Rank: #13 (Last year: #15) $9.84 Billion
Prior Fiscal: $9.37 Billion
Percentage Change: +5.0%
R&D Expenditure: $876B
Best FY24 Quarter: Q2 $2.5B
Latest Quarter: Q1 $2.5B
No. of Employees: 25,000
Global Headquarters: Geneva, Switzerland

There are many ways for companies to grow and decrease through strategic business moves. While increasing in size is almost universally seen as a positive, doing so through acquisition can bring with it aspects of a company that were not intended to be a part of the grand scheme. While many firms keep these segments in place to see how things turn out, others seek to split from them through divestiture, shuttering, or spinout. With the medtech space, it seems the spinout has gained interest as a successful method to retain a piece of the business (through shareholder status) while allowing it to swim on its own.

The industry has seen a number of spinouts of late. Medtronic made a recent announcement that it would be spinning out its diabetes business—to be called MiniMed. Perhaps MDT was inspired by former fellow diabetes peer, BD, and its spinout of Embecta. Another MPO top company denizen, Stryker, split from its Spine unit, which will be launched by Viscogliosi Brothers as a stand-alone firm. Baxter planned to separate from its Renal Care and Acute Therapies businesses as a spinout, before shifting to a sale of the units to Carlyle Group. Clearly, medtech organizations are seeing value in a spinout of a unit rather than an outright sale in many instances.

For companies seeking to try this strategy with a portion of their business, they may want to model it after one of the more successful examples among medical device firms. In April 2019, pharmaceutical giant Novartis spun off Alcon to stand alone as the largest eye care-focused device firm in the world. After that event, the $6 billion-plus organization of 2020 grew to its latest fiscal reporting of almost $10 billion.

Specifically, Alcon finished the 2024 fiscal year with a tally of $9.84 billion, a 5% gain over the previous year. That total is produced by its two primary businesses—Surgical and Vision Care.

Within the former, the annual revenue contribution grew by 4%, which was reflected by $5.52 billion in sales. Responsible for more than half of that was Consumables, which gained 5% to add $2.86 billion to the company’s coffers. The primary driver of the gains was due to sales of vitreoretinal and cataract consumables, including price increases on them. Implantables enjoyed a 4% expansion to end the year with $1.78 billion thanks primarily to advanced technology intraocular lenses in international markets. Rounding out the division, Equipment/Other had a final figure of $886 million, reflecting a decrease of 1%.

In the sister division, Vision Care, annual sales reached $4.31 billion—a 6% gain. Contact lenses was primarily responsible for the increase, exploding by 9% itself to end at $2.61 billion. This was attributed by the company to product innovation, including toric and multifocal modalities, as well as price increases. Eye drops, including continued strength from the Systane family of artificial tears, helped push Ocular health to 3% expansion to finish with $1.66 billion in sales.

Seeking to ensure this continued growth trajectory, Alcon made several strategic acquisitions recently as well as during its latest fiscal year.

July 1, 2024, marked the completion of a transaction that brought BELKIN Vision under Alcon’s roof. At an initial price tag of $81 million (with the potential for up to $385 million in payments, contingent upon rigorous sales-based milestones), Alcon expanded its glaucoma portfolio with a first-line therapy in the form of BELKIN’s Direct Selective Laser Trabeculoplasty (DSLT) technology. At the time of the deal’s closing, the DSLT technology was approved in the EU and the U.K. It had secured a 510(k) clearance from the FDA but was not available on the U.S. market. While Alcon expected to bring the system to the U.S. market before the end of the year, it ultimately announced its launch in February 2025.

FROM THE TOP: “Early in 2024, we looked back at the significant progress Alcon has made since becoming independent and charted a course forward for the coming years, with the goal of building a top-performing company. I believe 2024 will be seen as a watershed year, the moment when we laid the foundation of Alcon’s next stage of innovation excellence, operational efficiency, and financial performance.”

—David J. Endicott, CEO

More recently and after the close of the company’s 2024 fiscal, Alcon announced it would acquire LENSAR, a global medtech firm focused on advanced laser solutions for the treatment of cataracts. The deal includes the ALLY Robotic Cataract Laser Treatment System, LENSAR’s proprietary Streamline software technology, and LENSAR legacy laser system, enhancing Alcon’s femtosecond laser-assisted cataract surgery (FLACS) offering.

“We are excited for the opportunity to bring LENSAR’s unique next-generation technologies and intellectual property into our innovative, market-leading equipment portfolio,” said David Endicott, CEO of Alcon. “By leveraging our global footprint, we have the opportunity to deliver the benefits of advanced femtosecond laser technology to many more surgeons around the world and continue to improve efficiency in cataract surgery.”

Under terms of the arrangement, Alcon would purchase all outstanding shares of LENSAR for $14 per share in cash (an aggregate implied value of approximately $356 million), with an additional non-tradeable contingent value right offering up to $2.75 per share in cash, conditioned on achievement of 614,000 cumulative procedures with LENSAR’s products between Jan. 1, 2026, and Dec. 31, 2027. In total, the transaction represents a consideration of up to approximately $430 million.

Alcon continued to open its purse just days later when it purchased a majority interest in Aurion Biotech Inc., a clinical-stage company developing advanced cell therapies to treat eye diseases. According to Alcon, Aurion would continue to operate as a separate company with full support from Alcon to advance its clinical-stage allogeneic cell therapy asset, AURN001, into Phase 3 for corneal edema secondary to corneal endothelial disease. Aurion would be provided access to the broader R&D, regulatory, medical ophthalmic, and commercial capabilities of Alcon.

Aurion received Breakthrough Therapy Designation and Regenerative Medicine Advanced Therapy Designation from the U.S. FDA for AURN001, a novel cell therapy for the treatment of corneal edema secondary to corneal endothelial disease. AURN001 is a combination cell therapy product candidate comprised of allogeneic human corneal endothelial cells and a rho kinase inhibitor.

Then, in the midst of summer, it was revealed Alcon would acquire LumiThera Inc., a leader in light-based innovations for ophthalmology, and its photobiomodulation (PBM) device for the treatment of early and intermediate dry age-related macular degeneration (AMD). PBM received FDA de novo market authorization in November 2024 and received a CE mark in November 2018. The technology is currently available in Europe, Latin America, Singapore, the U.K., and the U.S.

The deal did not include the acquisition of AdaptDx and Nova/Diopsys diagnostic devices, which were to be separated and spun off to LumiThera’s shareholders before Alcon’s acquisition and would continue to be marketed and sold by the LumiThera spin-off.

In addition to the new technologies coming in through the merger and acquisition process, Alcon kept investment in its internal development healthy. Those ventures bore fruit in 2024 and were shared via a number of announcements made regarding new products and technologies.

The UNITY Vitreoretinal Cataract System (VCS) and UNITY Cataract System (CS) received 510(k) clearance in June, marking the first introductions of products from the Unity portfolio. Unity VCS and Unity CS introduce significant workflow efficiencies over the organization’s legacy systems—CONSTELLATION Vision System for vitreoretinal procedures and CENTURION Vision System with ACTIVE SENTRY for cataract surgery. The company anticipated the commercial launch to take place in 2025.

During September’s European Society of Cataract and Refractive Surgeons (ESCRS) Annual Meeting, Alcon announced a pair of new innovations—the SMARTCataract DX and NGENUITY 1.5. Both solutions had obtained CE marks by the time of the event.

Driven by the ARGOS Biometer, the SMARTCataract DX digital planning solution is designed to power workflow efficiencies for practices. The advanced planning solution eliminates transcription errors and provides EHR/PACS connectivity, ensuring a cohesive, streamlined workflow by linking data systems with Alcon diagnostic devices and OR equipment. SMARTCataract DX also simplifies planning; users can access multiple datasets in one view and quickly retrieve patients’ measurements to streamline decision-making during cataract surgery.

With NGENUITY 1.5, surgeons can see more with up to 48% increased magnification, while also seeing more detail with up to 42% increased depth resolution. The system introduces new enhancement modes, all designed to help surgeons distinguish every detail, including Tissue Detail Mode to visualize even more detail and depth during the delicate steps of a procedure; Blue Boost Mode with edge detection to help improve the ability of identifying capsule construction, compared to standard microscopes; Performance Green Mode, a specific digital mode for green dyes allowing for excellent visualization and contrast of membranes during macular work; and MIGS (minimally invasive glaucoma surgery) mode, which allows surgeons to benefit from up to 34% greater contrast leading to enhanced precision and efficiency when placing a device such as Hydrus Microstent. Similar to SMARTCataract DX, NGENUITY 1.5 integrates with the ARGOS Biometer, and will allow for in-network or cloud-based 3D image-guided cataract surgery. Biometry measurements and images can be imported, enabling surgeons to precisely overlay incision location, capsulorhexis, IOL centration, and toric alignment.

In November, the organization launched PRECISION7, a one-week replacement contact lens with the seven-day ACTIV-FLO system. PRECISION7 offers comfort performance and an easy-to-remember replacement schedule when daily disposables are not an option. The occasion marked the newest addition to the company’s WaterInnovations portfolio of contact lenses.

Helping to keep an eye on the clinical aspects of the technology acquisitions and those developed in-house, Terry Kim, M.D., professor of Ophthalmology at Duke University Eye Center, joined Alcon in April as chief medical officer and head of global medical safety. Dr. Kim specializes in cornea, cataract, and refractive surgeries. At the time he joined the firm, he was Duke Eye Center’s chief of the Cornea and External Disease Division, director of the Refractive Surgery Service, and director of the Duke Sports Vision Center. He succeeded Stephen S. Lane, M.D., who retired after seven years of service at Alcon and 39 years in ophthalmology.

$9.37 Billion
Prior Fiscal: $8.65 Billion
Percentage Change: +8.27%
R&D Expenditure: $828M
Best FY23 Quarter: Q2 $2.4B
Latest Quarter: Q1 $2.4B
No. of Employees: 25,315

Laura Giostra wanted her husband back.

She wanted the former version of himself back—the version she knew was still buried within him.

The version she fell in love with: The outdoor enthusiast, the gifted athlete, the self-sufficient family man, and the industrious, confident employee.

“You want the best in your spouse, you want the best for them but you want the world to see them as they are,” a teary-eyed Laura Giostra said in an online video. “It was difficult to watch him change. I wanted the old Mike back.“

The Mike that existed before That Day.

Michael Giostra remembers That Day well.

“I was in my early 30s, and I’ll never forget that day. I was doing infield drills and I got a ball come from the outfield and hit me in the eye,” Michael Giostra recalled in the same online video as his wife. “And then all of a sudden there was no vision out of my eye.”

The vision in that eye would never fully be restored. He suffered permanent eyesight damage from that outfield missile, as well as a concussion, the latter from which he recovered.

Thus ended Michael Giostra’s semi-professional baseball career. Over in an instant, suddenly and sadly, on That Day.

That was the Day Laura Giostra lost her husband. Suddenly and sadly.

Michael Giostra’s eye injury worsened as he aged, and eventually grew more complicated by the development of a cataract. Both he and his wife searched for a potential treatment, but the Giostras repeatedly were rebuffed by surgeons and eye care specialists.

“As I got older, the condition got worse,” Michael Giostra said. “It was very difficult when it came to light and sun and snow, glare, and as life went on, it seemed to be more and more of a battle because I just couldn’t see. I couldn’t focus.”

The Giostras’ medical fortunes improved after visiting Brandon D. Ayres, M.D., a board-certified ophthalmologist specializing in corneal transplants, including full thickness corneal transplants. He also performs all types of refractive and cataract surgery (LASIK, phakic lens procedures for myopia, and multifocal intraocular lenses). He wasn’t convinced that Michael Giostra’s condition was untreatable.

Ayers treated Michael Giostra’s cataract using an intraocular lens (IOL) from Alcon. The procedure proved to be life-changing for the Giostras—Michael got his sight back, and Laura got her husband (“the old Mike”) back.

“I’ll never forget that day when Dr. Ayres took that patch off my eye,” Michael Giostra declared in the video. “I cried because [it was] just like, ‘Oh my God, I’m normal again.’ Besides that, I can see.”

Michael Giostra’s sight salvation tale is among the millions penned in the wake of IOLs, the tiny artificial lenses that replace the eye’s natural crystalline lens. Since first gaining widespread use in the 1970s, IOL technology has advanced to address a diverse range of focal types, corneal curvature, materials, and refractive power.

Alcon’s line of AcrySof IOLs, for example, includes the IQ Vivity, which features non-diffractive X-WAVE technology that bends rather than splits available light into several focal points. X-WAVE allows for sharper vision in dim light, reduces the likelihood of glare, halos, or starbursts around lights at night, and provides some protection from blue light and solar UV rays. The IQ Vivity family also offers lenses that correct both astigmatism and presbyopia.

FROM THE TOP: “In a year of continued supply challenges, foreign exchange headwinds, high inflation, persistent competition and geopolitical uncertainty, our team achieved some remarkable things.”

— David J. Endicott, CEO

Study data released last fall associated the AcrySof IQ Vivity and AcrySof IQ Vivity Toric (presbyopia-correcting) lenses with sustained clinical performance, high patient satisfaction, and reduced dependence on glasses. Evidence also suggested the IQ Vivity IOLs could successfully be used in a broad range of patients.

