Rumors have swirled regarding the sale of German health care company Bayer's blood glucose meter division for a good chunk of 2012. Since the first reports of Bayer seeking a buyer, numerous companies have been tied to the possible purchase, from Abbott Labs (ABT 0.49%) to Johnson & Johnson (JNJ 0.29%). Nothing's come of the rumors so far, but it's recently been rumored that French health care giant Sanofi (SNY 1.15%) could be the answer Bayer's been waiting for. Is this really the big splash Sanofi investors should root for?

Diabetes: A global growing calamity
On paper, Bayer's diabetes division is a tempting buy. The branch makes more than $1.3 billion per year, according to estimates; Bayer's Contour glucose meter and testing strip line alone made more than $820 million last year, with growth exceeding 6% year over year. The Contour was Bayer's best-selling consumer health product last year, outstripping the next product by more than $200 million in yearly sales.

So, why's Bayer selling? According to sources speaking to Reuters earlier in the year, the diabetes division lacks synergies with the rest of the company. However, other medical care products -- particularly imaging products such as x-ray contrasts -- have been selling well recently, particularly in developing economies. Bayer could simply see the diabetes division as expendable in light of gaining sales elsewhere – even though it is the top-selling branch of the medical care category. Bayer further anticipates using money from the sales for other acquisitions, which could be particularly useful for the company if it's serious about picking up assets that fit well with existing synergies.

That's a potential home run for Sanofi, however. With global obesity rates on the rise, the diabetes market is set to explode. The market alone was worth more than $50 billion last year. Currently, more than 350 million people  worldwide have diabetes -- and before you think it's a problem contained to first-world nations, it's a serious crisis afflicting untapped growing economies as well. A reported 90 million Chinese citizens have diabetes as of May. India also suffers from a diabetes problem, with more than 60 million people dealing with type 2 diabetes last year.

While Sanofi obviously won't capture all of that, the prevalence of diabetes around the world is certainly a compelling investment. The future's even more tempting: The market for diabetes diagnostic and monitoring devices alone is expected to eclipse $26 billion by 2018, fueled by diabetes' growth and aging populations in many advanced economies. The blood glucose meter market by itself could reach more than $12 billion by 2017.

While there are reports that Bayer may not sell the division with potential buyers dwindling, the acquisition certainly lines up with what Sanofi's already got in place.

Well-versed in diabetes care
Sanofi has carved its place among the world's top pharmaceutical companies with diabetes treatments, making this industry no stranger to the company's experience. Its Lantus insulin drug has been a best-seller for some time, racking up more than $5 billion in sales last year alone, growing more than 11.5% year-over-year. Without a major base of diabetes products in its consumer health division, picking up Bayer's branch would give Sanofi a powerful one-two punch in the diabetes industry to cover all bases.

Unfortunately, Lantus is scheduled to lose patent protection in 2015. The company has little already available to supplant its best-selling diabetes drug, and its pipeline doesn't engender optimism. Sanofi's pipeline diabetes drug Lyxumia won the support of the European Commission's Committee for Medicinal Products for Human Use, but will face stiff competition in the GLP-1 diabetes drug market. Brystol-Myers Squibb (BMY -0.30%) already offers its Byetta drug that Lyxumia has often been compared to, and Novo Nordisk (NVO 2.70%) has also entered the space with its Victoza drug.

Many industry observers have touted the price tag as hampering the Bayer deal -- and with the purchase potentially exceeding $1.5 billion when all is said and done, it's for good reason. Still, it's doubtful that will slow Sanofi down should the company truly be interested in buying the division. The sales alone from Contour will pay off the purchase within two years, and if Sanofi can play upon its synergies in diabetes pharmaceuticals with Bayer's monitoring devices -- and push Lyxumia as the successor to Lantus for the future-the company could score a huge victory.

Time to step up
Bayer's deal comes with a steep price to pay, but it's one I believe Sanofi should ultimately pursue. While several others have shied away from the deal, Sanofi's significant investment in the diabetes business already makes it uniquely suited to capitalize on acquiring Bayer's division. Picking up Contour and other diabetes monitoring and consumer health devices could bridge the gap between Lantus' patent expiration and the company's next big diabetes drug. Only time will tell whether Sanofi pulls the trigger on this deal, but investors have plenty of reasons to push the French pharmaceutical giant to take this risk.