Amid increasing competition in the U.S. diabetes care market, Roche AG (RHHBY) plans to restructure its U.S. operations and reduce headcount by 10%.
The company recently announced that it will lay off 157 employees in its U.S. diabetes care unit. The affected group includes 133 full-time employees and 24 contract employees. Forty-two employees belong to Roche's Indianapolis campus, which employs around 1,200 people in its Diabetes Care unit and has a total of 3,500 employees.
Roche hopes to launch its Accu-Chek Guide, a new-age blood glucose monitoring system, in the U.S. market this year.
U.S. Diabetes Market Under Pressure
While Roche has expressed confidence that the new structure of its struggling diabetes care unit will “secure the long-term viability" of its business, the development spotlights the increasing competition and challenges in the U.S. diabetes sector.
In 2015, German major Bayer AG (BAYRY) sold its diabetes-devices unit to Panasonic Healthcare Co., citing deteriorating sales, as many countries initiated price cut programs to offer low-cost diabetes care products.
In January 2016, U.S. major Johnson & Johnson (JNJ) announced that it was evaluating strategic options for its diabetes care segment, which includes a possible sale, partnership or joint venture owing to pricing pressures. In 2016, the Danish diabetes giant Novo Nordisk (NVO) had described the U.S. diabetes market as "increasingly challenging."
In 2016, Roche said revenues from its diabetes business fell 5%, to 2 billion Swiss francs (around $2 billion). In February 2017, reports surfaced that the Swiss pharmaceuticals giant was open to a possible spin-off of its diabetes care unit or a partial stake sale for up to $5 billion. Refuting the rumors, Roche announced its continued commitment to the diabetes care business. (See also, Roche Denies Reports It Plans to Exit Diabetes Business.)