Chinese Company Might Buy J&J’s Diabetes Care Unit

Category: Business


Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. divest / dɪˈvɛst, daɪ / (v) – to sell off a property or an asset

    The company is planning to divest some of its minor businesses because of low profit.

  2. portfolio / pɔrtˈfoʊ liˌoʊ, poʊrt- / (n) – a company’s collection of businesses or investments

    The startup medicine supplier will soon be part of the leading pharmaceutical company’s portfolio.

  3. take a nosedive / teɪk ə ˈnoʊzˌdaɪv / (idiom) – to experience a drastic decrease

    The gadget’s sales took a nosedive after several units malfunctioned.

  4. benchmark / ˈbɛntʃˌmɑrk / (n) – a standard that is used for comparison

    We set a new benchmark after exceeding last year’s target.

  5. amenable / əˈmi nə bəl, əˈmɛn ə- / (adj) – being agreeable to something

    Most of us are amenable to the proposed new company policy because it has several advantages.


Read the text below.

Multinational corporation Johnson & Johnson (J&J) reportedly has plans to sell its diabetes care unit to Sinocare Inc., a Chinese diabetes device manufacturer.

In January 2017, the New Jersey-based healthcare business disclosed that it was considering to divest some of its diabetes care companies, such as Lifescan Inc., Animas Corp., and Calibra Medical Inc., from its portfolio.

This consideration stemmed from the declining revenues of J&J’s diabetes care unit since 2012, according to reports. In fact, sales took a 7.7% nosedive in the first nine months of 2017 as compared to previous years. In addition, J&J continues to face tough competition against rival companies like Bayer AG and Novo Nordisk.

Sinocare Inc. has publicly expressed its interest in obtaining J&J’s diabetes care unit, but there is no final word on the agreement and no specific details have been disclosed yet. However, insiders have said that the deal could reach up to $4 billion.

According to George Lin, chief financial officer of diabetes drug developer Hua Medicine, the number of diabetes patients in China has already exceeded 110 million. He added that the current global market for diabetes is at $50 billion, while its market in China is predicted to increase from 2016’s $6.6 billion to $20 billion by 2025.

Meanwhile, a Hong Kong-based healthcare business consultant believes that the sale of J&J’s diabetes care unit might be more value-adding to a Chinese company than to a multinational business. He explained that the former tends to have a different benchmark in terms of profitability. Therefore, it is usually more flexible and amenable to a profit that is not within multinational standards.

Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

• Do you consider the healthcare industry a good industry to invest in? Why or why not?
• In your opinion, what industries are generally good to invest in? How about industries that are considered risky? Discuss.

Discussion B

• What are other possible reasons why some businesses choose to invest in companies that have a declining revenue? Explain.
• Aside from looking for investors, what are other ways to recover from a declining revenue? Discuss.