Monday, February 24, 2014 12:21:40 PM
Both Bayer and Roche (OTCQX:RHHBY) have attempted to sell their blood monitor business within the last two years. Neither one was able to find an adequate offer and ended up holding onto their respective diabetes care divisions. This indicates there is not a great demand to break into the blood glucose monitoring market.Maybe, Sherlock, because with their business model they, and potential suitors know, that they are dead in the water.
Sales of blood glucose monitors have been declining. Globally the sales peaked in 2011 and have been declining by over 5% annually since. Domestically sales have been declining since 2007. However, this alone is not sufficient to conclude that the business is souring since the majority of sales come from blood glucose strips, not the monitors themselves. Maybe that's because the big 4 have been giving more of them away to make the big bucks on the strips!
Changes within government medical aid programs in Canada and the United States have begun to put a strain on the sales of blood glucose strips. The Canadian Agency for Drugs and Technologies in Health in 2009 reported that the use of blood glucose test strips have a limited clinical effect for many patients who do not use insulin. Due to this, and other studies of a similar kind, the Canadian government in 2013 limited the number of blood glucose strips that a patient who is not on insulin is reimbursed for. Additionally, the United States adjusted its Medicare reimbursement program. Under the new rules Medicare will only reimburse $10.41 for a box of 50 strips, where in the past it had reimbursed $34. While this does decrease the cost that the customer has to pay it puts more pressure on retail pharmacies, especially the smaller ones. It is expected that many of the pharmacies will move towards additional lower end products, which will cut into the larger brands retail network. DECN fills this void perfectly, for a lower cost alternative.
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