Weekend Update

Weekend Update

Well it seems as if Oliver Brandicourt the recently named CEO of that soap opera named Sanofi (NYSE:SNY) has walked into a major drama. As we noted just yesterday the Afrezza sales force was racked over the coals as management seems to believe it’s their fault the launch isn’t going as expected. This happens just as the company is getting set to launch their Lantus replacement Toujeo, which is supposed to be approved sometime in the first quarter. We shudder to think what will happen should the FDA delay Toujeo something Diabetic Investor has been hearing but cannot state with 100% certainty.

Perhaps not wanting to deal with the drama Diabetic Investor has learned that Medtronic (NYSE:MDT) has decided to end their partnership with Sanofi. Now Diabetic Investor never expected this partnership to amount to much of anything not so much Medtronic did not have good intentions rather Sanofi isn’t exactly a great partner. Given all the drama that’s going on at Sanofi this news is small potatoes when put in the proper perspective. However it does show the circus that Brandicourt is walking into.

One has to wonder which problem Brandicourt will tackle first. It’s an equally compelling question as to how much time the street will give him to clean up the mess he has inherited. Unfortunately for Brandicourt time is not on his side. The Lantus patent is set to expire, no one expects Toujeo even if it is approved to do all that well, the Afrezza launch isn’t going well and the pipeline is full of me-too copycat late to market compounds. Even members of the demoralized sales team agree that there are far too many reps and cuts are needed.

The unknown, and we cannot stress this enough, is what instructions Brandicourt has been given by the board and our good buddy Serge. Just based on his many comments, no matter how stupid they may be, Serge isn’t a big fan of being innovative nor could he be called visionary.  Keep in mind this is the same guy who said the organization needs to be accountable, something that has never happened and likely won’t. No matter how anyone felt about Chris Viehbacher to his credit he did want to run this company for the benefit of stakeholders and could care less about being French enough. Diabetic Investor suspects the board won’t allow Brandicourt the latitude to do what needs to be done.

Moving on to the other big news yesterday that Bayer has actually found a company dumb enough to buy their diabetes device unit a few clarifications. First as everyone knows this deal is not yet consummated and could blow up at any moment. Second just in case anyone thinks there is another suitor who might come in think again. Third looking at the rumored deal it does make some sense, here’s why;

The buyer really isn’t Panasonic but KKR who owns a majority stake in Panasonic and according to a press release; “Panasonic Corporation (“Panasonic”) and KKR, a leading global investment firm, today announced the completion of a share purchase agreement and a shareholders’ agreement under which Panasonic and KKR have become joint partners of Panasonic Healthcare Co., Ltd. (“Panasonic Healthcare”).”

It’s also true that Panasonic already manufactures the test strips for Bayer’s meters. So some may say that Panasonic/KKR is buying the unit as defensive move.

Still Diabetic Investor just doesn’t see it. Even as a privately held company this unit doesn’t have much of a future. Prices are not going to rebound, growth is not going to be restored and cheap imports will continue to gain share.  They also lack a portfolio of products which are aligned with coming move to interconnected diabetes management (IDM).

So stay tuned boys and girls as the wacky world of diabetes continues its wackiness. We knew 2015 would be an interesting year but my goodness. Enjoy the Oscars!