Most patients (75%) participating in the Vivity Registry Study—conducted across 41 sites in eight countries—had no vision-related difficulty while engaging in daily activities and more than 91% had no issues with halos, glares, or starbursts (common visual aberrations that blur the focus of light). In addition, 92% of participants were satisfied with their IOL-enhanced sight, with more than 78% and 88% of patients gaining independence from glasses to see at arm’s length and far away, respectively. Moreover, excellent binocular distance and intermediate uncorrected visual acuity was observed in study patients, with mean Snellen visual acuity values of 20/20 and 20/25, respectively.

“Vivity is a first-of-its kind, non-diffractive extended depth of focus IOL built with our proprietary X-WAVE technology,” Sunil Vasanth, vice president, Europe Surgical Franchise at Alcon, said upon releasing the study results last September. “Since its introduction, AcrySof IQ Vivity has been a disruptive technology—and an innovation we are very proud of as a company.”

That company pride may wane a bit based on the IQ Vivity and its fellow IOLs’ inability to disrupt finances last year. Implantable sales slipped 1% ($22 million) to $1.7 billion, though Alcon attributed the decline to foreign currency exchange rates and an insurance reimbursement change in South Korea beginning in April 2022. Excluding those uncontrollable impacts, Implantables revenue rose 5%.

Pride restored.

Implantables was the only business within Alcon’s two reporting segments to lose money in fiscal 2023. Both segments posted solid gains, with Surgical sales expanding 5% to reach $5.31 billion and Vision Care proceeds swelling 12% to reach $4.05 billion, according to the company’s latest annual report.

Offsetting the slight drop in Implantables sales (within the Surgical segment) was 9% hikes in both Consumables and Equipment/other revenue. Price increases and favorable market conditions boosted Consumables sales (ending FY23 at $2.71 billion), while higher service proceeds and strong demand for both cataract and vitreoretinal equipment advanced Equipment/other proceeds by $71 million compared to the previous year ($892 million total).

“2023 was an excellent year for Alcon,” CEO David J. Endicott said of his company’s FY23 financial performance. “We delivered solid top-line growth in both franchises on the back of healthy markets… we advanced our innovation and commercial agenda, particularly in our Vision Care franchise with the launch of Total 30 for astigmatism and multifocal. We also expanded our ocular health business with the integration of Rocklatan and Rhopressa and concluded Phase 3 trials for AR-15512, our dry eye pharmaceutical candidate. Based on these results, it’s clear our portfolio of products is winning.”

Winning big, actually: Both Vision Care businesses posted significant gains last year, with Contact Lenses revenue jumping 9% to $2.4 billion and Ocular Health sales surging 17% to $1.65 billion. The latter division’s profits resulted largely from price increases, Alcon’s eye drops portfolio, and a recovering contact lens care supply chain.

Similarly, Alcon credited price increases and new product launches for the growth in Contact Lenses sales. The company augmented its TOTAL30 portfolio last year with the bookended debuts of contact lenses for astigmatism and presbyopia. Both lenses are made with Water Gradient material, enabling a gradual increase to nearly 100% water at the outermost surface so nothing touches the eye but a cushion of moisture.

TOTAL30 for Astigmatism, introduced in January 2023, features biomimetic CELLIGENT Technology, which helps resist bacteria and lipid deposits for a month; and the PRECISION BALANCE 8|4 lens design, which provides on-eye stability astigmatic contact lens users need for clear, stable vision.

Nine months after TOTAL30 for Astigmatism hit the market, Alcon launched TOTAL30 Multifocal contact lenses. The lenses boast a multifocal optical design (PRECISION PROFILE) that enables its users see more clearly both near and far. The TOTAL30 Multifocal lens design mirrors the one in DAILIES TOTAL1 Multifocal and AIR OPTIX plus Hydraglyde Multifocal contact lenses. Data show 96% of patients were successfully fit in Alcon multifocal contact lenses with the PRECISION PROFILE optical design.

“I think our contact lens business right now is going on all cylinders,” Endicott told analysts during a Q4/full-year 2023 earnings call in February. “We’re doing really, really well. I would say and particularly, our Toric lenses have gained a ton of share. And I think that’s the design. Honestly, I think our designs are very stable, they’re easy to fit, and the settle quickly, and that is a really exciting phenomenon to see.”

An equally exciting phenomenon in Endicott’s eyes was Alcon’s exemplary fiscal performance last year. Overall sales rose 8.3% to $9.37 billion and gross profit ballooned 10.5% to $5.24 billion, annual report data indicate. Operating income nearly doubled, going from $672 million in FY22 to $1.04 billion in 2023, and net income almost tripled, surging to $974 million last year from $335 million in 2022.

“We outgrew our markets in almost every category…we expanded [our] core operating margin by 150 basis points to 19.7%, and when adjusting for foreign exchange, we grew core operating margin by 280 basis points to 21%,” Endicott boasted on the earnings call. “As I reflect on 2023, I’m extremely proud of what the team has accomplished. In a year of continued supply challenges, foreign exchange headwinds, high inflation, persistent competition, and geopolitical uncertainty, our team achieved some remarkable things.”

$8.65 Billion
Prior Fiscal: $8.22 Billion
Percentage Change: +5.23%
R&D Expenditure: $702 Million
Best FY21 Quarter: Q2 $2.2 Billion
Latest Quarter: Q1 $2.33 Billion
No. of Employees: 25,000

Imagine, if possible, a world in which the Alcon brand name is not associated with eye care.

Think hard.

Difficult, isn’t it?

Oddly enough, that world existed—but only for a brief time.

That time was the mid-1940s, the beginning of the postwar economic boom that gave rise to consumerism, import substitution, and the “Golden Age of Capitalism.” Among the untold number of businesses born during this time was a small Fort Worth, Texas, pharmacy founded by two pharmacists.

Naming the pharmacy after themselves (using the first syllable of their respective last names), Robert Alexander and William Conner nurtured their business for two years before incorporating specialty pharmaceutical manufacturer Alcon Laboratories Inc. on May 16, 1947. In the company’s early days, Alexander and Conner filled prescriptions by day and prepared sterile, injectable vitamins and oral products by night using a blender and pressure cooker.

Eye care was not on the pair’s radar.

At least not until they began traversing the United States to showcase their wares to doctors. They first presented their products to a Kiwanis International event in California, then to an American Academy of Ophthalmology and Otolaryngology conference in Chicago.

That conference completely changed Alcon’s focus. The Alcon the world has come to know (and depend on) for eye care was conceived at that meeting.

“They found out that nobody was specializing in providing or fulfilling the needs of the ophthalmologist, so it was an untapped market,” retired Alcon employee Tom McDonald told the Fort Worth Report in 2021. The 39-year employee has written a book on the company’s first 50 years.

“I think that very few people today realize that your average eye droppers that we use constantly in all sorts of medications have their roots right there in Alcon, and that’s part of why I say I think that it’s kind of a hidden gem,” noted LeAnna Schooley, executive director of the Center for Texas Studies at Texas Christian University. “I don’t know that a lot of Fort Worth natives realize the impact that the innovation rooted in Alcon has had on the whole world.”

That innovation has given the world the Droptainer eye drop dispensing bottle (1953); extended wear soft contact lenses (1990); an intraocular lens (IOL) made with advanced biocompatible material (1994); a water gradient daily disposable contact lens (2011); a monthly replacement color-enhancing lens with silicone hydrogel technology (2014); an intra-operative aberrometry system for cataract surgery (2014); and multifocal contact lenses (2016), among others.

Alcon maintained that pace of innovation last year with several new additions to both business segments.

First up was the DAILIES TOTAL1 for Astigmatism, a daily disposable toric contact lens for people with imperfect eye curvature. Debuting in January 2022, the lens is made with Alcon’s Water Gradient material, which gradually increases water content to approach 100% surface H2O; and the company’s proprietary SmarTears technology, which releases an ingredient found in natural tears for stabilizing the lipid layer of tear film.

Both the Water Gradient and SmarTears features incorporate Alcon’s Precision Balance 8|4 lens design, a configuration also found in the Precision1 and Air Optix plus HydraGlyde toric contact lenses. Additionally, DAILIES TOTAL1 lenses are designed to settle to the proper on-eye position in an average 37 seconds—roughly a quarter of the traditional two-minute positioning.

The U.S. and European rollout of DAILIES TOTAL1 for Astigmatism further diversified Alcon’s contact lens portfolio, providing premium dailies wearers with spherical, multifocal, and toric choices.

Alcon followed the DAILIES TOTAL1 introduction with the March 2022 launch of its Clareon intraocular lens portfolio in the United States. With that deployment, the company’s U.S. offering spanned Clareon Monofocal, Clareon PanOptix, Clareon PanOptix Toric, Clareon Vivity, and Clareon Vivity Toric IOLs.

The Clareon portfolio offers sharp, crisp vision with proprietary edge designed to help reduce glare and posterior capsular opacification. The lenses feature STABLEFORCE Haptics for superior axial and rotational stability. Alcon also made its Clareon Monofocal available in the next-generation, automated, single-use delivery systems called AutonoMe.

“Clareon is the result of robust R&D efforts at every level—inventive material science, advanced manufacturing techniques, and novel delivery systems—to deliver long-lasting clarity,” Alcon Global Business and Innovation president Ian Bell said upon Clareon’s U.S. launch. “At Alcon, we are consistently pushing the boundaries to deliver transformational innovation to cataract surgeons and their patients.”

“Transformational innovation” for cataract surgeons and patients also arrived last year via strategic acquisition and a limited market release of the Fidelis Virtual Reality Ophthalmic Surgical Simulator. Fidelis offers a high-fidelity, virtual operating room environment with haptic feedback to simulate the look and feel of cataract surgery, helping new surgeons hone their skills. The simulator can be used from any location worldwide with the ability to invite others to join virtual instruction and training sessions.

Introduced in select markets last May, the Simulator features a VR headset, two haptic engines, and an integrated Centurion footswitch; a realistic virtual OR environment, complete with Alcon equipment; and real-time feedback and performance tracking over time. The Fidelis Simulator also offers virtual reality experiences on ocular anatomy and physiology to help educate eye care professionals.

Alcon’s ready-made innovation came from Aerie Pharmaceuticals Inc., Kala Pharmaceuticals Inc., and Ivantis Inc. The Aerie and Kala deals enhanced the company’s ophthalmic portfolio, while Ivantis bolstered its surgical capabilities.

Ivantis developed and manufactured the Hydrus Microstent, an eyelash-sized minimally invasive glaucoma surgery (MIGS) device designed to reduce eye pressure in glaucoma patients. The microstent is implanted in Schlemm’s canal, where it expands the lymphatic-like vessel and allows fluid to drain to the circulatory system.

Ivantis designed the Hydrus Microstent to lower intraocular pressure for open-angle glaucoma patients in connection with cataract surgery. A five-year study showed a 60% reduction in the need for secondary glaucoma procedures; in addition, nearly two-thirds of microstent patients remained medication-free five years after receiving the implant.

Approved by the FDA in August 2018, the Hydrus Microstent is used in the U.S. to reduce intraocular pressure in adult patients with mild to moderate primary open-angle glaucoma. In Australia, Canada, Germany, Singapore, and the United Kingdom, the device is indicated for primary open-angle glaucoma in conjunction with cataract surgery and as a standalone procedure.

“…we look forward to introducing Hydrus microstent on a broader, global scale in the near future to help even more patients see brilliantly,” Alcon CEO David J. Endicott said upon the Ivantis deal’s closing in January (2022). “We believe this transaction will further strengthen our global surgical portfolio and help provide a platform for more growth in the glaucoma space.”

Time will determine whether that growth arises, but Hydrus has already proven its worth in Alcon’s Surgical segment: Endicott said the microstent helped boost sales 7% (13% constant currency) to $5.04 billion. Growth in the segment also was driven by continued strong demand for Alcon’s offering of advanced technology intraocular lenses and cataract equipment.

Such desire for cataract equipment likely contributed to the 4% rise in surgical equipment sales (to $821 million), but that growth was tempered by declines in refractive equipment and unfavorable currency impacts.

The latter growth blockers impacted Implantables and Consumables sales, though both product franchises still posted solid fiscal 2022 gains. Higher procedure volumes helped increase Consumables proceeds 5% (10% constant currency) to $2.49 billion, while improving market conditions and robust demand for advanced technology intraocular lenses sent Implantables revenue surging 13% (20% constant currency) to $1.72 billion, according to Alcon’s 2022 annual report.

Similar forces were at play in the Vision Care segment, where FY22 sales climbed 3% (8% constant currency) to $3.61 billion, buoyed by increases in both product franchises. Contact lenses revenue rose 2% (9% constant currency) to $2.19 billion, driven by silicone hydrogel lenses, including the PRECISION1 and TOTAL product lines. Ocular health proceeds swelled 3% (7% constant currency) to $1.41 billion, bolstered by Alcon’s eye drops portfolio. The increases in both Vision Care segments were somewhat offset by unfavorable currency impacts, although Ocular health also faced headwinds from supply chain challenges in contact lens care products.

Overall, Alcon’s 2022 net sales expanded 5% (11% constant currency) to $8.65 billion, driven by market improvements in most geographies, product innovation, and sales from its acquisitions. “As I reflect on 2022, I’m extremely proud of what we’ve accomplished, especially given the challenging geopolitical, macroeconomic and supply chain headwinds we faced,” Endicott told analysts on a Q4 2022/full year earnings call earlier this year. “In surgical, we grew the business double digits, driven by technology, solid execution, and continuing international recovery.”

