June 30, 2015
By Alex Keown, BioSpace.com Breaking News Staff
BASEL, Switzerland -- Roche Holding AG investors hoping the Swiss pharmaceutical giant will dump its sluggish diabetes- diagnostics unit may be in for a long wait, Bloomberg reported this morning.
The company’s diabetes unit, which is valued at approximately $6.4 billion, lead the market in blood glucose meters and insulin pumps, but growth has slowed considerably since price cuts in 2013 sent sales tumbling in the U.S., Bloomberg noted. That year the company floated the idea of selling its blood glucose meter business, but opted to scrap that plan in large part due to reimbursements on diabetes test supplies, Reuters reported.
Investors were hoping the company would follow the lead of Bayer AG , which sold its diabetes business to KKR & Co. and Panasonic Corp. for $1.1 billion earlier this month. However, there may not be an available buyer for the company’s diabetes unit. Michael Leuchten, an analyst at Barclays Plc in London, told Bloomberg there “aren’t enough natural buyers out there for two people selling a lemon at a good price.”
Leuchten added that he doesn’t believe Roche is looking to sell, but if a pharmaceutical company made a reasonable offer, the company would likely take a serious look because the division hasn’t been a big money-maker for the company over the past two years. Sales at Roche’s diabetes unit fell 17 percent in the U.S. in 2013 and 8.3 percent last year after cuts to reimbursement rates, Bloomberg noted.
A Roche spokesperson told Bloomberg the company is committed to diabetes care and added that the demand for products will continue to grow.
Diagnoses of diabetes are on the rise throughout the United States as well as around the world. There were approximately 30 million people in the United States diagnosed with Type2 diabetes in 2015, according to the American Diabetes Association. It is expected up to 9 million more Americans are undiagnosed. If the present trends continue, as many as one in three American adults are expected to have type 2 diabetes by 2050. More than 200,000 people die each year from diabetic complications, according to data compiled by the association. With the increase in diabetes rates, the market has been saturated with lower cost product, which is one reason Bayer sold off its unit and one reason Roche could consider making a move for the right offer.
Bayer had been looking to sell its diabetes unit since 2012, although the next year Bayer HealthCare ’s then chief executive officer Joerg Reinhardt said the company was planning on keeping the unit. Earlier this month Bayer completed the sale as part of its efforts to shed assets as part of its restructuring to focus on life sciences.
The deal, which is expected to be completed in 2016, includes Bayer’s Contour portfolio, including Contour Next, Contour Plus, Contour and Contour TS. It also encompasses the sale of Breeze2, Brio, Entrust, Elite and Microlet lancing devices. Bayer’s diabetes unit earned $€909 million in sales in 2014, however the division has been hobbled by a product line that has been hindered by lack of innovation.
While Roche may or may not be looking to sell its diabetes care business, Roche has been linked to rumors the company is one contender to acquire pharma giant GlaxoSmithKline for approximately $143 billion. That news came only a few months after Severin Schwan, Roche’s chief executive officer, said the company is still interested in acquiring new products and technologies, but it not interested in a “megamerger.”
Over the past year Roche has made several large acquisitions to bolster its cancer treatments, including the 1.7 billion purchase of San Diego-based Seragon, the $8.3 billion acquisition of InterMune, Inc., focused on therapies in pulmonology and fibrotic diseases and the February acquisition of Germany-based Signature Diagnostics AG, which specializes in oncology and genomics.
In April Roche nabbed a majority stake in U.S.-based Foundation Medicine, Inc. , spending more than $1 billion to acquire 56.3 percent of the company that specializes in molecular and genomic analysis. Roche also acquired Capp Medical, a genomics research company focusing on DNA sequencing to provide early cancer testing, earlier this month. In January Roche also spent $545 million to acquire French-based Trophos, which is developing drugs for neuromuscular diseases.
After Bristol-Myers Squibb Wonder Drug Meets Endpoints, Will FDA Process Be Up to Snuff?
Our most popular story last week was about a new wonder drug that wowed the FDA. An experimental anticoagulant drug under joint development between Portola Pharmaceuticals, Inc., Bristol-Myers Squibb Company and Pfizer Inc. met all primary and secondary endpoints in a Phase III study determining safety and efficacy—and our readers responded. The hope now is it will be sped to patients as fast as possible.
That’s lead BioSpace to ask, what do you think about the drug approval process in this country? Let us know your ideas.
