- Surprisingly, Roche’s Solo Patch Pump is expected to launch this year in Europe – the subtle mention in the slide deck was not discussed on the call. We couldn’t believe the “small and tubeless insulin delivery device operated through a remote control which includes a BGM” is still in development and now plans to launch this year, ~eight years after the acquisition from Medingo in 2010. Then again, Solo was previously expected to launch in 2012, so we’ll have to see if it actually launches this year. See below for a refresher on the device and the competitive landscape.
- Roche’s 2017 Financial Report confirmed that total cash consideration for mySugr was 64 million euros, or ~$80 million, in line with the estimate we shared last June ($75-$100 million). We were pleased to see the Annual Report also note Roche’s focus on increasing time-in-range (implicitly, a CGM call-out) and highlighted the mySugr acquisition as “key to executing our Diabetes Care strategy.”
- Global Diabetes Care revenue of 501 million CHF (~$508 million) declined 6% YOY, driven by a 59% YOY decline in North America sales (a record low in our model). Sales were flat sequentially. Management pointed to pricing pressures and CMS reimbursement cuts as significant drivers of the down quarter. In North America, sales of 30 million CHF (~$30 million) dropped a staggering 59% YOY against a very easy comparison to a 40% decline in 4Q16. International revenue of 471 million CHF (~$477 million) fared much better, rising 3% YOY against an easy comparison to a 3% decline in 4Q16. Worldwide 2017 sales of 1.96 billion CHF (~$1.99 billion) declined 3% YOY on an easy comparison (-5% YOY in 2016) – the lowest ever full-year revenue in our model.
- Pooled global sales for Roche, Abbott, and J&J totaled $1.3 billion in 4Q17, up 1% YOY against an easy comparison to a 5% decline in 4Q16. Excluding Abbott’s record-breaking Q4 sales paints a different picture of the quarter, with combined J&J and Roche sales dropping 10% on a very easy comparison (-28% in 4Q16). Pooled 2017 revenue for all three companies rose 1% YOY to $5.0 billion – finally (albeit marginally) ending five consecutive years of pooled declines.
- Lucentis (Anti-VEGF therapy) sales of 288 million CHF (~$292 million) declined 13% YOY against an easy comparison to 13% YOY declines in 4Q16. This is the lowest revenue for Lucentis recorded in our model dating back to 1Q14. Sales dropped 28% sequentially from a high base of 399 million CHF (~$415 million) in 3Q17.
Roche CEO Dr. Severin Schwan led the company’s 4Q17 financial update on Thursday. The biggest news from the update was that after eight years of mostly silence, Roche’s Solo Patch Pump, acquired from Medingo in 2010, was included in a list of key 2018 expected launches on the slide deck. We’re pleased to see the company finally following through with this product and we explore implications and opportunities in this report. Below, we also bring top financial, pipeline, and therapy highlights from the call, as well as pooled “Big Three” (Abbott, J&J, Roche) analysis and selected Q&A.
- Pipeline Highlights
- 1. Roche’s Solo Patch Pump, Acquired from Medingo in 2010, Listed for 2018 EU Launch…At Long Last!
- 2. mySugr Acquisition Total Cash Consideration Confirmed at 64 Million Euros (~$80 million), “Key to Executing Our Diabetes Care strategy”
- 3. Management Underscores “Shift Toward Continuous Glucose Monitoring” in Q&A, but No Senseonics Mention
- 5. No Updates on Roche-Senseonics-Type Zero AID Pivotal Trial, Slated to Begin In 1Q18
- 6. Instant bG Key 2017 Launch, No Mention of Guide BGM
- Financial Highlights
- 1. Global Diabetes Care Revenue Down 6% YOY on Easy Comparison; Full-Year Declines 3% YOY
- Figure 1. Global, North America, International Quarterly Sales (1Q11-4Q17)
- Figure 2. Global, North America, International Annual Sales (2005-2017)
- Figure 3. 2017 BGM and “Other” (Mostly Pumps) Sales
- 2. North America Record-Low Revenue Drops 59% YOY On Easy Comparison; Full-Year Sales Decline 23% YOY; Just 10% of Overall Sales
- 3. International Sales Rise 3% YOY on Easy Comparison; Full-Year Revenue Rises 1% YOY
- 4. 80 Million CHF Invested in “Smaller Plans” Including “Autonomy and Speed Initiative” in Diabetes Care