Alcon’s gross profit rose 2% last year to $4.75 billion and operating income ballooned 165 to $672 million. Operating margin climbed 0.7 percentage points, core operating income increased 9% to $1.57 billion, and core basic earnings per share grew 4% to $2.25. Alcon generated $1.2 billion in net cash from operating activities and $581 million in free cash flow.

$8.20 Billion
Prior Fiscal: $6.76 Billion
Percentage Change: +21.3%
R&D Expenditure: $557M
Best FY21 Quarter: Q4 $2.13B
Latest Quarter: Q1 $2.17B
No. of Employees: 24,389

In November, eye care firm Alcon celebrated the near-end of its third year as a standalone business by proclaiming its intention to acquire Ivantis, developer and manufacturer of the novel minimally-invasive glaucoma surgery (MIGS) device, the Hydrus Microstent. Designed to reduce intraocular pressure in open-angle glaucoma patients in connection with cataract surgery, Ivantis launched Hydrus in the U.S. and it’s also currently approved and marketed in the U.K., Germany, Canada, Australia, and Singapore.

The microstent is implanted into the Schlemm’s canal to boost outflow, reducing eye pressure to treat mild to moderate glaucoma. The company highlighted that a five-year Horizon clinical study showed 65% of Hydrus patients remained medication-free at five years post-implant, with 60% reduction in risk of invasive secondary glaucoma surgeries compared to cataract surgery alone.

“Glaucoma is the second-largest cause of blindness after cataracts, impacting more than 75 million people globally, with significant unmet patient need. This transaction will allow us to add a uniquely effective product into our glaucoma portfolio around the world,” Alcon CEO David Endicott told the press when the $475 million deal was announced. “Our global commercial footprint and development capabilities make us well positioned to build on the success of Ivantis and help even more patients see brilliantly with Hydrus Microstent.”

The deal for Ivantis was completed at the beginning of this year. Alcon plans to pursue further standalone surgery indications for Hydrus in the U.S., with clinical trials underway.

In 2021, Alcon’s net sales rebounded from COVID-19, which stifled many medical device market sectors. The firm posted $8.2 billion in revenue, rising about 21% over the year prior. The growth was driven mainly by landmark product launches as well as strong commercial execution and underpinned by global markets recovering from COVID-19, according to the company’s annual report.

Sales in the U.S. captured 44% of Alcon’s revenue with $3.7 billion posted. International sales reached $4.6 billion last year, making up the remaining 56%.

The surgical franchise contributed $4.7 billion to sales, rising an impressive 27% over the prior year that was impacted by the COVID-19 pandemic. Within the business, implantables proceeds grew 35% to $1.52 billion due to market improvements and the ongoing adoption of advanced technology intraocular lenses (IOLs), which included the rollout of Vivity and continued demand for PanOptix.

Consumables revenue increased 15% to $2.39 billion primarily due to market improvements over the prior year. Equipment/other sales rose 25% to $793 million, driven by demand for cataract and refractive equipment as well as other refractive products.

The surgical business’s one major product launch came in the U.S. last January with the AcrySoft IQ Vivity, a non-diffractive extended depth of focus IOL to mitigate presbyopia for patients undergoing cataract surgery. The first-of-its-kind IOL—approved by the FDA in February 2020—stretches and shifts light without splitting it, delivering monofocal-quality distance with “excellent” intermediate and functional near vision. Vivity is also available in toric designs and bolsters Alcon’s portfolio of presbyopia-mitigating IOLs.

The vision care business accrued $3.52 billion, growing 15% over the previous year, which was affected by COVID-19. Contact lenses sales grew 16% with $2.14 billion, due to strong U.S. recovery and growth in silicone hydrogel contact lenses including Precision1, Precision1 for Astigmatism, and Dailies Total1. Ocular health sales expanded 14% to $1.38 billion as a result of the Pataday Extra strength launch, and sales of Simbrinza after the firm’s acquisition of the U.S. commercialization rights.

The franchise began last year with the U.S. launch of Precision1 for Astigmatism contact lenses in January. The daily disposable, silicone hydrogel contact lens designed for astigmatic patients was born from the firm’s Water Gradient Technology and features SmartSurface, a permanent, micro-thin layer of moisture that steps up from 51% water at the core to over 80% water at the outer surface, according to Alcon data. This supports a stable tear film for lasting performance.

The exclusive U.S. rights from Novartis to sell the Simbrinza ophthalmic eye drops were gained last April. The drops are used to reduce elevated intraocular pressure for open-angle glaucoma or ocular hypertension patients. Combined with Alcon’s existing over-the-counter eye drops, adding Simbrinza makes for a bolstered ophthalmic eye drop portfolio.

That same day Alcon launched its Systane hydration multi-dose, preservative-free lubricant eye drops for sensitive dry eyes. The new option helps patients with aqueous deficient dry eye, protecting against further irritation and relieving dryness. Systane complete preservative-free lubricant eye drops had previously launched in Europe the January before.

September saw the release of Total30 monthly replacement Water Gradient contact lenses. According to Alcon, clinical evidence showed the lenses “feel like nothing” even on day 30 due to the proprietary Water Gradient material that approaches 100% water at the surface. Biomimetic Celligent technology uses a unique lens chemistry to resist bacteria and lipid deposits, with an inherently lubricious surface as soft as the human cornea.

The company also shook up some of its executive committee last year. Former President, International, Ian Bell was named president of global business and innovation, replacing the departing Michael Onuscheck. Senior VP of Operational Strategy and Chief Transformation Officer Raj Narayanan succeeded Bell as president, International. Senior VP and Chief Information Officer Sue-Jean Lin was appointed senior VP and chief information and transformation officer, adding oversight of Alcon’s transformation program to her remit. All of the executive changes took effect Sept. 1, 2020.

$6.76 Billion
Prior Fiscal: $7.36 billion
Percentage Change: -8.1%
No. of Employees: 23,655

Last June, Novartis AG and former eye-care unit Alcon were fined over $365 million to resolve U.S. charges that they bribed doctors, hospitals, and clinics in Greece and Vietnam to prescribe their drugs and use their surgical products. Novartis Hellas—the Greece-based unit of the Swiss drugmaker—paid $225 million of the fine. Alcon entered its own deferred prosecution agreement and paid an $8.9 million criminal fine.

The charges included a 2012 to 2015 Novartis Hellas conspiracy to bribe Greek hospital and clinic employees to purchase more Novartis-branded drugs. Alcon was accused of using a third-party distributor from 2011-2014 to quietly funnel payments to Vietnamese hospital and clinic employees to boost intraocular lens (IOL) sales. The units were also accused of falsifying books and records to hide the bribes.

“Novartis AG’s subsidiaries profited from bribes that induced medical professionals, hospitals, and clinics to prescribe Novartis-branded pharmaceuticals and use Alcon surgical products, and they falsified their books and records to conceal those bribes,” Assistant Attorney General Brian Benczkowski of the U.S. Department of Justice’s Criminal Division told pharmaforum.

Shannon Thyme Klinger, Novartis’ group general counsel, in a statement said the drugmaker was pleased to have resolved all its outstanding FCPA investigations.

COVID-19 spread containment measures temporarily deferred eye care procedures and exams in a number of markets, causing the surgical and eye care device firm’s full-year revenue to fall about 8 percent from the previous year. According to Alcon’s 2020 fiscal year annual report, the company saved $200 million in the detrimental Q2 of last year by managing discretionary expenses.

During the pandemic, the Alcon Foundation made donations to support meal programs for children and seniors, provide supplies to shelters, and assist public health emergency relief efforts. The company also ramped up efforts to donate personal protective equipment and hand sanitizers.

Surgical product proceeds reached $3.7 billion last year, declining 11 percent. The broad slowdown in non-urgent surgeries in 2020’s second quarter stifled the demand for eye procedures. Substantial recovery occurred later in the year according to the firm’s annual report.

Implantables fell 7 percent to $1.1 billion due to lower monofocal IOL demand, partially recovered by healthy AcrySof IQ PanOptix sales. Consumables revenue plummeted 15 percent to $1.9 billion and surgical equipment/other proceeds shrank 4 percent to $632 million thanks to the declined procedure rate as well.

The firm launched its AcrySof IQ Vivity presbyopia-correcting IOL in spheric and toric designs in Europe last March. Vivity’s non-diffractive X-WAVE design can reduce a cataract patient’s dependence on glasses. Two smooth surface transition elements on the IOL’s anterior surface work simultaneously for continuous, extended range of vision. Following U.S. Food and Drug Administration (FDA) approval last February, Alcon launched Vivity over the next few months.

The Vision Care segment’s sales dropped 4 percent with sales of $3 billion. Contact lens proceeds fell 7 percent, coming to rest at $1.8 billion. The declining unit’s loss was somewhat offset, however, by the rollout of several contact lenses within the company’s Precision1 brand.

Study findings presented at last year’s American Academy of Optometry annual meeting also demonstrated the company’s Precision1 sphere contact lenses were “strongly preferred” to competitive brands by five times more patients. Wearers also rated Precision1 higher than the leading daily disposable lens competitor for quality of vision, end-of-day vision, comfort, end-of-day comfort, and overall handling. The lenses were rolled out to U.S. and European markets early this year. Precision1 for astigmatism followed in late 2020.

Ocular health product sales remained flat with a miniscule loss, slipping to $1.2 billion in revenue. The launch of several products in the firm’s Pataday eye allergy itch drop franchise kept losses in that division to $4 million and prevented it from entirely offsetting pandemic losses.

In July, the company achieved FDA approval for its Pataday Once Daily Relief Extra Strength (olopatadine 0.7%). The eye allergy itch drop provides a full day of relief without a prescription. This formulation joins Alcon’s Once Daily Relief (olopatadine 0.2%) and Twice Daily Relief (olopatadine 0.1%), which were approved for over-the-counter sale last February. Once Dailt Relief Extra Strength became available online last September, and was available in retail stores nationwide this past February.

$7.36 Billion
Prior Fiscal: $7.15 Billion
Percentage Change: +3%
No. of Employees: 22,142

“We are poised to achieve sustainable growth and create long-term shareholder value as a standalone company. We have a long history of industry firsts and, as a nimble medical device company, we are sharply focused on providing innovative products that meet the needs of our customers, patients, and consumers,” David Endicott, CEO of the newly established independent corporate entity Alcon, announced in a company release marking the occasion.

No longer under the umbrella of Novartis, the eye care firm is now the largest stand-alone manufacturer of devices for the treatment of vision-related maladies. The separation, which was announced as completed on April 9, 2019, resulted in Alcon maintaining a global presence in 74 countries and treating patients in more than 140. While the sector as a whole is valued at approximately $23 billion a year, growing around 4 percent annually, the newly independent firm owns almost one-third of that market. Returning to its roots prior to the Novartis acquisition, the organization’s headquarters is now housed in Geneva, Switzerland, where the firm had an established presence for more than 40 years. Meanwhile, the location in Fort Worth, Texas, was noted to be a major operational center and innovation hub, while also serving as home to a large number of Alcon employees.

“This is an incredibly exciting day for both Novartis and Alcon. Alcon has demonstrated consistent growth, and is coming to market from a position of strength. We wish them the very best for the future,” said Vas Narasimhan, CEO of Novartis.

Retained by the former parent company was an ophthalmology pharmaceuticals business, which had $4.6 billion in sales in 2018. Novartis also claimed the segment enjoys a pipeline of potential novel treatments for presbyopia, dry eye, and genetic diseases.

As part of the spinoff arrangement, shareholders of Novartis were provided shares of Alcon on a 5:1 ratio. At the close of business on April 8, 2019, for every five Novartis shares or ADRs (American Depositary Receipts) held, a single Alcon share was provided.

Just prior to the conclusion of the spinoff, Alcon altered its executive family with the announcement of a new CFO. Timothy C. Stonesifer joined as senior vice president and chief financial officer, required as a result of the departure from Novartis. David Murray, who had been serving as the Alcon CFO, cited family reasons for deciding to return to Europe and remain with Novartis, but would work with Stonesifer throughout the final processes required for the corporate separation. Prior to Alcon, Stonesifer had served as executive vice president and CFO with Hewlett Packard Enterprises, the latest position in his 29 years of global financial and operational experience.

In addition to altering its leadership, Alcon also grew its corporate family when it acquired PowerVision in March for at least $285 million (with additional payments based on certain milestones). PowerVision developed fluid-based accommodating intraocular lenses for cataract surgery patients. The firm’s unique lens design utilizes the eye’s natural accommodating response to transport fluid in the intraocular lens, which is implanted in the eye’s capsular bag. The technology allows the patient to actively focus on objects, just as the natural crystalline lens does in a youthful eye, providing patients with a continuous range of vision.

All of this sets the stage for a successful entry into the medical device community as an independent entity. The company has been fortunate to have enjoyed a leading position in the marketplace while part of Novartis and if its 2019 financial reporting is any indication, that status should be maintained.

Alcon saw a 3 percent rise in net sales during its latest fiscal to finish the period at $7.36 billion. Across all five segments of its two business units, gains were achieved in four with the last remaining flat year over year.

