the company have begun to notice that if this trend continues the company will take a multi-billion dollar unit and turn it into a multi-million dollar unit. For the first time in recent memory management face a series of questions as to why the diabetes care unit is performing so badly and what plans the company has to improve performance in the future.
The company and Daniel O’Day COO of Roche Diagnostics in particular, continue to stick their heads in the sand ignoring the realities of the market. Frankly either Mr. O’Day is one the stupidest humans on the planet or he is being told by his superiors to toe the corporate line which is to ignore the 800 pound pink gorilla that is standing in the middle of the room. Now Diabetic Investor has never meet Mr. O’Day and he does seem like an intelligent individual, but we have meet many of his superiors and more importantly seen them in action and we can categorically state that these people are absolutely clueless when it comes to diabetes care and quite honestly could not pick the winner in a one horse race.
Here is the latest explanation as to why these results were so bad- Poland stopped reimbursement for two months and when they started again the new rate is lower than the old rate- declining reimbursement rates due to austerity measures put in place in Europe – a late launch of the Accu-Chek Nano SmartView in the US. Looking ahead Mr. O’Day noted that the plan is to grow faster than the market and new technologies are the key. In other words same old, same old.
Honestly whenever Diabetic Investor listens to Roche and their BS explanations as to why the diabetes care unit is doing so poorly we wish someone would take a baseball bat and bash these idiots upside the head and start screaming; “Either get with the program and into reality or sell the frickin unit before there is nothing left to sell.” Now we would never advocate violence but its obvious there is a huge problem, heck even the analysts who cover the company are starting to notice. Now we can excuse the analysts for not understanding the BGM market and how it works, but there is no excuse for the Roche management team. Diabetic Investor can only hope that in private they don’t believe the crap they say publicly for if they do these really are the dumbest people on the planet.
One has to wonder now that the analysts are beginning to ask questions if the company will actually do anything of substance. Based on what we have seen all these years Diabetic Investor honestly believes they shouldn’t even try and the company should sell the unit while it still has value. It’s time to acknowledge that the Roche management team has performed so poorly that the Accu-Chek brand name is on the verge of becoming toxic. They have thrown away literally billions of dollars not just with ill-advised acquisitions, i.e. Disetronic, but by ignoring the realities of the BGM market.
Although Diabetic Investor was actually joking when we stated it based on all available evidence it really does look as though their corporate strategy is to take this once dominate multi-billion dollar franchise and turn into a multi-million dollar franchise. The harsh reality is that Roche is incapable of turning this franchise around as that would mean they would have to acknowledge they were the ones who screwed things up so badly in the first place. That it was their poor decision making that contributed to one of the biggest sales declines in BGM history. They would no longer be able to blame everyone but themselves for the disaster they themselves created.
Frankly selling the unit is the perfect out for these people as they could claim victory as a sale would surly bring in much needed capital and the unit would no longer be a source of embarrassment. They could claim that it was their solid stewardship that made the unit attractive enough to be sold. Listen we could care less how they justify what is obviously the correct path to take, we just hope they get on with it before it goes from a value sale to a fire sale.
Yet knowing Roche they will do the absolutely wrong thing at the worst possible moment and likely go out and buy the diabetes care unit from Abbott (NYSE:ABT) which to Diabetic Investor would be poetic justice as it would be the classic example of how two wrongs can be combined into one huge disaster.