Roche – Running in place
Looking over third quarter results Roche released this morning Diabetic Investor couldn’t decide what’s more exciting watching paint dry or watching grass grow. Once again their diabetes unit showed declining sales here in North America, with the rest of the world picking up the slack. Once again there is nothing new or all that exciting in diabetes device pipeline. And as has become their custom the company is playing follow the leader with their announcement of a partnership with InterComponetWare.
According to a press release issued by the companies; “Using the very successful Accu-Chek® 360° software and the powerful ICW eHealth Framework (eHF) as well as other solution components, Roche Diabetes Care and ICW will jointly develop a technology platform that will facilitate the secure sharing of data and communications between healthcare professionals and people with diabetes via the web and allow patients and caregivers to manage diabetes even more efficiently. Already today, the Accu-Chek 360° software allows for well-structured visualization and assessment of important blood glucose and insulin data and enables healthcare professionals, as well as people with diabetes, to determine appropriate therapy.”
Given that every other major glucose monitoring company has or is already working on similar technology this announcement shows how backward Roche has become. Once again the company is late to the game and given their past performance it’s likely the technology developed here will also fall short. The reality is the words advanced technology and Roche should never be used in the same sentence. Keep in mind this is a company that charges their patients for a reader that attaches to the computer to capture readings from Accu-Chek monitors. Heaven forbid they use a free USB cable or Bluetooth technology and make this process easy for the patient.
The news isn’t much better on the diabetes drug front. Perhaps the most interesting, some would funny, comments came when the company was asked about the status of Taspoglutide, their troubled GLP-1 drug candidate. In an answer that involved tap dancing that would make Gregory Hines and Sammi Davis, Jr. proud, the company did their best to but a positive spin on a very bad situation. The reality here Taspoglutide is a dead drug and the only thing left to do is give it a proper burial.
Diabetic Investor isn’t quite sure what has happened at Roche as they are about to become irrelevant in diabetes devices and drugs. It amazes Diabetic Investor that management continues to ignore what the market is telling them and prefers to believe everything is ok while Rome is burning around them. One would think that any company that has lost over 12 share points in BGM and continues to get trounced by the competition might just consider a strategy change.
The reality is their glucose monitors are now well behind the competition in terms of technology and design. Their insulin pump franchise is the laughing stock of the industry and their marketing efforts were designed for a time when newspapers and television were the best way to reach patients. Just how bad have things become, take a look at privately held AgaMatrix, who doesn’t even come close to Roche in terms of resources. Even before their relationship with Sanofi-Aventis (NYSE:SNY), the company was producing high quality well designed monitors that are actually patient friendly. Or consider another privately held company Intuity Medical and their all-in-one system the Pogo, another system that makes life easier for the patient with diabetes.
Rather than acknowledge they have a problem management continues to stick their heads in the sand ignoring the problems instead of trying to fix them. At a time when everyone else is embracing the internet and social networking, Roche continues to believe in old technology and old marketing methods.
It seems pretty clear to Diabetic Investor that the company has decided to milk their glucose monitoring unit until the cow runs dry. This unit throws off tons of cash and with all their missteps still generates a hefty profit for the company. Management likely believes there is no reason to throw good money into new meter design or true advanced technology when the unit continues to deliver hefty margins. The reality is until it hurts their bottom line in a serious way there will be no sense of urgency. This day is fast approaching but given their actions Diabetic Investor doesn’t think management really gives a damn.