The Surgical business, which encompasses implantable intraocular lenses (IOLs), consumables, equipment, services, and procedural drops used in performing cataract, retinal, and refractive surgery, accounted for approximately $4.2 billion. All three business units within enjoyed strong single-digit percentage gains over 2018.

Leading the bump was Implantables with $1.2 billion in sales, a 7 percent rise. Demand for advanced intraocular lenses globally drove some of these gains, while steady demand for monofocal IOLs also contributed.

The largest Alcon business, Consumables, had the lowest percentage gain within the Surgical group—3 percent—still substantial given the total sales for 2019 tallied $2.3 billion. The firm’s strong base helped with an increase in unit volume during the year. Further, demand for smaller gauge instrumentation, retinal consumables, and CUSTOM PAK surgical kits contributed to category growth.

Equipment/Other benefited from a 4 percent increase to close at $700 million. In this segment, service revenue and sales of procedural drops grew during the fiscal. Newly introduced products in phacoemulsification and 3D visualization technology also aided with growth.

Alcon’s other half—Vision Care—is defined by a wide range of daily disposable, reusable, and color-enhancing contact lenses and lens care products. On the whole, the business ended 2019 with sales of $3.2 billion.

Broken down further, the Contact Lenses segment was up 2 percent over the previous fiscal to bring in $2 billion in net sales. Noteworthy gains were realized due to the shift to daily silicone hydrogel lenses with DAILIES TOTAL1, as well as the expansion of toric offerings and multifocal lenses. It was the third year in a row Alcon reported an increase in the sale of contact lenses.

Flat against 2018’s figures, Ocular Heath still ended the 12-month period with $1.2 billion in sales. The unit was helped in avoiding a loss with the double-digit growth of the SYSTANE dry eye business.

With the company showing positive results during its first independent year, it also sought partners to help share its message and the benefits of its technologies. With this in mind, Alcon paired up with Laurie Hernandez, a gold- and silver-medal winning gymnast. The “Eye Can, Eye Will” campaign was based on Hernandez’s belief that personal mantras and clear, comfortable vision with DAILIES TOTAL1 contact lenses have helped her maintain the focus and enthusiasm needed to get to the top of her game. As such, the company also launched a “mantra maker” online for anyone to use to help achieve their own goals.

In order to ensure continued success and future growth, Alcon debuted a bevy of new products in 2019:

• The ACTIVE SENTRY Handpiece was designed with a built-in fluidics pressure sensor for real-time dynamic monitoring of intraocular pressure.
• An update to the BALANCED Tip version, the INTREPID Hybrid Tip includes a rounded polymer edge designed to reduce the risk of capsular tears and further improve safety in the OR.
• The Alcon Visualization platform with LuxOR Revalia enhanced microscope is provided with personalized LED illumination technology and NGENUITY 3D Digital system.
• Designed to help analyze and confirm the topographic treatment for an eye in CONTOURA Vision, the PHORCIDES Analytic Engine diagnostic software was added to Alcon’s WaveLight Refractive Suite.
• Launched the AcrySof IQ PanOptix Trifocal IOL—the first and only trifocal lens for U.S. patients undergoing cataract surgery, according to Alcon.
• PRECISION1 daily disposable contact lenses use SMARTSURFACE technology to deliver lasting visual performance and comfort.
• For astigmatic patients, AIR OPTIX plus HydraGlyde were offered as a contact lens option.
• DAILIES COLORS contact lenses combine eye color enhancement with daily disposable contact lenses.

AT A GLANCE
$7.15 Billion
Prior Fiscal: $6.77 billion
Percentage Change: +5.6%
No. of Employees: 22,787

Novartis CEO Vas Narasimhan has been quite busy since taking the helm of pharmaceutical giant Novartis last February.

The first of three enormous transactions captained by the Swiss drugmaker’s leader transpired last March when Novartis sold its stake in a consumer healthcare business to joint-venture partner GlaxoSmithKline (GSK) for $13 billion. A month later, the firm bought U.S.-based gene-therapy company AveXis for $8.7 billion. And last June, Novartis revealed its next move to become an entirely prescription medicine company.

Last July, the company announced it would spin off its Alcon eye care unit while using the $13 billion in proceeds from the GSK transaction to repurchase up to $5 billion in shares. Once parted from Novartis, Alcon would become a standalone business publicly trading in Switzerland and the U.S. Last September, the eye care leader also solidified its plans to locate its global headquarters in the Canton of Geneva, Switzerland. Its Fort Worth, Texas, global divisional headquarters would remain a major operational, commercial, and innovation hub.

Novartis bought Alcon in two deals over 10 years ago for a total of more than $50 billion. The purchase proved to be disappointing, and the drugmaker had been assessing Alcon’s ownership since 2017. However, Alcon’s sales picked up over the past two years.

“Alcon has returned to a position of strength and it is time to give the business more flexibility to pursue its own growth strategy,” Narasimhan told The Wall Street Journal when the spinoff was announced.

Novartis didn’t provide the spinoff’s estimated valuation at the time, but it was expected to be lower than what the firm shelled out because the drugmaker kept the ophthalmology pharmaceuticals business previously in Alcon’s arsenal. This was somewhat tempered last October when Novartis transferred several mydriatic (pupil dilation), cycloplegic (ciliary muscle paralysis), diagnostic, and anesthetic products to the company’s portfolio. Vontobel Research analysts speculated at the time that Alcon could have a market capitalization between $15 billion and $23 billion, depending on its earnings multiples.

The spinoff was threatened last August, however, when Alcon pulled its CyPass Micro-Stent from the market. CyPass was approved in 2016 for glaucoma patients based on the two-year COMPASS study evaluating the stent against subjects undergoing cataract surgery alone. However, five-year post-surgery data from the COMPASS-XT long-term safety study revealed that the group using CyPass in conjunction with cataract surgery experience statistically significant endothelial cell loss compared to the control group.

“We believe that withdrawing the CyPass Micro-Stent from the market is in patients’ best interest and is the right thing to do,” Alcon Chief Medical Officer Dr. Stephen Lane told the press. “Although we are removing the product from the market now out of an abundance of caution, we intend to partner with the FDA and other regulators to explore labeling changes that would support the reintroduction of the CyPass Micro-Stent in the future.”

Alcon had highlighted the CyPass stent’s contribution to a recovery in sales. In the second quarter of 2018, Novartis said double-digit growth in implantables including CyPass helped drive the 8 percent surgical device revenue sales that was achieved. Zuercher Kantonalbank analyst Michael Nawrath estimated revenue from the stent stood at around $90-100 million. However, a Novartis spokesman told Reuters at the time that CyPass sales were “immaterial” to Alcon’s first-half sales, and the withdrawal would not impact the company’s spinoff plans. In fact, according to Nawrath, the quick move to withdraw CyPass after five years of patient follow-up would provide little leverage to lawyers seeking lawsuits against Alcon.

“A withdrawal is always negative, but if you react appropriately you can avoid becoming the potential target of litigation and legal costs,” he said.

More disappointing news—though not nearly as threatening to the spinoff—came last November when Google’s Verily pulled the plug on the glucose-sensing smart contact lens it had been attempting to build with Alcon due to difficulties in acquiring reliable tear glucose readings.

The Smart Lens program had begun in 2014 as one of Verily’s first projects. The ambitious project, poised to help patients with diabetes better manage their disease, evolved into a versatile electronics platform able to support sensing and transmitting data on the eye. But Verily was unable to demonstrate enough consistency in measurements to show a correlation between blood glucose concentrations and tear glucose.

“For example, we found that interference from biomolecules in tears resulted in challenges in obtaining accurate glucose readings from the small quantities of glucose in the tear film,” Verily chief technology officer Brian Otis wrote in a blog post. “In addition, our clinical studies have demonstrated challenges in achieving the steady state conditions necessary for reliable tear glucose readings.”

Verily and Alcon resolved to continue working on other smart contact lens applications despite halting glucose sensing. Other projects currently under development include a smart accommodating lens for presbyopia (farsightedness) and a smart intraocular lens (IOL) for improving sight after cataract surgery. Each program has already undergone many clinical study sessions with individual users, with hundreds of thousands of data points collected from on-eye readings.

Despite the setbacks, Alcon continued to grow in 2018. Last year the eye care giant posted $7.15 billion in sales, rising 5.6 percent over the prior year. The company’s Surgical division—which encompasses consumables, implantables, and related equipment—experienced 7 percent growth, making up over half of Alcon’s revenue with $4 billion in sales. All key product categories reported increases, driven mainly by advanced technology IOLs and consumables.

New advancements to the LenSx femtosecond laser were introduced at last year’s American Society of Cataract and Refractive Surgery meeting. The enhancements, which were cleared by the FDA last March, added indications for both tunnels for intracorneal rings and pockets for presbyopia-correcting inlays. Software updates to support the new uses and improve the graphical user interface (GUI) were also implemented.

At last July’s American Society of Retina Specialists (ASRS) meeting, Alcon launched the NGENUITY 3D Visualization System with DATAFUSION. DATAFUSION software integrates the CONSTELLATION Vision System for vitreoretinal surgery with NGENUITY 3D, allowing real-time tracking of intraocular pressure, flow rates, infusion pressure, and laser power. The new system also features four preset imaging modes, two footswitch control options, 2D or 3D video capture, and enhancement of the GUI and procedure flow. The technology was introduced in Europe last September in Vienna at the Annual Meeting of European Society of Retina Specialists (EURETINA).

Alcon also unveiled its new FINESSE SHARKSKIN ILM Forceps during last July’s ASRS meeting. Designed for better surgical precision and improved outcomes for retinal surgery, the forceps feature a large grasping platform and a tip surface laser ablated with microstructures that resemble the textured skin of a shark. That way, surgeons can more easily grasp and peel the internal limited membrane (ILM) and minimize retinal trauma during the procedure. The forceps were introduced in Europe at last year’s EURETINA meeting.

The AcrySof IOL portfolio was expanded last September with the launch of multifocal and multifocal toric ultraviolet (UV)-absorbing IOLs and the AcrySof UV-Absorbing monofocal IOL with the UltraSert Pre-loaded Delivery System. As a result, Alcon’s UV-absorbing IOL portfolio includes monofocal, toric, multifocal, and pre-loaded monofocal options. The UV-absorbing lenses treat patients undergoing cataract surgery who address their presbyopia or presbyopia with astigmatism at the same time. The new delivery system ensures a pristine, untouched IOL with less preparation time than manually loaded IOLs.

Software and hardware enhancements were added to Alcon’s WaveLight Refractive Suite for LASIK treatment last October. These included a heads-up display for surgeons, a higher-contrast GUI and backlit keyboard, updates to the laser, and a new key switch and emergency laser emission stop.

Last December Alcon acquired Tear Film Innovations, a private company that manufactures the iLux Device, a handheld and portable therapeutic technology to treat Meibomian Gland Dysfunction, a leading cause of dry eye. iLux lets eye care professionals treat blocked Meibomian glands in the office by warming the eyelids with disposable silicone pads through the application of light-based heating. While using iLux, clinicians can view the eyelid margin and apply manually-controlled compression to express blockages, adjusting as needed to tailor treatment. iLux was launched last May. It is currently offered in the U.S. and Canada, and Alcon intends to bring it to other countries this year.

Vision Care sales rose 3 percent for a $3.15 billion total last year. Contact lens proceeds made up the bulk of the revenue with $1.9 billion, provoked by contact lens product strength and the continued double-digit growth of Dailies Total lenses. Ocular health products brought in $1.2 billion in earnings last year.

Last May saw the launch of AIR OPTIX COLORS Gemstone Collection of contact lenses, a trio of colors including amethyst, true sapphire, and turquoise. According to Alcon data on file, one in two consumers are interested in color contact lenses even if they wear glasses or don’t need vision correction—though they still require a prescription from an eye care professional. The Gemstone Collection expands the AIR OPTIX color selection to true sapphire, amethyst, turquoise, gray, blue, green, pure hazel, brown, sterling gray, brilliant blue, gemstone green, and honey.

AIR OPTIX plus HydraGlyde multifocal contact lenses were introduced last September. Adding these lenses offered presbyopic patients a combination of technologies for seamless vision at all distances, plus boosted moisture benefits. SmartShield technology ensures deposit protection and consistent comfort. AIR OPTIX plus HydraGlyde Multifocal contact lenses are recommended for patients wanting a monthly replacement lens.

Alcon debuted as an independent, publicly traded company on April 9 of this year. Then-CEO F. Michael Ball became the company’s Chairman following the spinoff, and former COO David Endicott assumed his new role as CEO.

“Demand for eye care is growing significantly as our population ages and people spend more time in front of screens and mobile devices,” Endicott told the press on April 9. “As we mark this new chapter in the life of our company, all of us at Alcon are committed to addressing the growing consumer need for improved vision and eye health and to expanding access to quality eye care all around the world.”

$6 Billion
strong>NO. OF EMPLOYEES: 126,000 (total)

It’s no secret that Alcon has been a prospective candidate for Novartis’ chopping block for the past few years. The struggling eye care business has fallen prey to diminished sales for cataract and refractive equipment over recent years, as well as competitive pressures in the intraocular lens (IOL) market.

Novartis Chairman Jeorg Reinhardt’s comments to Reuters regarding its underperformance in 2016 were particularly provocative. “Alcon has not developed over the past two years as we had expected,” he said. “Even though Novartis would continue to push the turnaround, all options were open in the future. In the long run, the question arises as to whether we are the best owner for Alcon.”

