The New Reality Deal With It
Given the dynamics of the glucose monitoring market it should no longer be a surprise when one or more of the Big Four lay off even more people. As bad as some of these companies have been managed, poor management alone is not the sole factor for the decline of this once thriving market. Frankly there are too many factors to print, simply put there’s enough blame to go around. What truly amazes Diabetic Investor is the reaction of the laid off employees when they get the news.
Being in the field every day, at least that’s where their supposed to be, you just might think they would notice that selling prices are decreasing; competition increasing and market growth is practically nonexistent. Just what exactly did these people expect corporate to do? The fact is corporate is doing what corporate does best; cover their collective backsides and the easiest way to do that is to control costs. And we all know it’s easier to cut cuts than it is to grow market share.
The simple fact is the way things are going large and expensive sales forces that call on physicians and educators will soon be a thing of the past. The fact is companies like Johnson and Johnson (NYSE:JNJ), the owners of LifeScan, Roche, Bayer and Abbott (NYSE:ABT) can cut their costs dramatically by using the internet. Their human sales efforts can then concentrate on the larger more critical accounts.
Consider the following:
1. Physicians already pressed for time aren’t seeing sales reps. Some offices have gone so far to ban sales reps from their offices entirely.
2. The days of handing out free monitors like water are history. Whether they wish to acknowledge this fact or not the primary role of a rep was not to educate physicians and educators about the products they sold. Rather, their primary role was to drop off free monitors which physicians and educators gave to their patients.
3. Retailers, distributors and insurance companies are no longer carrying or reimbursing for all meter brands.
4. The fact is the BGM market has completed its transformation to a commodity market and in a commodity market you can’t afford an expensive sales force.
5. Sales reps aren’t the only people getting the pink slip. Customer service, quality control personal – frankly just about anyone who works at a BGM company is in danger of losing their job.
The cold hard truth is these companies are doing what they need to do and failure to control costs given the current market dynamic would not just be foolish but could threaten the very survival of their business units. Diabetic Investor can certainly sympathize with the laid off employees as it’s not easy to be newly unemployed when the national unemployment rate is 10%. However, the die was cast long ago and there are no tools or fancy marketing campaigns these companies could initiate that would bring back double-digit market growth, those days are gone forever.
The stark reality here is that the glory days for BGM have come and gone. This seems at odds with the epidemic growth rate of diabetes worldwide, but it is a fact nonetheless. Yet, just as many continue to live the fantasy of non-invasive glucose monitoring; it’s hard for some to accept the demise of BGM. They cling to the hope that someone or something will come along and bring back the glory days. Sadly these days will not return and the sooner people begin to realize this, the better. Going forward lean and mean will rule the day.