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Report: Roche mulls sale of blood-glucose monitor business

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Roche Diagnostics Corp. is mulling a sale of its blood-glucose meter business, according to a Reuters report, a move that would cast uncertainty over the nearly 1,000 people working for its diabetes business in Indianapolis.

Reuters reported the potential sale on Wednesday, citing three people familiar with the matter. A Roche spokesman declined to comment to IBJ.

The entire blood-glucose meter industry is facing a huge hit to sales on July 1, when the federal Medicare program will start a competitive bidding program for blood-glucose testing strips and supplies, which could cut its payments as much as 72 percent. The Medicare program for seniors is the largest health insurance program in the United States.

The Medicare cuts will directly affect a Roche test-strip plant in Indianapolis, which employs more than 150 workers and churns out more than 2 billion strips per year.

Two years ago, Roche decided to spend $37 million to expand its test strip plant in Indianapolis, in part to keep up with growing global demand.

But, last year, reimbursement cuts, as well as stiff price competition from generic makers of blood-glucose meters, forced Roche to restructure its diabetes business. The company cut 100 diabetes care positions between its two main locations in Indianapolis and Mannheim, Germany.

“There are lots of players here that are discussing either pulling out, consolidating or just riding it through,” wrote Kelly Close and Kira Maker, two diabetes analysts at San Francisco-based market research firm Close Concerns Inc., in an April report.

Roche Diagnostics’ North American blood-glucose monitor sales declined 6 percent last year, to $598 million, according to Close Concerns. Close Concerns predicts Roche's blood-glucose sales in North America will swoon this year by 23 percent, to $463 million.

Roche's blood-glucose monitoring business has also been suffering globally. Sales declined 10 percent last year, to $2.5 billion, and Close Concerns predicts another 8-percent dropoff this year.

Roche isn't alone. In the United States, blood-glucose monitoring has been a declining business since sales peaked in 2007 at nearly $3 billion. But this year will be especially bad, with an estimated 19-percent decline in sales, according to Close Concerns. Globally, sales of blood-glucose monitors peaked in 2011, but then fell 5 percent last year and are expected to decline another 11 percent this year.

Reuters' sources said there are only a few possible buyers of Roche’s blood-glucose meter business, including Minnesota-based Medtronic Inc. and New Jersey-based Johnson & Johnson.

A purchase by one of those companies could preserve Roche’s diabetes operations in Indianapolis, but it could also lead to their relocation.

However, a sale may not actually happen, Reuters noted. Last year, Germany-based Bayer AG attempted to sell its blood glucose meter business for about $1.5 billion, but failed to find a buyer.

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  • $wiss
    Does the buyer get to keep the recent Accu-Chek J.D. Power award? Be careful, those Swiss cannot be trusted. Last June they pimped Mayor Ballard and former Governor Daniels at a media op, announcing plans to invest "$300 million at its Indianapolis headquarters, creating up to 100 new jobs by 2017," only to turn around and close the Roche Nutley, NJ facility and eliminate 1000 jobs there later the same week. It seems that healthcare can be innovated only as long as money is to be made. Right now Roche seems to have big eyes for China: there are many Chinese in China and potential billions in Swiss francs! Since Roche is having difficulty with US insurance companies swallowing the bill for overpriced cancer drugs (with debatable efficacy) why not sell insurance to the Chinese and market the drugs to them there? There is a name for these sort of business practices however proper decorum precludes it use in this forum.
  • US regulations and wages can't match the generic price
    It would be nice if Roche could cut the price and still make money. But US manufacturing can't compete with China and India. We have FDA regulations, China has products mixed in outdoor, unsanitary, unregulated pots as we saw with the blood thinner that killed Americans a few years ago. I don't blame Roche. We have government rules and controls and taxes for what is US made. On price, we can't compete. Sad for companies that want to US produce. Dupree
  • Roche -Own worst enemy
    Roche and Bayer did it to themselves. Their products, especially their test strips, are so expensive that people who need to test 4 times a day or more can't afford them at almost $1 each. Anyone with diabetes should test before each meal and at bedtime. Those of us who are Type 1's test 7-10 times a day. It's no wonder everyone has moved towards Walmart and Kroger meters and test strips. Their test strips are less than half the cost of Roche's. Any diabetes educator could have told them this. Those corporate bigwigs saw only dollars in the epidemic of diabetes. Being unwilling to budge on price is going to cost them all in the end. It is a different world now.
  • Too expensive
    For years, the big players have given away free meters and then charged outrageous prices (because we can!) for the strips. You can go to Walmart and buy a meter for $16 and 100 test strips for less than $10. 100 "big name" strips might be $50! Pays for itself, the first time. #shortsighted

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