At the start of the company’s 2017 fiscal year—ended Dec. 31—then-CEO Joe Jimenez told CNBC that Novartis intended to initiate a strategic review of the flagging eye care business.

“We are going to look at what’s in the best interest of our shareholders, in terms of the future of that business, ranging all the way from retaining the business to a capital markets exit through an IPO or a spin,” he explained. “We’re going to take 2017 to do that and we will be back with an update on that by the end of this year.”

However, the measures taken to fortify Alcon—for example, instituting CEO F. Michael Ball and moving its ophthalmic drugs portfolio to Novartis’ main pharmaceuticals division to focus on devices—began to show signs of paying off after the third quarter of fiscal 2017. The quarterly profit increase was Alcon’s first in almost three years. As a result, late last October, Novartis decided to give the ailing division another year and a half to get its act together. According to Bloomberg, a decision regarding Alcon’s future probably won’t come before the first half of 2019.

As Jimenez was preparing to hand the reins to Vasant Narasimhan after eight years of leading the company around that time, he told Bloomberg he expects the company to return to growth in 2018. Alcon needs to demonstrate sales and margin improvements before a decision can be reached.

“We’d want to come to the market from a position of strength,” Jimenez told reporters on a conference call. “Let’s get this thing humming with good momentum, and then a final decision will be made.”

It did indeed gain speed, a bit earlier than Jimenez portended. The Texas-based maker of precision eye surgery equipment, advanced contact lenses, and lens care solutions posted $6 billion in 2017 revenue, a welcome 4 percent increase that undoubtedly had Alcon executives breathing sighs of relief.

It was perhaps this return to profitability that prompted Novartis to formally announce Alcon’s spinoff in early July of this year. The eye care division will become a separately traded, standalone company. Novartis will initiate a share buyback of up to $5 billion to be executed by the end of 2019. This action is planned to be largely funded through the proceeds of the divestment to GSK of the consumer health joint venture stake, net of the AveXis acquisition payments.

“Our strategic review examined all options for Alcon ranging from retention, sale, IPO to spinoff,” Novartis Chairman Reinhardt commented when the spinoff was announced. “The review concluded that a spinoff would be in the best interests of Novartis shareholders and the Board of Directors intends to seek shareholder approval for a spinoff at the 2019 AGM. This transaction would allow our shareholders to benefit from potential future successes of a more focused Novartis and a standalone Alcon, which would become a publicly traded global medtech leader based here in Switzerland.”

Alcon’s Surgical franchise, which had been the main financial problem for the company in recent years, achieved 5 percent sales growth to post $3.7 billion in 2017 proceeds. This was primarily stimulated by double digit sales growth in vitreoretinal products and moderate revenue boosts in both cataract disposable surgical supplies and IOLs for cataract surgery.

Alcon’s Surgical franchise began its year by launching last January the AcrySof IQ PanOptix Toric presbyopia- and astigmatism-correcting IOL for patients with pre-existing corneal astigmatism undergoing cataract surgery. Having achieved CE mark certification November 2016, the lens provides a new option for astigmatic patients to address near, intermediate, and distance vision needs. It expands the PanOptix trifocal platform first launched in September 2015, utilizing the same trifocal optic as the AcrySof IQ PanOptix IOL on the front surface of the lens and the astigmatic correction features of a toric IOL on the back surface. At the time of launch, it was also the only IOL on the market with a 60 cm intermediate focal point, a preferred distance for many patients.

In March, the AcrySof IQ ReSTOR +2.5 Multifocal Toric IOL with ActiveFocus design obtained FDA approval for uncompromised distance vision and presbyopia correction. Previously, presbyopia-corrective IOL designs tended to compromise on distance vision to ensure a range of vision. The only multifocal toric IOL in which the central portion is 100 percent dedicated to distance vision, the ActiveFocus toric IOL provides clear distance vision and a range of vision to address astigmatism and presbyopia at the same time. The launch extended the AcrySof IQ platform to a broader population of nearly 2 million cataract patients with treatable astigmatism who undergo cataract surgery each year.

In July, U.S. reimbursement became effective for the CyPass Micro-Stent, a minimally invasive glaucoma surgical (MIGS) device that treats adult patients with mild to moderate primary open-angle glaucoma in conjunction with cataract surgery that Alcon launched in October 2016. Further, CyPass also gained positive feedback related to coverage and payment from all U.S. Medicare Administrative Contractors (MACs) and several major commercial payers. Positive feedback from the MACs means Medicare will cover CyPass in all 50 states, and the micro-stent is now included in leading national commercial payers’ plans.

Alcon also made efforts to bolster its customer training and technical service operations last September. The company formed the Clinical and Technical Services operation, which is charged with installing, maintaining, and training customers on technologies across cataract, refractive, and vitreoretinal surgery. Alcon had previously crippled customer loyalty somewhat by cutting spending on surgeon training in 2016 in order to compensate for falling sales. According to the company, the efforts to restore these services were well received.

In October, Alcon’s Clareon IOL with the AutonoMe preloaded delivery system gained EU approval. Featuring an automated CO2-powered mechanism and ergonomic design, the first-of-its-kind disposable IOL delivery system permits precise, single-handed IOL placement into the capsular bag in cataract surgery patients. The Clareon hydrophobic acrylic IOL loaded into AutonoMe had previously gained CE mark approval four months prior, and is made of an optic polymer biomaterial that allows for improved clarity for cataract patients.

Sales for the Vision Care franchise swelled a modest 3 percent to $2.1 billion in 2017. Contact lens revenues, resting on the back of continued double-digit growth of water-gradient lens Dailies Total 1, rose 4 percent from the previous year. Contact lens care products were in line with the prior year.

In March, Alcon launched Air Optix Choice, a program that equips patients with the latest technology in monthly contact lenses and an easy-to-remember replacement schedule. The firm simultaneously extended its Dailies Choice Program, which expands patient access to Dailies contact lenses by reducing their price to that of two-week replacement lenses. Last May, the business launched U.S.-specific packaging for Dailies AquaComfort Plus (DACP) spherical contact lenses in 90-, 30-, and 5-packs to assist patients with proper lens care and wear. The DACP box’s new design features patient-friendly educational elements like detailed lens insertion and removal illustrations, a toll-free helpline and email address, and Dailies website access for at-home and online support. The DACP change is the first of several planned packaging changes.

In November, the Novartis division invested $97 million to expand its Johns Creek, Ga., operations center. It is the first phase of a multi-year project to boost production capacity for Dailies Total 1 contact lenses. In 2015, Georgia Gov. Nathan Deal proclaimed that Alcon had created 550 jobs and invested $500 million in the Johns Creek facility since 2013.

“Alcon’s expansion in Johns Creek reflects Georgia’s commitment to providing industry leaders with the best resources to compete worldwide,” Deal said in a news release last November. “Alcon already has a significant economic footprint in the Johns Creek area and with this expansion, the company is deepening its investment in our top-ranked business climate. With the next phase of this project, Alcon will create even more high-tech jobs for Georgians using our cutting-edge technological capabilities as a foundation for future innovation in eye care. We are proud of Alcon’s success and appreciate the company’s commitment to creating jobs and investing in the Johns Creek community.”

As part of the firm’s strategic review, Novartis also decided to move over-the-counter and diagnostic ophthalmic products from the Innovative Medicines division to Alcon, which became effective Jan. 1 of this year.

Under New Management

Last September, Novartis CEO Joe Jimenez announced he would step down from the position after eight years of leading the company. Jimenez began his tenure leading Novartis’ Consumer Health division, advanced to the position of division head of Novartis Pharmaceuticals, taking the reins of the company in 2010. Effective Feb. 1 of this year, former global head of drug development and chief medical officer Vasant Narasimhan, M.D., was installed as CEO.

“Both from a professional and a personal perspective, this is the right moment to hand the leadership reins of the company to Vas,” Jimenez said in a company statement. “Our strong pipeline and the strategic moves we have taken to focus the company have put Novartis on a strong path for the future. On the personal side, after 10 wonderful years in Switzerland, my family is ready to return to Silicon Valley and the U.S. I’m confident that Vas will be an excellent successor.”

Dr. Narasimhan joined Novartis in 2005, having previously worked at global management consulting firm McKinsey & Company. An elected member of the U.S. National Academy of Medicine, he held numerous leadership positions across Novartis in commercial, drug development and strategy roles. Prior to his role as head of drug development and chief medical officer, he served as head of development for Novartis Pharmaceuticals.

“I would like to congratulate Joe and express my gratitude to Joe, Joerg, and the Board of Directors,” Dr. Narasimhan said. “I feel honored and humbled to be asked to lead Novartis. We will continue our legacy of bringing leading innovation to patients around the world. With our recent launches, our strong pipeline, broad capabilities, leadership team, and committed people, I am very confident about our future.”

$5.8 Billion ($48.5B total)
NUMBER OF EMPLOYEES: 23,000 (122,985 total)

As the world’s only fully accredited teaching hospital aboard an aircraft, the Flying Eye Hospital is quite a sight to behold. Designed to bring the best medical technology and training to the developing world, the third generation of the flying hospital was built in a donated MD-10 jet in 2016. Orbis International (a non-profit dedicated to increasing eye care standard and availability in over 90 countries) operates the Flying Eye Hospital. Alcon, Novartis AG’s eye care division, has supported Orbis for 34 years with grants, donated equipment, and volunteers.

In October 2016, the new Flying Eye Hospital took its three-week maiden voyage to the northern Chinese city of Shenyang. Once there, the hospital’s volunteers demonstrated a number of eye surgeries using advanced equipment to Chinese ophthalmologists in the plane’s operating room.

Preventable forms of blindness are common in China—according to Alcon, cataracts account for about 40 percent of all blindness there. Unfortunately, less than half of China’s ophthalmologists perform cataract surgery. Lack of a national training program makes it challenging to increase the amount and caliber of eye care professionals, many trainees have insufficient hands-on training, and less than a third of junior ophthalmologists end up performing regular surgery post-graduation. Dr. Zhang Bin, an attending physician at He University Eye Hospital, is in the minority in that he has performed hundreds of cataract surgeries. But he recognized the need to improve eye care access for the 8 million people living in and near Shenyang, where some of his patients travel three hours for treatment. When he heard the Flying Eye Hospital was coming to town to train local eye care professionals and treat local patients, he signed up right away.

Dr. Zhang had never performed a corneal transplant before training with Orbis. By the end of the week, he was performing the surgery unassisted and doing so well that his surgery was shown in the classroom for other trainees’ observation. And although he’s performed hundreds of phaco cataract surgeries, he learned a new set of skills operating with Alcon’s high-tech surgical equipment on the plane.

“At some point I’ll be able to train others and make phaco cataract surgery more accessible,” Dr. Zhang told Alcon. “People shouldn’t have to travel to another city for surgery.”

Though Alcon’s philanthropic efforts flourished, for the second year in a row the Novartis division struggled with diminishing sales. Though not quite as drastic of a decline as 2015’s

9 percent tumble, FY 2016 sales (ended Dec. 31) fell 3 percent to $5.8 billion. Tasked with leading the slipping division beginning in February 2016, former Hospira CEO F. Michael Ball was not quite able to rescue Alcon from the decline it was on due to struggling surgical equipment sales, exacerbated by too few innovative product offerings. Alcon also crippled customer loyalty by cutting spending on surgeon training and education.

“If you look at the mistakes that were made that have led to the slowdown, we were not as vigilant enough…on ensuring that the innovation pipeline would result in continued growth,” Novartis CEO Joe Jimenez said in an interview with Reuters. “The second is, I think we went a little too far on cost savings, we reduced some of the services that they had grown accustomed to at Alcon.”

ANALYST INSIGHTS: B. Braun has remained fairly quiet in 2016 and year-to-date in 2017. B. Braun is focused on its goals to have a more cohesive company set to come to fruition in 2020. It remains a solid “brick and mortar” service company that provides consistent support and aims to work with its customers to achieve better and more affordable healthcare. Who could not agree with that?

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

Surgical sales continued to struggle in 2016, falling 3 percent to $3.5 billion. Intraocular lens (IOL) sales performed weakly due to competitive pressures, as well as slowing equipment sales—primarily LenSx for cataract surgery and Wavelight for refractive surgery, which have reached high penetration in their market segments. These circumstances were somewhat offset by the continued growth of cataract disposable surgical supplies sales, which were up 3 percent from the year prior. The Surgical business made progress toward sales growth in 2016, and the release of a number of new offerings in this segment will attempt to drive expansion of revenue next year.

One product (launched in September 2016) that may be able to pull surgical sales out of their rut is the NGENUITY 3D Visualization System, a videoretinal surgery platform designed to assist surgical procedures through high-resolution 3D imaging of the back of the eye. Rather than bending their necks to see through a microscope’s eyepiece, retinal surgeons can operate while looking at a high definition screen. Notably, surgeons can use NGENUITY 3D to magnify images while maintaining a wide field of view and use digital filters to customize the view mid-procedure.

“This digital platform offers more than just enhanced visualization. It will impact our therapies and the way we manipulate tissue,” said Dr. Allen Ho, professor of ophthalmology at Thomas Jefferson University and director of retina research at Wills Eye Hospital in Philadelphia, Pa. “The easier it is for surgeons to perform these long, delicate surgeries, the better they can perform for our patients who count on us to provide them with the best possible care.”

