Roche ($RHHBY) may be trying to unload its blood glucose meter business, reflecting continued challenges over reimbursement and a contrast from the far better success the company has enjoyed with diagnostics development.
Reuters reported on the interesting development, citing anonymous sources "familiar with the matter" that said Roche is exploring a sale. One source told the news agency the discussions are preliminary, however, and the Swiss drug and diagnostics giant may end up pursuing a different path that doesn't include an outright sale.
Who would buy the business? There aren't a lot of choices. Two of the sources told Reuters that Medtronic ($MDT) and Johnson & Johnson ($JNJ) would be logical buyers. Sanofi ($SNY) could also be interested, considering that last winter the drug giant was rumored to be looking into buying Bayer's blood glucose meter business for $1.5 billion. But as Reuters notes, Bayer decided not to sell after all because it didn't generate enough buyer interest.
So why would Roche sell its blood glucose meter line? Blame competition from the few rivals in the market, and the ongoing saga of reimbursement declines. Reuters zeroes in on what may have been the final straw for Roche: a decision earlier this year by the Centers for Medicare & Medicaid Services to slash diabetes test supply reimbursement, a major source of income for blood glucose meter manufacturers, by up to 72%.
That likely added to Roche's ongoing problems with its diabetes division. Last fall, the company announced plans to eliminate 100 jobs from the division and restructure in a bid to reduce an ongoing slump in diabetes sales. Diagnostics revenue, on the other hand, continues to grow robustly.
- read Reuters' story