- Pooled Financial Highlights
- Drug Pipeline Highlights
- Selected Questions and Answers
1. Roche’s Solo Patch Pump, Acquired from Medingo in 2010, Listed for 2018 EU Launch…At Long Last!
To our surprise, the slide deck listed Roche’s Solo Patch Pump as a key 2018 launch in Europe. The “small and tubeless insulin delivery device operated through a remote control which includes a BGM” was acquired from Medingo in 2010 – boy has this been a long time coming. As a refresher, Solo has a disposable 200-unit insulin reservoir (the only disposable piece, which is changed every ~three days), a reusable cannula “cradle” infusion set for insertion, a 90-day pump “base” (which stores pump settings) with adhesive that should be changed every three days, and a touchscreen remote. On the plus side, Solo is truly tubeless (unlike Cellnovo or Kaleido, which have short infusion sets) and pretty low-profile on the body, but it does have more on-body components than the Omnipod. Scale of the launch wasn’t indicated, though a slow learning rollout wouldn’t be surprising. Presumably Solo could be leveraged for eventual use in a closed loop system, adding an alternate tubeless pump option on top of the in-development tubed pump system with Senseonics and TypeZero. If high European demand for Insulet’s Omnipod – the most closely-related product on the market – is any indication, Solo could be a big product for Roche, especially if the manufacturing can scale (a big ‘if’ with all patch pumps) and Roche can ensure simple training and use. A lot of things will have to go right here, and Roche will certainly have to build manufacturing infrastructure for increased chance of success, but another patch pump on the market could be excellent for market expansion. We wonder how much investment the company will put in hardware vs. software development going forward, and how it will prioritize resources between the two pump platforms vs. BGM vs. CGM (Senseonics). Assuming Solo does indeed launch, it would affirm Roche’s commitment to pumps, which was in question after the US exit at the beginning of 2017. Solo would also gives Roche a tubed and tubeless pump in-house, something no other company can boast right now. (Ypsomed has its own tubed YpsoPump and distributes the tubeless Omnipod on behalf of Insulet, but Insulet is taking over EU distribution this summer.)
**We added the red box for emphasis
- The Medingo Solo patch pump received FDA clearance in 2009 and was scooped up by Roche quickly thereafter in 2010. During Roche’s 1Q10 call, management predicted a “2012” launch, but provided few details other than mentioning improvement of the manufacturing process as the main focus prior to launch. A rep at AADE 2016 told us that the patch pump was the next device in the US pipeline, though the 4Q17 deck clearly positioned it as a EU product, at least for this year. See below for a picture of the device from 2010, although the form factor and specs may have meaningfully changed since that time – for Roche’s sake, we hope the handheld has been radically redesigned with a more modern look and feel. Way back in 2011, Dexcom announced during its 3Q11 call an agreement with Roche to integrate the G5 sensor with Roche’s future wireless handheld, though that partnership was called off once Roche began its own work on CGM. We’d be surprised if the handheld launched with CGM integration, though a Senseonics integration seems possible at some point in the future.
- Near-term, Insulet’s Omnipod, which has been gaining traction at an impressive rate in Europe and has a rich pipeline, is the main competition for Solo. In 3Q17, international Omnipod sales of $33 million hit an all-time high for the sixth straight quarter, rising 70% YOY. If Roche executes, then it could tap into this accelerating demand for easy-to-use patch pumps. We’d guess Omnipod’s OUS pipeline launches will lag behind the US launches – near-term, the Bluetooth-enabled Dash PDM is under FDA review, with clearance expected in 2H18 followed by a “limited market release.” How quickly can Roche bring a product to market? How will the features stack up to Insulet’s more all-in-one Omnipod patch? How soon after that will it will look to automate insulin delivery via Solo, if at all? Also of note, Ypsomed hopes to launch its own patch pump (“YpsoPod”) in late 2020/early 2021, though we know little about the product at this stage.
- The type 2 pump market is severely underpenetrated – will Roche make a play with Solo there, competing with Insulet and BD? Insulet plans to launch its Lilly-partnered U500 and U200 pods in the US in 2019 and 2020, respectively, making the system more amenable to type 2s with high daily insulin requirements. Could Roche establish a similar partnership and develop for type 2 as well, after targeting type 1s in the initial launch (as management indicated on a 2010 call; clearly things could have changed)? Also on the full-feature type 2 pump horizon is BD’s “Swatch” (slated for October 2018-September 2019 US launch), but we’re not sure what the company’s plans are for international rollout. With respect to other type 2 pumps/patch insulin delivery devices, Valeritas’s V-Go, Cequr’s PAQ, and J&J’s bolus-only OneTouch Via have all yet to launch in Europe (and the latter two haven’t launched period). This is certainly a market that could see high demand for the slim-looking Solo pump if Roche is smart about user experience (do they make a different handheld for type 2, or wait until they can provide a mobile display/control app?) and marketing.
