Will Wonders Never Cease
Just when it appeared that things couldn’t get any wackier in the diabetes device world Diabetic Investor has learned that Johnson and Johnson (NYSE:JNJ) has agreed to sell their two diabetes device units; LifeScan and Animas, to the Brigadoon private equity group. Although we have been unable to confirm the purchase price, sources indicate that the deal is structured so that JNJ can earn a bonus should either unit hit various metrics.
As stunning as this news is, Brigadoon isn’t done wheeling and dealing. Sources inside the group have told Diabetic Investor that they plan on making additional acquisitions with their long term goal being “complete and utter” domination of the diabetes device world. While everyone else in diabetes device world is cutting back on sales and marketing expenses, Brigadoon believes they can effectively market their diabetes management systems using Facebook, Twitter and other forms of social media. In fact their plan calls for only a minimal field sales force with most sales handled in house through their proprietary web site.
When Diabetic Investor inquired as to whom else just might be on their radar screen, the company noted that it would make sense to acquire another insulin pump company perhaps one that has a wireless pump. (Considering there is only one company with an FDA approved wireless insulin pump on the market do we need to name, names?) They also noted while Animas does have a relationship with Dexcom (NASDAQ:DXCM) if they are to truly compete with insulin pump market leader Medtronic (NYSE:MDT) it also makes sense to own a continuous glucose monitoring company.
The way Brigadoon sees it the major glucose monitoring companies have done a very good job of screwing things up and the up and coming companies lack the scale and financial resources to compete over the long term. The further believe with pricing under continued pressure, competitive bidding likely to erode margins even further and the fact physicians don’t really control which system a patient uses a large and expensive field force is a huge waste of money. As one member of the group noted; “We don’t need a bunch of Ken and Barbie dolls out their selling when the internet is the most cost effective way to disseminate information.”
Just in case anyone is wondering just who makes up Brigadoon and how they have been able to fly under the radar for so long while raising so much money, Diabetic Investor can only provide scant details as the only way we could get the scope on all this was to promise we would not name, names. Here is what we can tell everyone. The leaders of this group all have experience in the space and to a man (and woman) believe that the organizations they themselves help build are now just mere shells of what they once were. The see lots of kids running around (there words) who know nothing at all about diabetes and who couldn’t find their way to executive restroom without help. The way these seasoned ex-executives see it this lack of diabetes experience will only help them retake what they see as their rightful place as the leaders of the diabetes device world.
As far as money goes, they have not only raised “billions” but they have the ability to raise “billions” more if needed; again their words not ours- considering JNJ is selling them two units which many believe are worth billions we’ll take them at their word they have the cash. As one member stated; “Heck if Al Mann can bilk investor out of millions with a product that doesn’t stand a chance in the marketplace, we’ll have no problem raising additional cash if we need it.”
What really stood out for Diabetic Investor was how this group could stay under the radar for so long. How could it be that no one has heard of them until know? Keep in mind this the diabetes device world where the second favorite sport is spreading rumors, the first, of course is suing other device companies over intellectual property. Here is where the story truly gets interesting as according to the members of the group they are only allowed to come out in public once a year and the one day this happens to be is April Fool’s Day.