Despite Roche's ($RHHBY) continued diagnostics growth, the company has struggled to turn its diabetes unit around, and now it plans to slash 100 jobs and restructure the operation.
As the Indianapolis Business Journal reports, Roche will cut staff from its diagnostic hubs in Indiana and Germany, citing reimbursement cuts and pricing pressures in the diabetes world. Under the restructuring, the development of blood glucose tests will stay in Indianapolis, while insulin pump R&D will move to Germany.
In a call with investors, Roche Diagnostics Chief Roland Diggelmann said the company plans to rethink every side of its diabetes Dx business, including cost structure, sales, marketing and innovation, IBJ reports. "We are in the process of doing this in the R&D organization, focusing on competent centers both in Indianapolis and Mannheim," Diggelmann said. "We're also optimizing the [marketing] investments with some field force restructurings, which have already started to take place, mainly in the United States, and also streamlining the operation structure."
In the first 9 months of 2012, Roche Diagnostics pulled in $8.1 billion, a 4% jump over the previous year. However, diabetes sales dropped 5% in the period, worsening H1's 1% decline.
Roche Diagnostics has long faced regulatory obstacles in its diabetes operation, IBJ notes, from a 2003 FDA warning that kept its insulin pumps off the market for three years to 2009 concerns over its blood glucose meters. Last year, Roche retooled its diabetes capabilities at its Indianapolis diagnostics HQ, however, and the company snagged FDA approval last week for the Inform II blood glucose monitor.
- read the IBJ story