This Really Isn’t News…at least not yet

This Really Isn’t News…at least not yet

This past Wednesday Reuters published a story which stated that Roche was once again looking to sell their struggling diabetes care unit.  According to the story Roche seeks to sell this ailing unit because; “the industry grapples with increased competition and reimbursement pressure.”  Now Diabetic Investor doesn’t want to speak ill of another news organization but this really isn’t news, real news would be if Roche could find a company that will actually pay real money to be in the conventional blood glucose monitoring market.

It should also be noted that this isn’t the first time, nor likely will it be the last, that Diabetic Investor has heard rumors about practically every company in the BGM market either being sold, taken private or spun off to as a separate publicly traded company. Frankly all this speculation is getting a little boring as for years Diabetic Investor has been chronicling the demise of the BGM market. How the market has transformed itself from a medical device model to full blown commodity market where the only thing that matters is price.

But let’s just for the moment assume that Reuters got it right and Roche is actively seeking buyers for this unit, what makes anyone believe that they will succeed and not suffer the same fate as Bayer who tried to sell their diabetes device unit but failed. Now some might speculate that Sanofi (NYSE:SNY) a company who has basically shut down their ill-fated entry into BGM and a rumored buyer of the Bayer franchise could switch gears once again and go after Roche’s business. After all even with Roche doing their best to run this unit into the ground they still have a sizeable market share and solid sales internationally. And let’s not forget that Roche, although most people forget about it, also has an FDA approved insulin pump and yes an FDA approved patch pump, even though it has never seen the light of day.

Given that Sanofi is basically an insulin company, or put more accurately, a long-acting insulin company some could speculate that buying Roche’s diabetes device franchise would put them back on their original diabetes strategy of selling a diabetes management system. A plan that seems to have been abandoned but then again this is Sanofi a company that’s known to change their mind, then change it back, then ….. nothing.  Frankly Diabetic Investor isn’t sure what would be bigger news, Sanofi buying Roche’s diabetes franchise or the company actually making a decision.

Others will speculate that Bayer once a seller will switch gears and become a buyer, as rumors were flying just a few weeks ago that Bayer was buying Abbott’s (NYSE:ABT) diabetes device unit. Another unit which includes an insulin pump which has never seen the light of day and a continuous monitoring system which was dead, but just as Dr. Frankenstein attempted to bring dead tissue back to life Abbott is trying to bring the Navigator back from the grave. Diabetic Investor can’t say for certain but we’re pretty sure Bayer isn’t a buyer and that Abbott is closer to dead than alive.

That leaves about the only company that, at least from all outward appearances, isn’t panicking, Johnson and Johnson (NYSE:JNJ). While JNJ would just love to convert the Roche customer base to the OneTouch platform, the good folks at corporate are in no mood to spend even more money and quite frankly would happily listen to offers for their diabetes franchise. As we have noted many times in the past, JNJ just isn’t smart about when to buy companies they are equally adept at when it’s time to sell a unit.

There is remote possibility that Alere (NYSE:ALR) could come in and try to buy Roche on the cheap. Or that Roche will find some private equity group that has too much money on their hands and seeks a real challenge. The harsh reality is, and Roche is about to find this out or already has, there isn’t an appetite to acquire troubled companies playing in troubled markets, markets which aren’t going to get better and will likely only get worse. It also doesn’t help any that the Roche management team has done severe damage to the Accu-Chek brand.

Yet there is one side of Diabetic Investor that actually hopes a deal does happen as we would then irrefutable, undeniable proof that in the wacky world of diabetes anything can and usually does happen. We would also know the identity of the dumbest company not just on the planet but in this galaxy.