Diabetes device maker Embecta mulls sale amid profit slump

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Diabetes device maker Embecta has hired advisers to explore a sale following two years of weak share price performance following the spin-off of its medical technology business from health tech giant Becton Dickinson.

Embecta, the world’s largest maker of disposable insulin pen needles and diabetic syringes, has in recent months turned to advisers from Centerview Partners for help in executing a potential sale of the company, according to two people familiar with the matter.

The medical technology company, which sells about 8 billion syringes and needles a year to more than 100 countries around the world, could be an attractive takeover target for private equity firms because of its low market value and similar profile to other companies that have recently attracted takeover interest, two of the people said.

Last year, Advent International and Warburg Pincus bought injectable device maker Simtra BioPharma Solutions for $4.25 billion after it was spun off from healthcare conglomerate Baxter International. Baxter is also working on a spinoff or possible private equity sale of its Vantive kidney care unit.

Embecta’s share price has fallen nearly 70 percent since it was spun off as a separate publicly traded company from Becton Dickinson in April 2022. The Nasdaq-listed company was valued at $2.1 billion, including debt, at the close of trading on Friday.

Sales of Embecta’s U.S. unit, which generates about half of the group’s revenue, have fallen amid the popularity of GLP-1 drugs such as Novo Nordisk’s Ozempic, which are taking market share away from conventional insulin treatments for type 2 diabetes.

People briefed on the process said the sale is not guaranteed and Embecta could remain a publicly traded company. Embecta did not immediately respond to a request for comment. Centerview declined to comment.

Embecta CEO Devdatt Kurdikar told a Bank of America investor conference in May that Ozempic had led to “delays” in patients being prescribed insulin, “but not the complete elimination of it.”

“Insulins have been around for 100 years,” Kurdikar said. “Mechanistically, we don’t see insulin disappearing because of GLP-1.”

Analysts said the company’s stock value was also impacted by falling margins across all business lines, as well as the length and cost of completely separating the company from Becton Dickinson.

Analysts are forecasting that Embecta’s adjusted net income will fall 23 percent year over year to $132 million in the 12 months to the end of September this year, while full-year revenue is expected to remain broadly unchanged at about $1.1 billion.

As Kurdikar has previously said, the rising incidence of diabetes in developing countries, where insulin therapy is preferred over GLP-1 therapy, as well as possible approval by the U.S. Food and Drug Administration for a new insulin pump that can hold 300 doses of insulin at a time, could spur the company’s growth.