The CyPass Micro-Stent for use in conjunction with cataract surgery to lower intraocular pressure in adult patients with mild to moderate primary open-angle glaucoma was launched at the American Academy of Ophthalmology (AAO) annual meeting in October. CyPass lowers intraocular pressure (IOP) by enhancing aqueous outflow through the eye’s natural drainage pathways and minimizes tissue disruption. It marks the first in Alcon’s portfolio in a new segment of glaucoma treatment called minimally invasive glaucoma surgery (MIGS), formed by the February 2016 acquisition of privately held, U.S.-based Transcend Medical.

“We expect the MIGS technology to be a great addition to our device pipeline and to establish Alcon’s presence in this new surgical category to treat glaucoma,” Alcon CEO F. Michael Ball said when the acquisition was announced. “It will provide a less invasive means of lowering IOP than traditional invasive glaucoma surgery, with the goal of lowering the dependency of topical ocular medication. This acquisition also expands Alcon’s leadership in glaucoma and cataract treatment as part of our Surgical business.”

The December FDA approval of the AcrySof IQ ReSTOR +3.0D Multifocal Toric lens—designed to address presbyopia and pre-existing corneal astigmatism at the time of cataract surgery in adult patients who desire good near, intermediate, and distance vision with an increased potential for spectacle independence—also set the stage for potential growth in surgical sales. The new intraocular lens combines two technologies that simultaneously correct presbyopia and corneal astigmatism.

Vision Care sales were flat in 2016 at $2.3 billion—a rise in contact lens revenue offset the drop in contact lens care products. The division was driven mainly by the July release of the Dailies Total1 Multifocal contact lenses, the first and only water gradient lenses designed for people with presbyopia. An alternative to bifocals or reading glasses, the technology addresses end-of-day dryness and discomfort many contact lens wearers over 40 years old experience.

Vision Care also revealed the new AIR OPTIX plus HydraGlyde monthly replacement contact lenses at the AAO annual meeting. The lens is composed of a silicone hydrogel and features HydraGlyde Moisture Matrix technology for longer-lasting surface moisture. The lenses were launched with a power range of +8.00D to -12.00D.

Will Alcon Stay in the Novartis Family?

Alcon’s revenue struggles have begun to raise rumors that Novartis is looking to divest the business. Diminished 2016 sales for cataract and refractive equipment, paired with competitive pressure in the IOL market, curtailed surgical sales. Down 2 percent from 2015, Jimenez expects growth in Novartis as a whole to resume after some delay.

“Unfortunately, 2017 is going to look a lot like 2016,” Jimenez said in an interview with AAO. “We expect the next growth phase of this company to begin toward the end of this year,” he said, adding that the company anticipates annual growth beginning in 2018.

Keeping Alcon in the fold does fit Novartis’ overall strategy of establishing the division in a position as a leading surgical instruments maker, according to a statement made by Alcon general counsel Felix Ehrat in a Zurich mergers and acquisitions conference reported by Reuters. And when pressed about the prospect of an Alcon sale, Ehrat advised that such a pledge “wouldn’t be clever,” but quickly added “never say never.”

Ball has implemented a turnaround effort to pull Alcon out of the mire, but following the move of its ophthalmic drugs business to Novartis’ main pharmaceuticals division, much talk has arisen about Alcon’s potential status on the chopping block—especially if Ball’s efforts fail.

“Alcon will either be fixed or sold,” David Evans, an analyst at Kepler Cheuvreux, wrote in a note to investors.

“Alcon has not developed over the past two years as we had expected,” Novartis Chairman Joerg Reinhardt told Reuters. “Even though Novartis would continue to push the turnaround, all options were open in the future. In the long run, the question arises as to whether we are the best owner for Alcon.”

Needless to say, investors and customers will be keeping a close eye on Alcon from here on out.

$6.0 Billion ($49.4B total)
NUMBER OF EMPLOYEES: 23,000 (122,966 total)

Marketing professionals have a tough job. They are tasked with promoting brand image creatively yet sensitively through ad campaigns that command attention respectfully and pleasantly. They walk a fine line between opinion and controversy, entertainment and frivolity, individuality and normalcy, as they craft strategies to boost product sales and profits.

The best at their craft spin true marketing gold. Consider, for example, the ingenuity behind Absolut Vodka’s iconic print ads in the 1980s and 1990s. Surprisingly simple but impactful, the campaign featured Absolut’s non-descript glass bottle in various creative displays, with the brand name below in a two-word phrase suggesting perfection. The first ad (debuting in 1980) showed the product with a white halo above the bottle neck and the words “ABSOLUT PERFECTION” below; another depicted an aerial view of New York City with a bottle-shaped Central Park (“ABSOLUT MANHATTAN”). The bottle also manifested itself in traffic (via yellow taxicabs), the Brooklyn Bridge, a box of chocolates, jetliner entrails, lemon rind, and Christmas presents.

Absolut’s ads enjoyed an unprecedented 25-year run, during which time the now-recognizable bottle embodied everything from an ancient Greek column and stone chimney to beach chairs, a waterfall, basketball court, guitar, and land-line telephone cord (remember those?). By the time the campaign lost steam in the early part of the new millennium, Absolut had placed more than 1,500 print ads and drastically increased its U.S. sales from a paltry 10,000 cases in 1980 to 4.5 million annually, or half of all imported vodka in the United States.

The brilliance of Absolut’s marketing is evident in both its bottom line impact and its creativity. Indeed, the campaign’s success can be attributed specifically to the team’s ability to produce interesting branding from an unremarkable product (bottle).

Alcon attempted to replicate Absolut’s marketing magic last year by collaborating with Jacksonville University in Florida to study Generation X attitudes on aging.

Conducted online, the Age Perception Impact Survey found that one in four U.S. adults (aged 38 to 54) believe reading glasses—also known as readers—ages people 10 years. Nearly half of Americans polled said they would consider avoiding reading glasses if they realized it made them look older.

“Readers are ubiquitous, and I was curious about their effect on one’s perceived age,” Dr. Heather Hausenblas, survey leader, healthy aging expert, researcher, and professor at Jacksonville University College of Health Sciences’ School of Applied Health Sciences, said when the survey results were released last May. “In our culture where youth and beauty are prized, many decisions—like getting collagen fillers or staying fit—are carefully made, while others, like donning readers, may not be. The truth is…many people may not be aware that readers could be adding years to their appearance.”

Partnering on a survey that disparages reading glasses apparently is an odd marketing strategy for an eye healthcare company (cue the irony), but Alcon—like Absolut—is attempting to differentiate itself in an interesting way by tapping American (human?) vanity to fuel sales of its presbyopia-correcting multifocal contact lenses.

Alcon is eyeing a huge market. More than 110 million Americans suffer from presbyopia, otherwise known as farsightedness, and nearly 1.7 billion people globally suffer from the condition. Industry forecasts project the worldwide number of presbyopics to grow by 400 million in the next four years.

Presbyopia is an age-related condition believed to be caused by a gradual thickening and loss of flexibility of the eye’s natural lens. The thickening occurs within lens proteins and muscle fibers, causing the optic to become harder and less elastic, and consequently, lose its ability to focus up close.

“Most people aren’t aware of any other options for addressing presbyopia,” Hausenblas noted, “and so readers are a quick fix…”

But not the only solution. Alcon makes multifocal contact lenses and implantable lenses that correct all vision deficits (presbyopia and myopia), and its parent company, Novartis AG, is collaborating with Verily (formerly Google Life Sciences) on a “smart” contact lens for presbyopics that involves sensors, microchips, and other miniaturized electronics embedded within the lenses.

Hence, the logic behind Alcon’s participation in the “readers” survey. The poll, in fact, was a clever attempt on the company’s part to promote its presbyopia-correcting contact lenses and in turn, boost sagging sales. Overall revenue fell 9 percent last year to $9.81 billion (including divisions outside the medical device scope) due to flat sales in Japan, softening markets in Asia and Russia, and a 3 percent dropoff in North American proceeds. Operating income plummeted 50 percent, and core operating income, which excludes certain items, tumbled 20 percent, having been hammered by lower sales, higher spending (primarily on marketing and sales), product development investments, and increased provisions from bad Asian debt.

Alcon’s dismal financial performance extended to its three reporting divisions in 2015 (year ended Dec. 31), with each reporting significant losses compared with 2014. (Editor’s note: MPO’s Top Companies revenue total for Alcon combines sales from its Surgical division and contact lens sales from its Vision Care segment—the majority of proceeds generated by medical devices.) Ophthalmic pharmaceutical revenue slid 9.5 percent to $3.81 billion, with gains in fixed-dose combination products offset by generic competition for monotherapies.

Surgical sales declined 9.1 percent to $3.69 billion, as intraocular lens (IOL) sales fell victim to competitive pressures, a Class I recall, and waning equipment purchases in the United States and emerging markets, particularly Asia. The voluntary recall was triggered by an increase in reports of postoperative inflammation, and affected nearly 90,000 ReSTOR intraocular lenses and AcrySof IQ ReSTOR Multifocal Toric intraocular lenses sold in Japan.

The division, however, potentially can reverse its financial fortune with the help of several products that received approval last year, including the AcrySof IQ ReSTOR +2.5 Diopter IOL and AcrySof IQ PanOptix trifocal IOL for cataract patients. The former product enables vision correction at all distances in cataract patients with or without presbyopia; it is already used in Australia, Canada, Europe, Japan, and Central and South America, and has been implanted nearly 27,000 times. The AcrySof IQ PanOptix lens also corrects vision at all distances.

Another potential cash cow for the Surgical Division is the UltraSert Pre-loaded Delivery System for cataract patients, which received both U.S. Food and Drug Administration and CE mark approval last year. The system, according to Alcon, combines the control of a manually-loaded device with the safety and convenience of a disposable, pre-loaded injector to optimize the implantation of the AcrySof IQ Aspheric IOL.

The UltraSert device features the TensionGlide Plunger, a spring-controlled mechanism that ensures a smooth, controlled delivery of the AcrySof IQ lens into the capsular bag. The UltraSert system also contains a plunger tip designed to support consistent IOL folding and precise placement into the eye’s capsular bag. In addition, the product design helps to create a less invasive corneal incision during cataract surgery. The smaller nozzle tip allows for an incision as small as 2.2 millimeters, while the Depth Guard nozzle prevents the device from being inserted deeper into the opening than necessary, preserving the size of the original incision.

“There are many surgeons who are highly interested in pre-loaded devices, and UltraSert represents a major step forward in pre-loaded delivery system technology,” practicing ophthalmologist Robert Lehmann, M.D., FAACS, said in a news release about the product’s approval. “…In testing this device, I was immediately impressed with its smooth control and single hand delivery. I believe it will give the surgeon excellent control during the procedure to ensure a consistent delivery of the IOL into the eye.”

With only one new product release last year, a turnaround in Alcon’s Vision Care unit is far more uncertain. In March 2015, the company extended its line of Air Optix Colors contact lenses to include plus power lenses for patients with hyperopia (farsightedness) across the full range of colors. The power range was expanded to include +6.00D to -6.00D (0.25D steps; including plano) and -6.50D to -8.00D (0.50D steps).

Launched two years ago in the United States, the Air Optix Colors lenses (available in nine colors, ranging from subtle to vibrant) are the first monthly replacement, daily wear color lenses available in America on a silicone hydrogel platform, allowing up to six times more oxygen through the contact lens compared to the leading, older technology color contact lens, according to Alcon.

The Air Optix Colors contacts were among the Vision Care unit’s best-selling lenses in 2015, but their popularity (and profitability) were stymied by declines in older products. Overall division sales fell 9.4 percent to $2.3 billion, with contact lens solution revenue tumbling 14 percent to $600 million, beset by ongoing market shifts to daily disposable lenses and U.S. competition.

$6.6 Billion

NO. OF EMPLOYEES: 25,000

Globally, more than 285 million people live with vision impairment and blindness. More than 90 percent of vision problems can be prevented, treated or cured, provided patients have access to treatment. This isn’t just a market for Alcon, the second largest division of pharmaceutical giant Novartis AG. It’s a mission.

Through the 70-year-old company’s three main divisions—Surgical, Ophthalmic Pharmaceuticals and Vision Care—employees tackle the increasing need for technologies to treat vision impairment. A number of critical demographics are fueling expansion in the ophthalmic marketplace: Emerging markets access to and ability to pay for new technologies continues to grow (90 percent of people that are visually impaired live in developing countries, according to the World Health Organization); an increasing aging population worldwide and longer life expectancies; the growth of chronic diseases such as diabetes that have an impact on eyesight.

“Developing new products in an increasingly costly and heavily regulated environment requires that Alcon carefully select those projects that truly deliver on unmet patient needs. This is the focus of everything we do in Alcon R&D,” said Sabri Markabi, M.D., senior vice president, chief medical officer and head of Alcon’s research & development.

For fiscal 2014 (ended Dec. 31) the company’s product pipeline resulted in steady gains.

