The Numbers Tell The Story

The Numbers Tell The Story

As most everyone knows the conventional blood glucose monitoring market is sinking into the abyss. That it’s just a matter of time before conventional meters become obsolete and the business consolidates further. A perfect illustration of this came when Johnson and Johnson (NYSE: JNJ) and Roche reported results. Take a look at the numbers as the numbers do tell the story.

JNJ total worldwide sales $429 million DOWN 11.4% US sales $180 million DOWN 15.1% International sales $249 million DOWN 8.5%

Roche total worldwide sales $460 million DOWN 11% NORTH AMERICA $50 MILLION DOWN 49% $297 million Europe, Middle East and Africa DOWN 6% and Rest of the World $114 million UP 11%

Stop for a moment and reread the Roche number for North America, the largest and still most profitable BGM market in the world, sales down almost 50%. Listen we have known for many quarters that the US business was in a free fall but seriously to see a 50% decline in sales is truly astonishing even for Roche. A company who has proven beyond a shadow of a doubt that it is possible to turn gold into sand. That the surest way to make a small fortune is to start with a big one.

Now there may be some newcomers to the wacky world who don’t understand that at one time Roche owned the US market, that the diabetes unit was a BILLION-dollar highly profitable cash cow. That it was LifeScan who was chasing Roche.  Seriously even for Diabetic Investor who has seen the rise and now fall of Roche these results are shocking.

These numbers also point to how the BGM world is being divided. As we will likely see tomorrow when Abbott (NYSE: ABT) reports, their results will also suck. It’s also likely that like Roche, Abbott has basically surrendered the US market to LifeScan and sees international markets as their lifeline. The problem here is that the established international markets have followed the US lead and are cutting reimbursement and placing more restrictions on who is and isn’t eligible to receive strips.

The harsh reality for all the players is that things will only get worse, and yes we know this hard to believe, and they will NEVER EVER get better. That the patient is now on life support and it’s no longer a question of if the end is coming rather when the end is coming. This is one time when the numbers tell the story, a horror story that does not come with a happy ending.