Report: China's Sinocare Eyeing Bayer's Diabetes Device Business

By Jof Enriquez,
Follow me on Twitter @jofenriq

Sinocare, Inc., a Chinese manufacturer of blood glucose monitors, is reportedly bidding for Bayer's diabetes device unit.

Sinocare is said to be offering as much as $1 billion for Bayer's diabetes device business, anonymous sources told Bloomberg recently. The company is making the offer with Citic Securities Co.’s direct-investment unit, Goldstone Investment Co., and is talking with Chinese banks to help finance a potential deal.

Neither Bayer nor Sinocare has formally confirmed or commented about the reported bid.

A rival bid by Sinocare could challenge ongoing talks between Bayer and KKR-backed Panasonic Healthcare Holdings over the purchase of Bayer’s Contour blood glucometer business.

As reported in February, Panasonic Healthcare had been negotiating with Bayer for quite some time about buying its diabetes unit, which could fetch between €1 billion and €2 billion ($2.3 billion). Although the report said a deal may be weeks away, the two sides reportedly are still wrangling over the price.

When Bayer formally announced in December that it was divesting its diabetes unit, the business had been optimistically valued at as much as $2.5 billion, but only Panasonic Healthcare emerged as a serious bidder, until Sinocare made its reported bid.

Bloomberg notes that more Chinese companies — such as Sinocare and Biosensors International Group, Ltd. — are pursuing foreign acquisitions to gain access to technology and broaden their healthcare product portfolio. An aging population and a spike in chronic conditions, such as diabetes, are giving local Chinese companies the impetus to offer more diversified products.

Bloomberg reports that government healthcare expenditures in China topped ¥1 trillion ($161 billion) last year, a 9.6 percent hike from 2013.

The Chinese government also is increasing its support for local companies against foreign competition in the country's growing medical device industry, which is expected to grow 20 percent annually.

However, unlike Chinese companies,some larger foreign firms like Bayer are streamlining.

Under CEO Marijn Dekkers, German company Bayer has been adopting a new strategy to exit the diabetes care segment. Dekkers also is preparing to divest Bayer's plastics division. He wants the company to focus instead on core competencies and growth areas, such as pharmaceuticals, crop science, and animal health.

Image credit: "Turning Bayer" by Conan. Licensed under CC BY 2.0 via Flickr.