- If JDRF’s new partnerships are any indication, there is high enthusiasm for integrated patch pump-CGM AID systems. JDRF recently invested in two such projects in the same month – SFC Fluidics and EOFlow. How quickly will Roche move Solo into the AID realm? We don’t imagine the Senseonics’ Eversense transmitter could be built into the Solo patch pump (enabling an all-in-one on-body experience), though presumably Eversense could stream data from its transmitter to the Solo handheld.
The 2017 Financial Report confirmed that total cash consideration for mySugr was 64 million euros (~$80 million) in line with the estimate we shared last June of $75-$100 million. We were also very pleased to see the Annual Report note Roche’s focus on increasing time-in-range and highlight the recent mySugr acquisition as “key to executing our Diabetes Care strategy.” The $80 million investment lends confidence that Roche is making and will continue to make a significant investment in digital diabetes care, and the time-in-range focus may confirm intent to shift more towards CGM and tracking population level glucose metrics from connected BGMs. We’re cautiously optimistic about the positive impact that mySugr’s strategy, culture, and agility can have on Roche’s larger, slower-moving, legacy BGM business. For its part, mySugr has signed contracts with at least two payers in Germany and anticipates signing the first US payers in the “first half of 2018” for its unlimited strips + coaching bundle, per JPM.
- Roche continues to demonstrate commitment to digital healthcare, highlighting the “ongoing digital revolution driving a radical transformation in healthcare” on page nine of its Annual Report. As an example of Roche’s implementation of “modern diagnostic tools,” the Report details the company’s online platform for digital diabetes management. Roche has certainly talked about its “integrated diabetes ecosystem,” which heavily features the Senseonics Eversense implantable CGM and mySugr. At EASD 2017, we learned that the ecosystem will leverage the Accu-Chek BGM, the mySugr app, GoCarb (an AI carb quantification app), the Accu-Chek Connect app, Eversense CGM, Accu-Chek View (a digital diary with HCP data sharing portal for prediabetes), the connected Pendiq pen, and other pieces, and will “hopefully” be available before EASD in September 2018. At JPM last month, we learned that Welkin Health is one of many partners that Roche Diabetes has contracted; Roche is using Welkin’s patient services/case management platform to enable diabetes coaching services. It’s encouraging to see Roche pursuing a broader strategy, though execution on product excellence and business models is where we’ll be watching for progress. With a partnered or in-house CGM, BGM, pumps, connected pens, software, and coaching, there is a definite opportunity for a broader portfolio to compete with other players (e.g., Onduo, Medtronic, Lilly, Bigfoot, etc.). Hopefully, ATTD 2018 will bring updates – read our preview here.
In Q&A, CFO Dr. Alan Hippe noted “… some of the pricing reimbursement cuts, so we’ll see how that plays out against a certain shift towards continuous glucose monitoring.” We weren’t entirely sure what he meant by this, but presumably it reflects the multiple forces Roche is dealing with: pricing cuts in BGM, a shift of high-frequency BGM users to CGM, and growing reimbursement for CGM around the world. At EASD, we learned that Roche will deprioritize its own Accu-Chek Insight sensor in favor of partner Senseonics’ Eversense implantable CGM. We still wonder if Senseonics is a Roche acquisition target – Roche has invested in the company (distribution partnership, financial investments) and shown a willingness to integrate external diabetes companies (e.g. mySugr acquisition for ~$80 million). As of Senseonics’ 3Q17 call, Eversense had launched in 13 countries, but is still under FDA review (over a year now) and projected approval has been pushed back from 4Q17 to “early 2018.” Senseonics’ management said an FDA Advisory Committee could come in 1Q18, though this seems less likely as time passes and there haven’t been any updates.
