Healthcare behemoths Panasonic Healthcare Holdings Co, Ltd (PHCHD), Tokyo, and Bayer AG, Leverkusen, Germany, recently announced an agreement to form a global business focused on diabetes care solutions.

Under the terms of the agreement, PHCHD will acquire the Bayer business unit Bayer Diabetes Care (BDC), Basel, Switzerland, and Whippany, NJ, for €1.022 billion, or approximately ¥138 billion at the exchange rate of €1 = ¥135. According to the companies, their newly formed partnership will be better equipped to respond to customers’ healthcare needs.

BDC is one of the leading providers of blood glucose monitoring systems to people with diabetes and healthcare professionals around the world. Formed as a business unit within Bayer, BDC conducts business in more than 125 countries, and generated sales of €909 million in 2014.

Established in 2014, PHCHD is a comprehensive healthcare company backed by funds sponsored by leading global investment firm KKR. The company develops and manufactures blood glucose monitoring meters and strips for people with diabetes through the in vitro diagnostics business of its subsidiary, Panasonic Healthcare Co, Ltd. (PHC). BDC has marketed and sold PHC products around the world for more than two decades and has been PHC’s exclusive sales and distribution partner for Contour Next products, as well as some Contour products, both brands belonging to Bayer Healthcare LLC.

The partners believe that integration of BDC’s global sales network with PHC’s high-quality production capabilities will better enable them to reach global consumers at a transitional time for the diabetes healthcare sector. According to the World Health Organization, nearly 350 million people worldwide are living with diabetes, up from an estimated 30 million in 1985. The rate of diagnoses is expected to rise, particularly in low- and middle-income countries.

To accommodate such rising incidence, many national healthcare systems have instituted price reduction programs for diabetes care products, contributing to an increased volume of low-priced diabetes care products on the market. To navigate this environment, BDC and PHCHD look forward to scaling their capabilities to continue providing top-quality and cost-competitive products to patients in need.

“Since first taking steps to becoming an independent healthcare company from Panasonic Corp, through KKR’s investment, it has been our key management objective to form strong partnerships with strategically pivotal companies,” says Kenji Yamane, PHCHD president. “For more than 20 years, BDC has been our flagship partnership with whom we share complementary goals. Now, with KKR’s support, we are pleased to have reached this landmark agreement with BDC. We anticipate that this partnership will take our two great businesses to new heights, and we wholly welcome the BDC team as full partners to Panasonic Healthcare.”

“We are confident that the sale of our diabetes care business to our long-standing partner Panasonic Healthcare, with the strong backing of KKR, will support the long-term sustainability of this portfolio,” says Werner Baumann, CEO of Bayer Healthcare and member of the Bayer AG board of management.

“This groundbreaking agreement of two strong leaders in manufacturing and marketing diabetes care products, combined with the commitment and shared vision of our partner KKR, will create a large global business fully committed to investing in innovative solutions that will help improve the lives of diabetes patients,” says Michael Kloss, global head of Bayer Diabetes Care.

Huth

Johannes Huth, KKR.

“We are pleased that Bayer Diabetes Care chose Panasonic Healthcare and KKR as the trusted partners for bringing the business to its next stage of development,” comment Johannes Huth, member and head of KKR Europe, Africa, and Middle East; and Hiro Hirano, member and CEO of KKR Japan. “This is another milestone in KKR’s track record of partnering with leading German and Japanese corporates and growing top healthcare companies. Together, we will leverage our experience and network to create a global diabetes care solutions powerhouse in an effort to make this a transformational transaction for the diabetes care industry.”

Hirano

Hiro Hirano. KKR.

The company expects to close the transaction in the first quarter of 2016, subject to customary closing conditions, including relevant antitrust clearance. Further details of the transaction were not disclosed.

For further information visit Panasonic Healthcare, Bayer, and KKR.