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May 20, 2013
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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 May 15, citing three people familiar with the matter. A Roche spokesman declined to comment to IBJ. The entire blood-glucose meter industry faces a huge hit to sales July 1, when the federal Medicare program will start a competitive bidding program for blood-glucose testing strips and supplies. Bidding could cut Roche's payments as much as 72 percent. 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. Roche Diagnostics’ North American blood-glucose monitor sales declined 6 percent last year, to $598 million, according to Close Concerns Inc., a market research firm based in San Francisco. Close Concerns predicts Roche's blood-glucose sales in North America will swoon this year by 23 percent, to $463 million. 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.

While its diabetes business struggles, Roche Diagnostics’ laboratory testing business is riding high on the trend of personalized medicine. On May 14, the U.S. Food and Drug Administration approved a new Roche test to detect a gene mutation found in about 10 percent of non-small cell lung cancers. That’s important because Switzerland-based Roche’s pharmaceutical business has a drug, Tarceva, that the FDA said could be used in patients with the mutation whose cancer is spreading. The new test is the first approved to detect the epidermal growth factor receptor, or EGFR, gene, according to a Reuters report.

Construction has stopped on a generic insulin facility being built with a $6 million loan from the city of Greenwood. Greenwood attorney Krista Taggart said the city could foreclose on the Elona Biotechnologies facility within the next few weeks unless new investors take over the company. Greenwood officials three years ago approved $8.4 million of incentives for the project, including the construction loan. Elona said then it expected to employ some 70 workers and spend more than $25 million on a planned expansion. Elona told Greenwood officials of financial troubles in late January. In February, the company said it had reached a deal under which the company would be acquired by private investors.

Few observers believed WellPoint Inc.’s explanation that three of its directors all resigned within one week of each other for entirely “personal reasons.” But investors didn’t care. They bid up the Indianapolis-based health insurer’s stock price more than 2 percent last week after WellPoint disclosed the departures of Dr. Lenox Baker, Sheila Burke and Susan Bayh. Two outside observers cast the departures as a positive that allows new CEO Joseph Swedish, a veteran hospital executive, to put his stamp on the company. Institutional investors had criticized the board for a variety of matters, including its 2007 hiring of Angela Braly as CEO. After a series of missteps under Braly’s leadership, the board ousted her in August. “This is normal and it’s probably good for the company to clean out a few of the board members, especially given how long it took the board to come to the decision that it was time to remove the prior CEO,” Erik Gordon, a business professor at the University of Michigan in Ann Arbor, told Bloomberg. “A new CEO always wants the full support of the board.” The company announced the departures just six weeks after Swedish’s hiring and two days before its annual meeting.

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