5. No Updates on Roche-Senseonics-Type Zero AID Pivotal Trial, Slated to Begin In 1Q18
There were no updates on the Senseonics/Roche/TypeZero long-term closed loop system iDCL pivotal trial, which was last expected to begin in 1Q18 and wrap up later in 2018 to support a CE mark. At DTM 2017, we learned that the EU pivotal will require a training protocol to test the new system configuration. We’re not sure if it’s the training protocol that is set to start in 1Q18 or the main study, and received no updates during today’s call – our bet is on the former, and that the main study may not start until later this year, given the slow-moving history of the iDCL. Notably, language on the DTM slide for the Roche/Senseonics system included a reference to “subsequent FDA presentation” – while the focus is currently on the EU market, this marked the first definitive indication that the companies are interested in US commercialization as well (and that Roche has a future US pump market re-entry planned). We hope to hear further details at the upcoming ATTD meeting, during which Dr. Boris Kovatchev will discuss the International Diabetes Closed Loop (iDCL) trial. As noted above, we assume this will use Roche’s tubed pump, and a subsequent integration would include the Solo patch pump.
6. Instant bG Key 2017 Launch, No Mention of Guide BGM
The slide deck listed the Accu-Chek Instant bG system as a key launch achieved in the EU in 2017. We’re still not sure what the US plans are for the Instant, but in 3Q17,Roche told us the initial launch countries are Greece, Romania, and South Africa. There was no mention of the Accu-Chek Guide, which launched in the US in May (and has expanded to at least five other countries), although in the past Mr. Diggelmann has expressed confidence in the Guide to “protect and safeguard this franchise.” At JPM, Mr. Diggelmann added that the company is “very well positioned in the strip business – that’s still the majority of the business. There are a lot of patients that will continue to be diabetic. There are 450 million [sic] today, and that number is expected to increase by 100 million over next 10-20 years. It’s a strong business to be present there, and it’s our responsibility to patients.” He went on in that Q&A to talk about opportunities in CGM, AID, and digital health, but the BGM focus is there.
1. Global Diabetes Care Revenue Down 6% YOY on Easy Comparison; Full-Year Declines 3% YOY
Global Diabetes Care revenue of 501 million CHF (~$508 million) declined 6% YOY on an easy comparison to 4Q16 (when sales decreased 11% YOY). Sales were flat sequentially. Management repeatedly pointed to pricing pressures and CMS reimbursement cuts (spilling over into the private sector) as significant drivers of the down quarter – characterized as a “drag on the margin” by CFO Dr. Alan Hippe. Sales have fallen in 11 of the past 13 quarters, but there seems to be some optimism with Roche’s move away from a product-centric and toward an ecosystem-based business with several diabetes devices and digital components. This quarter, the international market actually saw 3% growth YOY, while North America contributed a 59% decline. 2018 will be an important year to show more tangible progress on this new vision, now that more of the components are in place.
- Full-year worldwide 2017 sales of 1.96 billion CHF (~$1.99 billion) declined 3% YOY on an easy comparison (-5% YOY in 2016). This performance marks the lowest full-year revenue recorded in our model dating back to 2005, the first time full-year revenue has dipped below the $2 million mark, and is down from peak annual revenue of $3 billion for the business in 2011. Diabetes Care contributed only 16% to overall 2017 Diagnostic Division Sales of 12.1 billion CHF (~$12.3 billion). Despite the sales decline, Accu-Chek was listed as one of Roche’s top five selling portfolios for full-year 2017 (1.96 billion CHF; ~$1.99 billion), a reminder of how large this segment is.
Figure 1. Global, North America, International Quarterly Sales (1Q11-4Q17)
Figure 2. Global, North America, International Annual Sales (2005-2017)
- BGM continues to be responsible for the lion’s share of Diabetes Care revenue, as depicted below. BGM decreased 3% YOY, while Roche’s “Other” products in Diabetes Care (mostly pumps) fell 8% YOY. The US pump market exit at the beginning of 2017 is presumably responsible for some of the difficulties in “other,” at the same time Medtronic and Insulet continue to show strong growth OUS. We wonder how much longer Roche will separate sales out in this manner as it shifts further toward an ecosystem approach.
