The exit plan came from Becton, Dickinson & Co., which caused Abbott Laboratories and LifeScan Inc. to announce they would give free blood glucose monitoring systems to all BD patients. Abbott's diabetes care division is based in Alameda and LifeScan Inc., a division of Johnson & Johnson, is based in Milpitas.
"It's a smart move because you give away the meters, which pretty much costs nothing, and at the same time you try to build a loyal customer base," said Phillip Nalbone, an analyst with RBC Capital Markets.
LifeScan will give out its OneTouch blood glucose monitors and a starter supply of test strips. Abbott will do the same with its FreeStyle line of blood glucose meters. Both companies believe the strength of their products is the ability to provide an accurate blood reading quickly, with a relatively small blood sample.
"At the end of the day, the way to think about diabetes and how companies like us fit in is to use technology to give patients the best way to control their blood glucose levels," said Ed Fiorentino, president of Abbott Diabetes Care. "If you look at diabetes as a medical condition, it's a significantly growing medical problem, and with Western diets, the number of incidents of diabetes continues to grow.
From a business standpoint, because BD is one of the smaller players and hasn't been in the market very long, Nalbone said its departure will be fairly transparent.
"It's basically like chopping this company into small pieces and spreading what's left amongst the others," Nalbone said. "At the end of the day, it's just a relatively minor player that has backed out of the market, and nothing has really changed that much."