Bayer to Divest Diabetes Care Business for $1.15 Bn

Bayer AG has agreed to sell its diabetes care business to Panasonic Healthcare Holdings Co., Ltd., a company backed by funds by the investment firm, KKR and the Panasonic Corporation, for EUR 1.022 billion ($1.151 billion). The sale will include the Contour portfolio of blood glucose monitoring meters and strips, as well as other products such as Breeze 2, Elite, and Microlet lancing devices. Closing of the transaction is subject to customary conditions, including relevant antitrust clearance, and is expected to occur in the first quarter of 2016.

The move by Bayer to divest its diabetes care business comes as the company moves forward with a plan to become a pure-player life sciences company focused on pharmaceuticals, consumer healthcare, animal health, and crop science. Bayer first announced plans to separate its material sciences business into an independent company to focus on life sciences in September 2014. At the company’s annual stockholder meeting last month, the company provided an update as to the progress of this transformation. Bayer announced that the new name of its MaterialScience business will be Covestro, effective September 1, 2015, and that Bayer intends to float Covestro on the stock market by mid-2016 at the latest.

Bayer’s diabetes business is one piece of Bayer HealthCare. Bayer HealthCare accounted for 47% of Bayer’s total 2014 revenues of EUR 42.2 billion ($46.3 billion) with revenues in Bayer HealthCare at EUR 19.975 billion ($22.448 billion). Its pharmaceutical business (2014 sales of EUR 12.052 billion ($13.542 billion ) and its consumer healthcare business (EUR 7.923 billion ($8.9026) are the two largest pieces of Bayer HealthCare and respectively accounted for 28% and 19% of total 2014 revenues of Bayer AG. The pharmaceuticals segment focuses on prescription products, especially for women's healthcare and cardiology, and also on specialty therapeutics in the areas of oncology, hematology, and ophthalmology.The company’s consumer health segment includes the consumer care business (non-prescription medicines, dietary supplements, and dermatology products), medical care (includes the diabetes care business unit, which markets blood glucose monitoring systems, and the radiology business unit, which offers contrast-enhanced diagnostic imaging equipment along with the necessary contrast media), and the animal health division (makes products for livestock and companion animals). Bayer CropScience accounted for 22% and the to-be-demerged material science business 28%

Bayer's diabetes care business provides blood glucose monitoring systems, lancing devices and diabetes management software. The business accounted for EUR 909 million ($1.022 billion) in sales in 2014, with Contour being the principal product portfolio. The Contour portfolio includes Contour Next, Contour Plus, Contour, and Contour TS and is designed to meet the needs of all patients regardless of type of diabetes, stage of disease, or testing frequency. Other products include Breeze 2, Brio, Entrust, Elite, and Microlet lancing devices.

Source: Bayer AG

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