Johnson & Johnson’s Diabetes Business Elicits Chinese Interest

Reports indicate that Chinese bidders are interested in acquiring a Johnson & Johnson diabetes business. Selling the diabetes business belonging to the largest healthcare firm in the world could bring Johnson & Johnson approximately $4 billion according to sources. The Johnson & Johnson diabetes division has been recording declining revenues for six years now. Last year sales fell by 7.7% and the year before the decline was similar.

Exactly one year ago the New Brunswick, New Jersey-based healthcare firm indicated that options were being evaluated for the diabetes care firms and this included Calibra Medical, Animas and LifeScan. At the time Johnson & Johnson said selling the businesses was one of the options. While Calibra Medical and Animas make devices for delivering insulin, LifeScan focuses on making devices using to monitor the level of blood glucose. Calibra Medical and Animas were both acquired by Johnson & Johnson in 2012.

Heightened competition

Last year in October Animas indicated that it would be shutting down the business in Canada and the United States due to increased competition as well as the inability to get a buyer.

The interest by the Chinese in the Johnson & Johnson division comes at a time when the diabetes car market in the worlds’ most populous country is expected to experience a rapid growth rate. Per estimates from the World Health Organization, close to 30% of all diabetes sufferers in the world live in China.

Some of the potential bidders interested in Johnson & Johnson’s diabetes division include a consortium which was formed by Sinocare, a developer and manufacturer of monitoring systems for blood sugar as well as a China Investment Corp’s unit, China Jianyin Investment. According to sources an advisor has been hired by the consortium to work on the bid. The sources further indicate that Goldman Sachs has also been hired with regards to the sale.

Asia’s diabetes pandemic

It is estimated that over 60% of the cases of diabetes in the world are in Asia. Unhealthy diets, rising wealth levels and sedentary lifestyles are being blamed for sparking Asia’s ‘diabetes epidemic’. Hua Medicine’s chief financial officer, George Lin, claimed that a recent market research report indicated that in China the number of diabetes patients was over 110 million.

“The market right now in the world is already close to $50 billion. In China, it is expected to grow from $6.6 billion in 2016 to $20 billion by 2025. This is a very large, fast-growing market,” Lin said in reference to diabetes treatments.

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