J&J unit exits insulin pump business amid rising competition

(Adds details, analyst comments, shares)

Oct 5 (Reuters) - Johnson & Johnson's diabetes care unit, which makes insulin pumps, said on Thursday it would shut its business in United States and Canada amid increased competition and after failing to find a buyer.

Animas Corp has selected rival Medtronic Plc as its partner for the device and nearly 90,000 patients using its pumps will be offered the option to transfer to pumps made by Medtronic.

J&J has been reviewing strategic options, including a potential sale of its diabetes care division, which includes LifeScan Inc, Animas Corp and Calibra Medical Inc.

The division reported sales of $421 million in the second quarter, down 10.6 percent from a year earlier.

Analysts said Animas' exit from the insulin pump business is not surprising. "Animas has not been investing in its product pipeline or aggressively adding patients to its platform over the last year," William Blair analyst Margaret Kaczor said in a client note.

Animas would continue to sell its insulin pumps - Animas Vibe and OneTouch Ping - outside of the United States and Canada, J&J spokeswoman Bridget Doherty told Reuters on Thursday.

Brokerage JP Morgan said device makers Medtronic, Insulet Corp and Tandem Diabetes Care Inc could benefit from J&J's exit from the insulin pump business.

However, DexCom Inc, which partnered with Animas, could lose both new and existing blood-glucose monitoring patients, JPMorgan analysts said in a note.

Animas said its parent continues to evaluate potential strategic options for blood glucose monitoring business, LifeScan Inc.

Shares of J&J and DexCom were marginally down in early morning trading while shares of Medtronic, Insulet and Tandem rose. (Reporting by Akankshita Mukhopadhyay and Divya Grover in Bengaluru; Editing by Arun Koyyur)