Roche to cut local jobs after diabetes-care sales plunge

From: Indianapolis Business Journal

Plunging revenue from its blood-glucose monitors has forced Roche Diagnostics Corp. to cut its staff, the company informed its workers last week.

Roche, which operates its North American headquarters in Indianapolis, suffered a 14-percent decline in revenue in its diabetes care unit during the first six months of
the year. Roche has reportedly put that unit up for sale, according to a May report by the Reuters news agency.

“The U.S. diabetes care market is rapidly evolving, and Roche’s diabetes care business in the U.S. is responding by making changes to its customer service and manufacturing operations, which includes the elimination of some jobs,” spokesman Todd Siesky wrote in a prepared statement. “Roche is confident that its diabetes care business in the U.S. is well positioned for the future.”

Siesky declined to disclose the number of workers that will be let go, but said the jobs will be eliminated over the next several months. The cuts will affect Roche’s customer service group in Fishers and its diabetes manufacturing plant on the far northeast side of Indianapolis.

Between the two sites, Roche employs more than 900 diabetes care workers in the metro area.

Diabetes care accounts for roughly one-third of Roche’s Indianapolis-area work force of 2,900. Roche’s other workers here oversee and provide administrative
support for Roche’s three other business units, which sell medical testing equipment to hospitals, doctors and researchers around the country. Sales of Roche’s non-diabetes products rose 3 percent in the  first half of 2013, compared with the first half of 2012.

A year ago, Roche cut 100 jobs between its Indianapolis diabetes team and another diabetes plant in Germany, after cuts to reimbursement and competition from generic blood glucose monitors reduced sales.

During the first six months of this year, sales of Roche’s North American diabetes products totaled $224 million. During the same period of 2012, the sales totaled
about $257 million.

And it’s going to get worse. The price of blood-glucose monitors—which account for 90 percent of Roche’s diabetes care revenue—will be hammered by a
new competitive bidding process instituted July 1 by the federal Medicare agency.

Some projections indicated the program would reduce its payments for blood-glucose monitors 72 percent. And private health  insurers in the United States often follow Medicare’s prices.

In the United States, blood-glucose monitoring has been a declining business since sales peaked in 2007 at nearly $3 billion, according to data from San Francisco-based market research firm Close Concerns Inc.

“The BGM industry is under immense pressure due to both pricing and reimbursement challenges,” Close Concerns analysts Kira Maker, Adam Brown and Kelly Close, said in a May report on Roche.