Alcon’s net sales for the year totaled $10.8 billion, a 3 percent increase from the previous year. Operating income increased 30 percent to $1.6 billion in the fiscal year. The Surgical division—which makes surgical equipment, intraocular lenses, and surgical packs, among others—sold $4.07 billion, up 5 percent. The Ophthalmic Pharmaceuticals franchise recorded $4.21 billion in sales, up 3 percent. The Vision Care unit, maker of contact lenses and lens care solutions, grew sales by 2 percent to $2.54 billion—contact lens sales were $1.89 billion and contact lens care was $698 million. (Editor’s note: MPO’s total for the Top Companies list for Alcon combines sales for the Surgical division plus contact lens sales from the Vision Care division—the majority of the unit’s sales generated by medical devices.)

Regionally, sales were driven by a strong performance in emerging growth markets, led by Asia (up 13 percent in constant currencies), particularly in China (up 23 percent in constant currencies), and Russia (up 27 percent in constant currencies). Latin America delivered robust growth (growing 17 percent in constant currencies), driven by the Surgical and Ophthalmic Pharmaceuticals franchises.

North America (up 4 percent in constant currencies) accelerated growth in the Surgical franchise, but it was offset by weak sales from Ophthalmic Pharmaceuticals. Sales in Europe, the Middle East and Africa (up 3 percent in constant currencies) were driven by moderate performances in the Surgical and Ophthalmic Pharmaceuticals franchises, according to the company. Sales in Japan grew 3 percent (in constant currencies), mostly attributable to Surgical franchise sales, offsetting weaker growth in Ophthalmic Pharmaceuticals and Vision Care.

Net sales for parent company Novartis increased by 1 percent to $58 billion in 2014. Net income increased by 12 percent to $10.3 billion in the fiscal year.

Management & Acquisitions Focus

In May 2014, Jeff George was appointed division head of Alcon, succeeding Kevin Buehler who retired from the company after a 30-year career.

Richard Francis was appointed as new division head of Novartis’ Sandoz division, succeeding George. Francis joined Novartis from Biogen Idec, where he has held roles of increasing responsibility across several therapeutic areas in both Europe and the United States over his 13-year career with the company.

As division head, George will continue to serve as a member of the executive committee of Novartis, reporting to Jimenez. Since joining Novartis in January 2007, George has held leadership positions of increasing importance in the Vaccines and Diagnostics division and the Pharmaceuticals division, becoming division head of Sandoz in December 2008. He holds an M.B.A. from Harvard University, a master’s degree from Johns Hopkins University, and a bachelor’s degree from Carleton College.

In October, Alcon appointed Eric Bruno as the new general manager for Alcon U.S. Vision Care. He replaced Jim Murphy, who was promoted to president, Alcon Japan.

Bruno most recently served as the global franchise head of Vision Care at Alcon. He joined Alcon in 2012. Prior to Alcon, Bruno spent 16 years at Johnson & Johnson in roles of increasing responsibility, including overseeing the company’s over-the-counter business and its Ethicon Endo Surgery business. Murphy replaced Seiichiro Matsumura, who left Alcon. Murphy joined Alcon in 1995, and has held roles of increasing responsibility across all three Alcon businesses.

In August, Alcon agreed to acquire WaveTec Vision, a privately held company that developed the ORA System, the first commercialized intra-operative guidance system for cataract surgeons implanting intraocular lenses (IOLs). The ORA System, which complements Alcon’s Verion image-guided preoperative diagnostic system, allows surgeons to see incisions and IOL alignment in real time to support optimal positioning of IOLs during cataract surgery.  The ORA System performs additional measurements to confirm the surgeon’s lens selection and placement within the eye. Alcon integrated the ORA System into its existing cataract refractive suite.

“Alcon is continuously seeking new ways to address the needs of cataract patients, particularly those who live with astigmatism and presbyopia,” said George. “The ORA System provides intra-operative measurements, which are not available with current pre-operative technologies and is designed to help surgeons improve patient outcomes through optimal IOL selection and placement during surgery.”

Cataracts are the leading cause of treatable blindness worldwide. They affect more than 240 million people globally and are widespread among people 55 years of age and older.

New Technology

In November, the U.S. Food and Drug Administration’s (FDA) Ophthalmic Devices Advisory Committee recommended approval for Alcon’s AcrySof IQ ReSTOR Multifocal Toric Intraocular Lens (ReSTOR Toric IOL) for patients undergoing cataract eye surgery who are astigmatic and suffer from presbyopia. The committee agreed by a unanimous vote that the available clinical data demonstrate a favorable benefit-risk profile. While the FDA is not obligated to follow the recommendations of its advisory panels, it typically does so. Final approval was received from the agency in April.

“By combining two important technologies into one lens we can correct cataract patients’ presbyopia as well as their astigmatism,” said Joanne Chang, M.D., Ph.D., head of U.S. clinical and regulatory affairs at Alcon.

“There is, at present, an unmet medical need for a multifocal intraocular lens that can correct for spherical error, astigmatism, and near vision in a single surgical procedure for patients desiring less dependence on spectacle correction after cataract surgery,” said Stephen Lane, M.D., medical director, Associated Eye Care and adjunct clinical professor at the University of Minnesota. “The data presented today demonstrated a favorable benefit-risk ratio that I believe will translate into an exciting new treatment option for my patients and my colleagues’ patients across the U.S., without the requirement of additional surgical procedures.”

The product already was commercially available in the European Union, Australia, Canada, Japan and many other countries within Central and South America.

According to figures cited by Alcon, more than 3 million cataract surgeries are performed each year; of those patients more than 50 percent suffer from astigmatism. Astigmatism is a variation in the shape or curvature of the cornea and, if left untreated, astigmatism can cause blurred vision at all distances. Presbyopia is an eye condition that occurs as the natural part of aging. It involves the gradual loss of the eye’s ability to actively focus on close objects, such as smart phones, computers, books and menus. Once people reach 40 years of age, it is likely they will experience presbyopia. Worldwide, nearly 1.7 billion people experience vision issues due to presbyopia, and this number is expected to soar to more than 2 billion by 2020.

In September, Alcon introduced new products in its surgical vitreoretinal portfolio—the Ultravit High Speed Vitrectomy Probes, 27+ Vitrectomy Packs and Instrumentation, and the Finesse Flex Loop. The technologies are designed to help surgeons deliver a higher level of precision and efficiency during vitreoretinal surgery. Vitreoretinal surgery is the surgical removal of the vitreous gel from the middle of the eye. The procedure allows ophthalmic surgeons to better access the back of the eye when treating retinal diseases.

In July, the company got out in front of technology that promises to transform the future of eye care.  The company entered into an agreement with a division of Google Inc. to in-license its “smart lens” technology for all ocular medical uses. The agreement with Google[x], a team within Google that is devoted to finding new solutions to big global problems, provides Alcon with the opportunity to develop and commercialize smart lens technology with the potential to transform eye care and further enhance Alcon’s pipeline and global leadership in contact lenses and intraocular lenses.

The agreement between Google and Alcon represents an important step for Novartis, across all of its divisions, to leverage technology to manage human diseases and conditions. Google’s key advances in the miniaturization of electronics complement Novartis’s pharmaceuticals and medical device expertise. Novartis aims to enhance the ways in which diseases are mapped within the body and ultimately prevented.

“We are looking forward to working with Google to bring together their advanced technology and our extensive knowledge of biology to meet unmet medical needs,” said Novartis CEO Joseph Jimenez. “This is a key step for us to go beyond the confines of traditional disease management, starting with the eye.”

“Our dream is to use the latest technology in the miniaturization of electronics to help improve the quality of life for millions of people,” said Sergey Brin, co-founder of Google. “We are very excited to work with Novartis to make this dream come true.”

Under the agreement, Google[x] and Alcon will collaborate to develop a smart lens that has the potential to address ocular conditions. The smart lens technology involves non-invasive sensors, microchips and other miniaturized electronics that are embedded within contact lenses. Novartis’ interest in this technology currently is focused in two areas. This first is to help diabetic patients manage their disease by providing a continuous, minimally invasive measurement of the body’s glucose levels via a “smart contact lens,” which is designed to measure tear fluid in the eye and connects wirelessly with a mobile device.

The second area is for people living with presbyopia who can no longer read without glasses, the smart lens has the potential to provide accommodative vision correction to help restore the eye’s natural autofocus on near objects in the form of an accommodative contact lens or intraocular lens as part of the refractive cataract treatment.  The agreement marries Google’s expertise in miniaturized electronics, low-power chip design and microfabrication with Alcon’s expertise in physiology and visual performance of the eye, clinical development and evaluation, as well as commercialization of contact and intraocular lenses. Through the collaboration, Alcon seeks to accelerate product innovation based on Google’s smart lens technology.

“Alcon and Google have a deep and common passion for innovation,” said George. “By combining Alcon’s leadership in eye care and expertise in contact lenses and intraocular lenses with Google’s innovative smart lens technology and groundbreaking speed in research, we aim to unlock a new frontier to jointly address the unmet medical needs of millions of eye care patients around the world.”

Expansion in Asia

In April last year, Alcon opened the doors to a new state-of-the-art ophthalmic pharmaceutical manufacturing facility in Singapore. The new facility allows Alcon to be closer and quickly respond to its growing base of customers and patients throughout Asia.

Construction of the 330,000-square-foot facility began in 2009. The plant produces ophthalmic pharmaceutical products which address eye conditions such as glaucoma, dry eye, allergies and bacterial infections.

Alcon already has experience in operating a manufacturing plant in Singapore. In 2005, the company opened a contact lens manufacturing facility in the Tuas Biomedical Park, to meet the growing demand for Dailies contact lenses. Singapore has proven to be an attractive manufacturing environment for Alcon.

Through a comprehensive quality management system, Alcon is able to test and monitor all manufacturing processes, and all of its products pass rigorous inspections prior to shipment. At its startup, the facility employed approximately 150 associates, and is expected to continue to grow as production increases.

”

26. Alcon

$3.2 Billion ($7.2B total)

KEY EXECUTIVES:

Kevin J. Buehler, President & CEO

Robert Karsunky , Sr. VP, Finance & Chief Financial Officer

William K. Barton, Sr. VP, International Markets

Dr. Sabri Markabi, Sr. VP, Research & Development andChief Medical Officer

Ed McGough, Sr. VP, Global Manufacturing &Technical Operations

NO. OF EMPLOYEES: 22,000 (total)

GLOBAL HEADQUARTERS: Hünenburg, Switzerland

Without a doubt, 2010’s biggest news for Alcon was its blockbuster purchase by the Novartis Group—with a final deal announced late in the 2010 fiscal year—for $12.9 billion. With the buyout finalized in 2011, Alcon became the second-largest unit of the $50 billion drug-making giant. The new Alcon division of Novartis is headquartered in Fort Worth, Texas. Alcon separates its product offerings into surgical devices, pharmaceutical and vision care.

The takeover of Alcon happened gradually over the course of the past few years. The drug maker bought into Alcon in three main stages, first purchasing $10.4 billion worth of Alcon shares from multinational food conglomerate Nestlé for $143 a piece in 2008. The company took its largest step in August 2010 by acquiring majority control from Nestlé for $28.3 billion—bringing an end to 30 years of corporate ties. Altogether, the cost for Novartis came to $51.6 billion, including a cash supplement of up to $900 million.

“The growth synergies here are significant,” Joseph Jimenez, CEO of Novartis, said in December. Novartis is eyeing (pun intended) opportunity in emerging markets and the aging population of the developed world.

According to Kevin Buehler, president and CEO of Alcon (who now leads the division for Novartis), “This merger will create a stronger eye-care business with broader commercial reach and enhanced capabilities to develop innovative eye-care products that fulfill unmet clinical needs in eye care.”

For 2010 (fiscal year ended Dec. 31), Alcon reported global sales of $7.18 billion, an increase of 10.5 percent compared with 2009. The organic sales growth rate was 8.6 percent. Net earnings for 2010 rose 10.1 percent to $2.21 billion. Sales in the United States rose 9 percent to $3.18 billion, largely based on the sale of intraocular lenses. International revenue grew 11.6 percent to $4 billion, thanks to rapid growth in emerging markets and strong sales of pharmaceutical products.

On the device side, global surgical sales rose 5.5 percent on an organic basis and 7.4 percent reported to $3.22 billion. Sales of advanced technology intraocular lenses increased 21.4 percent and refractive products rose 11.4 percent based on surgeon adoption of the WaveLight refractive laser product line, according to the company.

“2010 was an extremely successful year for Alcon,” said Buehler. “We emerged from the challenging economic environment that began in late 2008 to achieve another year of solid operational performance driven by global market share gains, strong organic growth and margin improvement.”

Though an acquisition target itself, Alcon also exercised its purchase power with the buyout of LenSx Lasers Inc., a privately held company based in Aliso Viejo, Calif., that developed the first femtosecond laser to receive U.S. Food and Drug Administration clearance for use as a part of cataract surgery. The LenSx system is indicated for anterior capsulotomy and laser phacofragmentation during cataract surgery, providing a complementary surgical approach to certain manual steps within the traditional cataract procedure. The deal, announced in July, was worth $361.5 million in cash, plus maximum contingent payments of $382.5 million based upon the development of a future femtosecond unit and procedure fee revenue milestones.

The LenSx laser platform enables surgeons to perform some of the delicate manual steps of cataract surgery with image-guided visualization and micron level laser precision, according to the firm.

