UPDATE 1-Roche decides against selling diabetes device unit -sources

Thu Sep 19, 2013 10:46am EDT

By Soyoung Kim and Jessica Toonkel

NEW YORK, Sept 19 (Reuters) - Swiss drugmaker Roche Holding AG has decided against trying to sell its blood glucose meter business, according to two people familiar with the matter.

At least one other large drugmaker, Bayer AG, also scrapped plans to sell a diabetes device unit this year.

In the past few months, Roche was looking to sell the business as the industry faced increased competition and lower reimbursement rates from U.S. government healthcare programs, people familiar with the matter told Reuters in May. .

However, the reimbursement pressure on diabetes test supplies lessened the chances of a competitive sales process, leaving Roche little choice but to hold on to the business, according to one of the people who spoke to Reuters this week.

The people wished to remain anonymous because they are not permitted to speak to the media.

A Roche spokesperson said in an email that the company remains committed to its Diabetes Care division.

Bayer, Germany's biggest drugmaker, had attempted to sell its blood glucose meter business for about $1.5 billion, only to pull the plug on the sale early this year after failing to attract sufficient interest.

The diabetes device market came under pressure earlier this year after the U.S. Centers for Medicare & Medicaid Services moved to cut the reimbursement for diabetes test supplies by up to 72 percent.

The change, which took effect in July, makes it more difficult for companies to be profitable in this business.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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