Roche Considers Options for Diabetes Unit Including Saleby and
Options may also include a spinoff or a stake sale of business
Asset may attract private equity and medical-device bidders
Roche Holding AG is considering options for its diabetes-care business including a sale, people familiar with the matter said, following other large drugmakers that have exited the treatment area amid price declines.
Alternatives being weighed also include a partial sale of the business or a spinoff, the people said, asking not to be identified because the deliberations are private. A sale could fetch as much as $5 billion, though the valuation could be affected by pricing pressure in the industry, they said. No final decisions have been made and Roche may decide to keep the unit, the people said. Chief Executive Officer Severin Schwan said Wednesday the company is committed to the business.
Roche’s American depositary receipts rose 1.6 percent to $29.96 in U.S. trading Tuesday, after the shares had declined 0.4 percent to close at 233 Swiss francs in Zurich.
The potential exit of the business would mirror other drugmakers globally. Johnson & Johnson said it was exploring options including a sale, partnerships or joint ventures for its own diabetes-care business, citing significant price declines for the last several years. In 2015, Bayer agreed to sell its diabetes-devices unit to Panasonic Healthcare Co., a joint venture backed by buyout firm KKR & Co., for about 1 billion euros ($1.1 billion) to exit a business hobbled by aging products and price pressure.
Private equity firms and some other medical-device makers could be interested in acquiring some or all of Roche’s business, the people said. The large size may make it difficult to find buyers, making a spinoff an attractive alternative, the people said.
Sales at the diabetes care unit fell 5 percent to 2 billion francs ($2 billion) in 2016 due to continuing U.S. reimbursement cuts, the drugmaker said as it reported results Wednesday.
“It’s a difficult situation we are going through, but we remain committed to this business,” CEO Schwan said on a results conference call with reporters.