Roche AG's (SWX: ROG) Diagnostics Division is due to close Medingo, two years after acquiring the miniature insulin pump developer for $200 million. Medingo produces its insulin pumps at its facility in Yokne'am, which has more than 100 employees.
Sources inform ''Globes'' that Roche Diagnostics is transferring its Israeli insulin pumps R&D activity to Europe in order to consolidate it with the company's diabetes operations. The move is part of a massive restructuring by Roche. Most of Medingo's development staff have been offered relocation at the new facility, but most of them will probably seek work in Israel's medical devices industry.
The closing of Medingo is not a big surprise. Roche acquired the company when it did not yet have a product, and the establishment of the Israeli facility is easy to relocate. Roche was mostly interested in Medingo's technology, and it was obvious from the outset that it would set up a production facility in a low-cost location, and transfer marketing operations to the US or Europe, where the markets are. Israel's development capabilities were unable to tip the scales against Roche's need to cut costs.
Medingo's product is due to reach markets in a few months, after a short delay. If it achieves strong sales, its sellers - IDB Holding Corp. Ltd. (TASE:IDBH) unit Elron Electronic Industries Ltd. (TASE: ELRN) and Rafael Development Corporation could reap revenue from royalties payments.
Published by Globes [online], Israel business news - www.globes-online.com - on January 22, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
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