Figure 3. 2017 BGM and “Other” (Mostly Pumps) Sales
In North America, sales of 30 million CHF (~$30 million) dropped a staggering 59% YOY against a very easy comparison to a 40% decline in 4Q16. That translates to a ~65% drop in the North American business in just two years! This performance marks the lowest quarterly revenue, as well as the largest YOY decline, recorded in our model for North America dating back to 2005. Sales decreased sequentially by 59% from a higher base of 73 million CHF (~$76 million). In his prepared remarks, Roche Diagnostics CEO Mr. Roland Diggelmann noted that “a spillover of the CMS reimbursement cuts from 2016 in the US into the private market” is largely responsible for the poor sales performance. In past quarters, we’ve heard much more about the detrimental effects of pricing pressures and competitive bidding from all three big public BGM companies. We assume that all three are still feeling the squeeze, but Abbott hasn’t spoken much about traditional BGM on its calls in over a year due to strong success for FreeStyle Libre, while J&J does not discuss Diabetes devices other than mentioning it is still evaluating the business for sale. All three companies, however, are moving away from the traditional BGM strips business model towards CGM (Abbott, Roche), more digital approaches (J&J, Roche), or getting out entirely (J&J). Will we see more outcomes-based, population-based business models to escape from the traditional BGM pricing woes?
- 2017 North American sales of 221 million CHF (~$224 million) dropped 23% YOY. For the year, the North American business amounted to just over 10% of global sales, the lowest it’s ever been – down from 22% in 2011, 23% in 2012, 20% in 2013, 18% in 2014, 18% in 2015, and 14% in 2016.
3. International Sales Rise 3% YOY on Easy Comparison; Full-Year Revenue Rises 1% YOY
International revenue of 471 million CHF (~$477 million) was a bright spot for the quarter, rising 3% YOY against an easy comparison to a 3% decline in 4Q16. Remarkably, this means Roche’s 4Q17 international business was ~16 times the size of the US business! Sales increased sequentially by 10% from a base of 429 million CHF (~$446 million), matching Roche’s typical seasonal trend of 2Q and 4Q sequential growth interspersed with 1Q and 3Q declines (dating back to 2007). 4Q marks the highest international revenue since 4Q15, when the company reported slightly higher 474 million CHF (~$479 million) in revenue.
- International sales of 1.7 billion CHF (~$1.8 billion) rose 1% YOY on a moderate comparison to a 1% decline in 2016. According to page 25 of the Annual Report, Diabetes Care revenue rose in Asia-Pacific (China and India) with expansion in Latin America (Argentina and Brazil), but declined in North America, Japan, and EMEA (although growth was observed in several markets in this region). The Financial Report provided a bit more detail, noting declines of 3% in EMEA due to competitive pressure and increasing reimbursement of CGM, particularly in Germany.
The 2017 Financial Report noted 80 million CHF (~$81 million) spent in 2017 Diagnostics Division strategy plans, including costs related to the “Autonomy and Speed” initiative in Diabetes Care. The “Autonomy and Speed” initiative was announced in September 2013 to “enable the business to focus on Diabetes Care’s specific requirements, speed up processes and decision-making and drive efficiencies.” We’re not sure what this program actually entails, but wonder if it includes lean manufacturing, agile software development, or something similar to increase speed in an increasingly fast-paced business world.
Pooled Financial Highlights
1. Pooled Global Sales for Big Three Rise 1% YOY to $1.3 Billion, Driven by Abbott OUS Revenue Growth
Pooled global sales for Roche, Abbott, and J&J (the “Big Three” BGM companies) totaled $1.3 billion in 4Q17, up 1% YOY against an easy comparison to a 5% decline in 4Q16. In North America/US, pooled sales declined a whopping 28% YOY to $252 million, while international pooled revenue grew 11% YOY to $1.1 billion. Pooled quarterly sales have now risen YOY for two consecutive quarters, a positive trend. Revenue also grew 1% sequentially, from a moderate base of $1.30 billion, marking three quarters of sequential growth. That said Abbott singlehandedly drove growth, and that was clearly driven not by BGM but by uptake of FreeStyle Libre. Abbott sales grew 33% YOY globally (+28% operationally). Meanwhile, J&J reported worldwide declines of 16% YOY, and Roche reported a 6% decline (driven by North America). Excluding Abbott, Roche and J&J pooled sales fell 10% in 4Q17 on a very easy comparison to a 28% decline in 4Q16. For the first time in our model, Abbott reported greater worldwide sales ($413 million) than J&J ($390 million). It will be interesting to see how the recent FreeStyle Libre approval and CMS reimbursement in the US affects the narrowing gap between Abbott and Roche. Abbott is already just ~$95 million away from catching Roche, and Abbott management endorsed a projection for $50-$100 million in 2018 FreeStyle Libre US sales during the company’s 4Q17 call. At this rate, it seems like Abbott’s global sales may surpass Roche in 2018 or perhaps 2019. While Roche has some irons in the fire on CGM, digital health, and AID, these will take time to materialize – at the same time FreeStyle Libre is hitting its stride in a big way. Given recent chatter and updates, it’s hard to predict the future of the LifeScan business.
