Roche Strengthens Diabetes Portfolio - Analyst Blog

In a move to strengthen its diabetes care portfolio, Roche (RHHBY) recently agreed to acquire Medingo Ltd., a subsidiary of Elron Electronics Ltd. Roche intends to make an upfront payment of $160 million to Medingo’s shareholders. The company will also pay up to $40 million (25% of the upfront payment) on the achievement of certain milestones.

This acquisition should help Roche strengthen its position in the insulin delivery systems market. With this deal, Roche will have access to Medingo’s semi-disposable insulin patch pump, which includes a remote control that allows personalized insulin delivery.

With more than 285 million people suffering from diabetes worldwide, the pump, once launched, should see significant uptake due to its convenient delivery system. According to the company, the insulin delivery system global market was worth approximately CHF 1.6 billion in 2009.

The company said that while the insulin delivery system market continues to grow at a fast pace, the patch pump segment is slated to grow at a higher rate. Roche expects to launch the pump in 2012.

The acquisition is in line with Roche’s recently announced plans to expand in therapeutic areas like metabolism, inflammation and central nervous system disorders. One of the company’s most advanced metabolic disorder candidates is taspoglutide, which is being developed for the treatment of type II diabetes. Roche should be in a position to seek approval for the candidate in 2011.

Roche already has a strong presence in the diabetes market. The company’s diabetes care segment posted sales of CHF 2,969 million in 2009. The company’s Accu-Chek portfolio of products which consists of blood glucose meters, insulin delivery systems, lancing devices, data management systems and education programs, provides patients with several options for managing their ailment.

Roche’s primary competitors in the diabetes market include Eli Lilly (LLY) and Novo Nordisk (NVO) among others.