J&J’s LifeScan to Enter Insulin Delivery Pump Market
Johnson & Johnson (J&J; New Brunswick, NJ) plans to acquire insulin delivery company Animas Corp. (West Chester, PA) in a cash-for-stock transaction valued at about $518 million. J&J reports that Animas will operate as a stand-alone entity within its subsidiary LifeScan Inc. (Milpitas, CA), which manufactures blood-glucose monitoring systems.
“The combination of Animas’ insulin delivery systems and LifeScan’s glucose monitoring systems will allow us to offer more comprehensive disease management solutions for our patients,” says Eric Milledge, a J&J group chairman with responsibility for the LifeScan business. “We have worked in partnership with Animas Corp. since 2003 and know they share our commitment and passion for advancing the standards of care for people with diabetes.”
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| Animas’ Crothall: Increasing company capacity. |
“Insulin pumps allow significant improvements in blood glucose control over conventional therapy for people with insulin-requiring diabetes, reducing the long-term morbidity of diabetes and improving quality of life,” says Katherine D. Crothall, PhD, chief executive officer and president of Animas. “We expect that in combination with LifeScan, our capacity to further contribute to the management of this disease will be meaningfully increased.”
The J&J-Animas deal, approved by the boards of both companies and expected to close in the first quarter of 2006, is still subject to various regulatory approvals, as well as Animas stockholder approval.
In addition to providing Lifescan with an immediate entry into the insulin delivery pump market, the acquisition would give the company access to the continuous glucose monitoring system market. Animas acquired its continuous glucose monitoring technology through the $10 million purchase of Cygnus (Redwood City, CA), completed in March 2005. Cygnus’ GlucoWatch G2 Biographer, a glucose monitor worn like a wristwatch, is a completely noninvasive glucose monitor that is approved by FDA as an adjunctive device.
At the time of the GlucoWatch’s approval, it was widely hailed as a breakthrough for the marketplace. However, FDA imposed significant restrictions on the use of the GlucoWatch, and the device also suffered from a number of technical problems that slowed adoption. Upon its acquisition of Cygnus, Animas announced that it was considering addressing these difficulties by substituting GlucoWatch’s noninvasive reverse electroiontophoresis extraction technology with an invasive microneedle extraction method.
Animas reported in its 2004 annual report that the third-generation GlucoWatch (G3) Biographer has been approved by FDA, but it is not yet commercially available.
J&J’s acquisition announcement comes despite Animas’ string of regulatory troubles over the past year. In February 2005, the company received a warning letter from FDA that cited violations at its manufacturing facility in West Chester, PA, related to inadequate complaint handling and corrective and preventive action procedures. In April 2005, a software bug led Animas to voluntarily recall 2000 of its IR 1250 insulin infusion pumps, launched just three months earlier.
For 2005, Animas expects to report net revenue of between $85 million and $86.5 million. In the first nine months of fiscal 2005, the company reported net revenue of $62.5 million. By comparison, Lifescan contributed sales of more than $1.4 billion to J&J in the first three quarters of 2005.
© 2006 Canon Communications LLC
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