- The pooled “Big Three BGM” growth trends are becoming more challenging, given growing differences between the companies. While BGM is still the biggest seller for all three companies, Abbott’s sales are largely driven by FreeStyle Libre, Roche is expanding the focus beyond BGM, and J&J’s future is quite uncertain.
- Pooled 2017 global revenue of $5.0 billion rose 1% YOY. Results finally (albeit marginally) broke five consecutive years of pooled declines. This performance came against an easy comparison to a 5% decline in 2016. Aligning with quarterly results, Abbott was the only one of the three companies to achieve full-year increases, rising 24% YOY (+23% operationally). J&J full-year sales fell 10% YOY (-11% operationally). Excluding Abbott, Roche and J&J yearly sales fell 6% YOY.
Figure 4. Worldwide Pooled Roche, Abbott, and J&J Quarterly Sales (1Q12-4Q17)
Figure 5. Worldwide Pooled Roche, Abbott, and J&J Annual Sales (2005-2017)
Drug Pipeline Highlights
1. Lucentis (Anti-VEGF therapy) Sales Drop 13% YOY On Easy Comparison to -13% in 4Q16
Lucentis (Anti-VEGF therapy) sales of 288 million CHF (~$292 million) declined 13% YOY against an easy comparison to 13% YOY declines in 4Q16. This is the lowest revenue for Lucentis recorded in our model dating back to 1Q14. Sales dropped 28% sequentially from a relatively high base of 399 million CHF (~$415 million) in 3Q17. Full-year revenue of 1.4 billion CHF (~$1.4 billion) increased 1% on an easy comparison to 8% declines in 2016. Lucentis was listed in the slide deck as one of the top 20 products within Pharma Division sales for 2017. Highlights included the launch of 0.5 mg prefilled syringes earlier this year, as well as first-in-class launches in mCNV (myopic choroidal neovascularization, a complication of near-sightedness) and diabetic retinopathy without DME (launches ongoing). A 0.3 mg prefilled syringe for diabetic retinopathy with DME was filed with the FDA in December.
Figure 6. Global Lucentis Sales (2013-2017)
2. No Mention of LADDER Study; BOULEVARD Trial Readout Expected in 2018
There was no mention of the LADDER (phase 2 Lucentis port delivery study; n=220) study, for which enrollment was completed ahead of schedule in 3Q17. The study was included in the slide deck under a list of trials seeking additional indications, with a status of “recruitment completed.” According to CT.gov, the estimated primary completion date for the trial is September 2018, with a study completion date of March 2019. Lucentis is also involved in three studies investigating the anti-VEGF/Ang2 bispecific antibody with dual mechanism of action (RG7716), all of which are indicated to have completed recruitment. Data from the Phase II BOULEVARD trial (n=210) will be presented at Angiogenesis 2018 this month.
3. Two Studies Investigating RG7992; No Further Updates
The slide deck noted two studies investigating Roche’s FGF21 candidate RG7992. One Phase Ia study in obesity (n=79 adults with overweight/obesity and no type 2 diabetes, but suspected insulin resistance) was completed in March 2017, while another (Phase Ib) is ongoing in type 2 diabetes (n=120) and is expected to complete in June 2018. It’s unclear whether Roche will pursue a diabetes indication, an obesity indication, or both for this candidate (RG7992). Given that Lilly and Pfizer both discontinued FGF21 analogs in development for type 2 diabetes due to lackluster glucose-lowering results, we’re inclined to have more confidence in the weight loss prospects of this therapeutic target for now. Novo Nordisk also has an FGF21 analog in phase 1 for obesity.
Selected Questions and Answers
Mr. Vincent Meunier (Morgan Stanley): I understand that there will be operating margin improvement in 2018 with other drivers. Is it the diabetes deterioration which is no more important because it's smaller or is it because there is a key driver in the unit?
Dr. Alan Hippe (CFO, Roche): You hinted at Diabetes Care and you're right. The relative margin contribution is smaller. There are some elements that are being analyzed. Some of the pricing reimbursement cuts, so we'll see how that plays out against a certain shift towards continuous glucose monitoring. I want to be somewhat cautious there.
--by Maeve Serino, Brian Levine, Adam Brown, and Kelly Close