Chinese Backers Eye J&J’s $4 B Diabetes Deal
Johnson & Johnson’s diabetes-care arm — a trio of brands that helps millions keep their blood sugar in check — is on the radar of a handful of Chinese investors looking to snap up $4 billion (about S$5.3 billion) worth of assets. Here’s how the story unfolds.
What’s at Stake?
- LifeScan – the company behind handheld glucose meters that let diabetics monitor their levels on the fly.
- Animas – formerly a J&J darling that produced insulin pumps; the latest news says it’s shutting down its US‑Canada operations.
- Calibra Medical – another insulin‑delivery outfit J&J acquired in 2012.
J&J announced last year they were “exploring strategic options” for these businesses, but no concrete plan had emerged yet. A sale would align with their broader strategy to exit lower‑margin, commoditized categories such as glucose meters and strips.
Chinese Interest Springs from a Booming Market
China’s diabetes market is no small pie. Roughly one in every three people worldwide with diabetes lives in China, domestic figures suggest. The sector is projected to grow from $6.6 billion in 2016 to a staggering $20 billion by 2025. That’s a huge, fast‑moving playground for any savvy investor.
Key Players on the Hunt
One consortium is shaping up: Shenzhen‑listed Sinocare, a maker of blood‑sugar monitors, teamed with China Jianyin Investment (JIC), a sovereign wealth fund subsidiary. They’ve hired a specialist adviser to help craft a compelling offer.
Sinocare’s past is a mixed bag. In 2015 it teamed up with Citic Securities to bid for Bayer’s diabetes‑devices unit (which ultimately ended up with Panasonic Healthcare), but now it’s set to go full‑tilt on J&J’s unit.
JIC and the parent China Investment Corp (CIC) are known for investing across industry, consumption, and IT sectors. CIC’s leadership says they’re actively hunting for opportunities in healthcare.
Why Is J&J Packing Up?
Sales have been in decline for the diabetes unit: a 7.7 % drop in the first nine months of 2017, mirroring a similar slump in 2016. The company’s revenue slide has been persistent since 2012.
For J&J, shedding these assets could tidy thin margins and free up capital for higher‑growth ventures. While global private‑equity firms have expressed interest, analysts think China could offer an aggressive turnaround angle.
Will a Chinese Buyer Pull the Trigger?
Experts like Franck Le Deu from McKinsey point out that a Chinese company might extract more value than a multinational—thanks to different profitability expectations and willingness to operate at slimmer margins.
“However,” Le Deu warned, “diabetes is a dispersed market that demands a broad portfolio and extensive footprint. The competition is fierce, and the capital required to stay competitive is substantial.”
The Bottom Line
Johnson & Johnson remains cautious, quietly letting interested parties know they’re still evaluating options. Meanwhile, Chinese firms are lining up with the hopes of turning a struggling Japan‑born unit into a rosy, fast‑growing venture backed by China’s burgeoning diabetes market.
Stay tuned. If the deal goes through, we’ll see a bold reshuffle in the global diabetes‑care landscape.
