Johnson & Johnson/LifeScan will acquire long-sought access to the continuous glucose monitoring system (CGMS) market with its $518 mil. purchase of Animas, the firm announced Dec. 16.

By purchasing Animas for $24.50 per share, a nearly 35% premium over its Dec. 15 close of $18.20, LifeScan will gain a foothold in both the CGMS marketplace and insulin delivery in general. Animas expects to bring a continuous glucose monitoring system to market in 2006.

Investors have speculated throughout this year that J&J would acquire Animas (¹ Also see "Animas Stock Pumped Up 22% By Takeover Speculation In February – Index" - Medtech Insight, 7 March, 2005., p. 22).

J&J holds an 8% stake in Animas and inked a co-promotional agreement with the firm in October 2003.

Recently, J&J Medical Devices Group Worldwide Chairman Michael Dormer noted that J&J was interested in acquiring continuous glucose monitoring technology.

Eric Milledge, who heads Lifescan for J&J, said in a release that "the combination of Animas' insulin delivery systems and LifeScan's glucose monitoring systems will allow us to offer more comprehensive disease management" products.

Though LifeScan is the current market leader for diabetes monitoring, it has fallen behind other firms in the long-term development of a completely closed-loop, artificial pancreas - considered the "holy grail" of diabetes management.

Medtronic, Abbott, Roche and DexCom are much further along in developing such a device.

In August, Medtronic received FDA approval for its Guardian RT CGMS, though the system has not yet incorporated the firm's Paradigm sensor-augmented pump. The combination of the two would create a device that not only can detect blood sugar levels but also provides immediate insulin therapy.

Abbott ( Freestyle Navigator ), DexCom ( STS ) and Roche are also vying to reach the U.S. market with continuous glucose monitoring systems.

Animas' CGMS GlucoWatch G3 application is currently being held up at FDA while the firm works to resolve issues raised in a February 2005 warning letter from the agency, though the company anticipates approval within the first half of 2006.

The company's West Chester, Penn. manufacturing facility was cited for violations in the areas of complaint handling, adverse event reporting and corrective and preventive action, following a September 2004 inspection (² Also see "Animas Looks Forward To Continuous Glucose Monitoring As Market Crowds" - Medtech Insight, 7 November, 2005., p. 17).

Animas originally acquired the CGMS technology with its $10 mil. acquisition of Cygnus in 2004.

The company's existing insulin pumps include the IR 1000 , IR 1200 and IR 1250 . The IR 1250 faced a Class II recall over the summer because the pump failed to respond to keypad presses.

LifeScan's glucose monitors include the OneTouch blood glucose meter line and test strips.

J&J's LifeScan glucose monitoring business has performed well in recent quarters, despite a recent Class I recall due to the potential for users to inadvertently change the unit of measurement on the devices.

For the third quarter, LifeScan generated $462 mil. in sales for J&J, up 9.1% from the prior-year period.

By comparison, Animas pulled in $21.7 mil. for Q3, down 4.2% from the prior-year period. The loss was primarily due to a decrease in insulin pump sales, which represent the majority of the firm's business. Sales fell 27.2% to $12.5 mil. during the quarter. Insulin supplies comprise the remainder of its business.

Animas will operate as an independent entity reporting to LifeScan. J&J anticipates that the majority of Animas' management team will stay on after the acquisition closes.

J&J expects the deal to close in the first quarter of 2006.

After the announcement, Animas' stock jumped 32%, or $5.83, to close at $24.03. J&J's stock rose 1.2% to close the day at $60.86.

Johnson &amp; Johnson Snags Animas To Advance Artificial Pancreas Design

More from Archive

More from Medtech Insight

Johnson & Johnson Snags Animas To Advance Artificial Pancreas Design