CC - Ascensia Diabetes Care (formerly Bayer) will not issue quarterly earnings reports or briefing calls –
We learned recently in a conversation with Ascensia Diabetes Care (formerly Bayer) that it has no near-term plans to issues quarterly earnings reports or hold briefing calls for analysts and/or others in the public that can use the calls to learn more about the markets. Management has not provided a rationale for the decision, but we’re assuming they do not want to deal with the “noise.” That too, since this is now a private company that owns the technology, we assume they are reluctant to share news on their revenue or R&D plans. While the announcement makes it impossible to track the sales of the newly formed company, we plan to just assume 0% growth for our analysis of the global pooled Big Four BGM market. Per our most recent estimates (3Q15), the Contour franchise was responsible for ~18% of worldwide BGM sales, coming in behind Roche (~34%) and J&J (32%) and just ahead of Abbott (~17%). Ascensia's decision to operate in stealth obscures what has become an increasingly complex and competitive BGM market: a challenging reimbursement environment; rapidly improving sensor technology; fewer type 2 therapies that cause hypoglycemia; and fierce competition from Abbott, J&J, Roche, and store brands. On the latter, we learned in October that Chinese BGM maker Sinocare reached an agreement to acquire Nipro Diagnostics for $273 million, merging one of the fastest growing BGM companies in the US with the fastest growing BGM company in China. Ultimately, it remains challenging to speculate on how the divestiture of Bayer's Diabetes Care business will change the US and global BGM markets, though we’re not expecting anything drastic. Last week at ATTD, Ascensia told us that it plans to launch a new connected BGM later this year, continuing Bayer’s pipeline. Said the reps, “The people are the same. The products are the same. The only thing that’s different is what we’re called.” And the transparency and visibility! One of Bayer’s choices several years back was to bundle the Medrad diagnostics business into the Diabetes Care division, which has made it considerably more challenging to break out diabetes care sales separately – Bayer would report Contour, but not other brands. As a result, we’re not losing as much visibility on the market as it might seem at first glance. Ultimately, it will make our reporting more challenging though we’ll look for other public sources of information to assess the global BGM market. We do look for Ascensia Diabetes Care to provide future innovation though we also note this business could fail to achieve that – we’ll stand aside for a quarter to see how we’ll be able to assess this in the future and report back at the end of 1Q15 reporting season.