J&J to sell Lifescan, dropping out of diabetes diagnostics
- Private investment firm Platinum Equity has put in a binding offer to acquire Johnson & Johnson's blood glucose monitoring unit LifeScan Inc. for $2.1 billion, the pharma announced March 16.
- If accepted, the offer is expected to close by the end of 2018. An acceptance period for the offer will end on June 15.
- More than 20 million people worldwide use LifeScan's blood glucose monitoring systems, including its OneTouch products. Net revenue for the division totaled $1.5 billion in 2017.
J&J's move away from diabetes began in the first quarter of 2017, when it announced a process to evaluate potential strategic options for its Diabetes Care Companies: LifeScan Inc., Animas Corp. and Calibra Medical Inc.
In October 2017, Animas Corporation exited the insulin pumps market, giving patients the option to transfer to a Medtronic pump. A divestment of LifeScan would further remove J&J from a role in diabetes management.
Last year, J&J's Diabetes Care Franchise sales were $1.6 billion, a 9.7% drop from 2016. The company chalked this up to "price declines and competitive pressures."
"Following a thorough review of all strategic options, we feel confident that the business would have a promising future with Platinum Equity," said Ashley McEvoy, company group chair of Consumer Medical Devices at J&J. "This initiative is part of our ongoing, disciplined approach to portfolio management to focus on our most promising opportunities to help patients and drive growth."
With the sale,, J&J will be left with only a few assets in the space, including its offerings in bariatric surgery and its SGLT-2 inhibtior Invokana (canagliflozin), as well as its family of related products.
J&J is not the only company that has seen a decline in its diabetes business. In the first half of 2017, Sanofi SA warned its investors it foresaw a weakening in its diabetes franchise in the U.S. This was borne out by a 16% drop in diabetes sales during the fourth quarter of last year and a resultant slip in share price.
Novo Nordisk A/S has also been hit hard, spurring a commercial restructuring and layoffs.
- Johnson & Johnson Press release
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