“The LenSx femtosecond laser has been designed to advance the precision and reproducibility of key manual portions of the cataract procedure, something we have seen lasers do repeatedly in other ophthalmic procedures,” said Stephen Slade, M.D., of Slade and Baker Vision, Houston, Texas, who performed the initial series of LenSx laser procedures in the United States.

Cataracts are the world’s leading cause of treatable blindness and cataract surgery is the most frequently performed ophthalmic procedure globally. A cataract cannot be prevented and is a “clouding” of the eye’s natural lens, which results in blurred or defocused vision. Cataract surgery is a simple operation where a surgeon removes the eye’s clouded natural lens and replaces it with an artificial intraocular lens. Femtosecond lasers have been used for more than 3 million laser-assisted in-situ keratomileusis (commonly known as LASIK) refractive surgical procedures. The LenSx laser system brings laser technology to cataract surgery for the first time, according to Alcon.

On the new product front, Alcon launched its AcrySof IQ ReSTOR Multifocal Toric intraocular lens (IOL) outside the United States. This new lens is built on Alcon’s AcrySof platform and is designed to provide cataract patients that have astigmatism a surgical option that delivers quality vision at all distances with limited reliance on glasses. Alcon completed its CE Mark in Europe for the system during the second quarter of 2010. The company plans to file a pre-market application for the lens with the FDA in early 2012.

“

$3 Billion ($6.5B total)
NO. OF EMPLOYEES: 14,664

In more financially stable times, a sales growth rate of 3 percent probably would be scoffed at. But with spending down and manufacturing costs climbing, that kind of growth no longer seems so objectionable.
Indeed, executives at Alcon deemed the company’s 3.3 percent growth rate in 2009 (year ended Dec. 31) “especially impressive” in light of the economic downturn that seemed to impact healthcare companies more last year than in 2008. Overall sales totaled $6.5 billion, while gross profit rose 1.3 percent to $4.8 billion and operating income increased 2 percent to $2.2 billion. Net income fell 2 percent to $2 billion, or $6.66 per diluted share, as a $236 million tax benefit recorded in 2008 evaporated in 2009. The drop in net income also was affected by $19 million in pretax restructuring charges and a $30 million tax reserve related to prior years, executives said.

Surgical product revenue, which accounts for 46 percent of the company’s total sales, recorded the highest growth rate among the firm’s three business divisions. Consumer eye care product sales tumbled 3.1 percent, while pharmaceutical revenue, surprisingly, increased 4.5 percent.

Sales of surgical products jumped 7.1 percent to $3 billion, with one-third of that revenue ($1 billion) coming from worldwide sales of the AcrySof family of intraocular lenses. The two newest additions to this family—the AcrySof IQ ReSTOR +3.0 and AcrySof IQ Toric intraocular lenses—contributed significantly to the growth, adding $259 million to Alcon’s bottom line. In 2009, the AcrySof IQ ReSTOR +3.0 lens captured the top market share in the United States for presbyopia-correcting intraocular lenses, gaining 12.5 share points to end the year with 57.5 percent of the market.

Cataract and vitreoretinal equipment, surgical devices and disposable products provided a broad-based source of growth for the company’s surgical product business, according to executives. Sales of these products generated nearly $1.8 billion, a 6.8 percent increase compared with 2008.

Alcon invested heavily in its future last year, pouring $665 million into research and development (a 7.4 percent increase compared with 2008) and partnering with several companies to foster new product development. A key strategic move for the firm took place in September with the acquisition of ESBATech AG, a Swiss biotechnology company that is developing antibody fragment therapy for the treatment of eye disease. Alcon executives claim the deal will strengthen the company’s leadership position in ophthalmology.

Perhaps the most defining deal of the year, however, was Novartis AG’s purchase of a 52 percent stake in Alcon that currently is owned by Nestle S.A. The Swiss pharmaceutical giant already owns a quarter of Alcon through a previous agreement with Nestlé and is exercising its option to purchase the remaining shares (for $180 each) in order to gain full control of the eye care company.

Novartis’ path to full ownership, though, is fraught with hurdles. In January (2010), the company offered to buy the remaining 23 percent stake held by minority stockholders for $153 per share, a price that is substantially less than the value of Nestle’s shares. Novartis has since dropped its offer to stockholders to about $138 per share, which has ignited a standoff between both sides: Alcon’s independent director committee has continually expressed its opposition to the deal and Novartis has been uncompromising about the offer.

Assuming full ownership of Alcon is crucial for Novartis, analysts have said, because it would give the company the ability to run the business on its own. Holding a 77 percent stake in Alcon would require Novartis to report to minority shareholders and subject the pharmaceutical giant to constant scrutiny from the independent board of directors.

$2.9 Billion ($6.3B total)
NO. OF EMPLOYEES: 15,000

The United Nations has estimated that the global population 65 years of age or older will more than double by 2030. Although the consumption of eye care products spans all demographic categories, the World Health Organization estimates about 75 percent of eye disease is associated with aging. As medical technology expands and the global standard of living continues to rise, people not only will live longer, but they also will require greater access to high-quality medical care. On the basis of such positive demographics, Alcon executives believe global demand for eye care products will remain robust for the foreseeable future.

Alcon’s products fall into three categories—surgical products (mostly medical devices), pharmaceuticals, and consumer products (such as contact lens solutions). Total company sales were $6.3 billion compared to $5.6 billion. Total company net earnings for the year were $2 billion, up from $1.6 billion in 2007. Surgical product revenue—46 percent of total company sales—was $2.9 billion for fiscal 2008, up from $2.5 billion in 2007.

Alcon—a division of Nestlé (based in Vevey, Switzerland)—has derived much of its success through growth of a broad global infrastructure. According to the company, which has its U.S. headquarters in Fort Worth, Texas, the benefits of this global reach were clearly demonstrated in 2008 with international markets contributing more than 55 percent of international sales. International sales grew 19.1 percent to $3.5 billion, led by strong product performance and a favorable foreign exchange environment. While all of the company’s international markets performed well, emerging markets grew 21.5 percent and account for 18.3 percent of global sales.

Company officials said “challenging economic conditions” in the United States had a negative effect on market growth in its pharmaceutical sales, which partially offset solid surgical and consumer sales growth and led to a 5 percent increase in U.S. sales to $2.8 billion. During 2008, Alcon’s surgical product line, which accounts for 46 percent of global sales, expanded its market share leadership in cataract and vitreoretinal surgery and made gains in refractive surgery. Globally, according to the company, more than 60 percent of micro-incision cataract surgeries were performed with Alcon equipment, including the Infiniti phacoemulsification system. During 2008, Alcon launched the Laureate world phaco system for cataract surgery. According to the company, the device is a response to healthcare cost reduction demands and access needs of emerging markets. Alcon also rolled out the Constellation vitreoretinal system to replace its Accurus surgical device, which has been a market leader for almost 10 years. Company officials claim that the Constellation increases the safety and efficiency of the complex surgeries that are performed on the retina and in the back of the eye. In addition, company officials reported making “excellent progress” in the integration of a majority interest in Germany-based WaveLight AG (Alcon completed the purchase of majority control of the company in May this year) and its Allegretto refractive laser for LASIK procedures (though the market for LASIK procedures has declined sharply due to the economy).

Though most of the company’s surgical product line has been built on equipment platforms, the majority of sales come from single-use products, the most important being intraocular lenses (IOLs; an implanted lens in the eye, usually replacing the existing crystalline lens because it has been clouded over by a cataract). Alcon’s AcrySof family of lenses topped $1 billion in sales for the first time in fiscal 2008. The company reported strong sales of intraocular lenses, including the AcrySof ReSTOR and AcrySof Toric intraocular lenses, which correct for presbyopia and astigmatism. Together, sales of these lenses increased 46 percent and accounted for almost 20 percent of IOL dollar sales.

In December, Alcon received U.S. Food and Drug Administration approval of the AcrySof ReSTOR Aspheric, +3.0 add lens, for presbyopia correction. The company claims the new lens significantly improves the range of quality vision for presbyopic cataract patients.

According to Alcon, the company holds the No. 1 market share in cataract and vitreoretinal surgical products and the No. 2 position in refractive surgery.

None of the company’s product breakthroughs would be possible without a well-funded research and development pipeline. A total of 33 percent of the company’s $619 million (up from $564 million in 2007, a 6.9 percent increase) research and development (R&D) expenditure was in the surgical products sector. Pharmaceuticals took the greatest share with 62 percent. The company plans to invest more than $3 billion in R&D in the next five years.

To respond to demand for advances in cataract surgical products, Alcon broke ground on the expansion of its manufacturing center in Huntington, W.Va. The site is the world’s largest intraocular lens manufacturing facility. The new addition is a 74,000-square-foot building that is expected to be operational by 2011.

Though the medical device side of the business has remained strong, the pharmaceutical portion of the company has been the cause of significant corporate machinations. Alcon experienced a significant shareholder change in 2008, with the agreement between global pharmaceutical giant Novartis AG, based in Basel, Switzerland, and the company’s majority owner, Nestlé. The agreement provides for the potential sale of Nestlé’s stake in Alcon to Novartis in a two-step transaction. Under the agreement, Novartis acquired slightly less than 25 percent of Alcon’s shares in July 2008 for $11 billion, and has the option to acquire Nestlé’s remaining 52 percent beginning January 1, 2010, and extending through July 31, 2011.

However, since the deal was announced, Alcon’s share price has dropped approximately 25 percent (from about $150 to roughly $112 as of press time).

This leaves Novartis with few options. It can exercise an option to buy Nestlé’s stake for $181 a share. Or Nestlé can exercise its option to sell its stake to Novartis at a premium of 20 percent to the market price—assuming today’s prices hold, that would mean Novartis would pay around $136 a share, which is the option Novartis officials would prefer. Both options run for 19 months, starting Jan. 1 next year.

According to industry analysts, Alcon’s shares most likely will recover its year-ago levels, given uncertainties over whether several drugs can keep their patent protection. Two drugs’ patents have been challenged, and a third drug is expected to lose its patent in 2013 or 2014. Those looming patent expirations and the need to replenish Alcon’s pipeline were among the reasons why Nestlé decided to sell the business to a drug maker with developmental expertise.

Alcon also recently experienced a management change. In March of this year, Cary Rayment stepped down as chairman, president and CEO, a post he held for nearly five years. Kevin Buehler, a 24-year Alcon veteran, became president and CEO on April 1. Buehler most recently managed the company’s global marketing and sales operations as senior vice president, global markets, and chief marketing officer.

“$2.5 Billion ($5.6B total)

KEY EXECUTIVES:

Cary Rayment, Chairman, President and CEO
Richard J. Croarkin, Sr. VP and CFO
Kevin Buehler, Sr. VP, Global Markets and Chief Marketing Officer
Gerald D. Cagle, PhD, VP of R&D and Chief Scientific Officer
Ed McGough, Global Manufacturing and Technical Operations

NO. OF EMPLOYEES:

14,500

GLOBAL HEADQUARTERS:

Hünenberg, Switzerland

The eyes, like sentinels, hold the highest place in the body, said philosopher Marcus Tullius Cicero. Given such a sentiment, it’s no wonder that Alcon’s success continues to impressively grow with each passing year. The ophthalmic giant, immersed in both pharmaceutical and medical devices used in eye care, has a stronghold in markets for drugs, surgical equipment/devices and consumer products.

In 2007, Alcon—a division of Nestle—increased sales 14.4% from $4.9 billion in 2006 to $5.6 billion. The company’s sales are well balanced in the United States (47.7% of total revenues), where an 8% increase led to sales of nearly $2.7 billion, and abroad, where sales were especially healthy at $2.9 billion, a 20.3% increase. The company’s focus on emerging markets, which represented 15.5% of global sales, grew faster than developed markets—proving the company’s focus on these regions most likely will prove fruitful in years to come.

Another double-digit gain was seen in net earnings, which were $1.59 billion, or 17.7% growth from $1.35 billion in 2006.

Looking at the company’s portfolio of medical devices, the surgical products division remained strong in 2007, with sales increasing 13.4% to $2.5 billion. (A five-year compound annual growth analysis shows the rate has increased 11.7%.)

Sales of Alcon’s intraocular lenses totaled $919.4 million, a 15.7% gain from 2006 sales. Within this category, AcrySof IQ lens, the company’s bestselling lens, had sales growth of more than 70%; Alcon attributes the gain to physicians preferring to use aspheric optics for patients who receive monofocal lenses. Premium intraocular lenses also grew 31.4% to $136.8 million. These sales were bolstered by the July 2007 rollout of AcrySof ReSTOR Aspheric in the United States as well as a strong showing for AcrySof Toric. The latter brand benefited from approval that year by the US Centers for Medicare and Medicaid Services for dual-aspect reimbursement for toric intraocular lenses.

Sales of cataract and vitreoretinal equipment, devices and disposable products were $1.5 billion, representing a 12% increase compared with 2006. Interest in Alcon’s OZil torsional hand piece created strong demand for the Infiniti vision system (OZil is only available for use with Infiniti), whose unit sales were 18% higher in 2007. Another driver was the newly launched Laureate compact phacoemulsification system with accessories that help decrease the cost of cataract removal. Sales of viscoelastics devices—used to protect tissues and cells inside the eye during cataract surgery—also were solid with a 13.4% increase, greatly aided by Alcon’s newest product offering, DisCoVisc. Finally, sales of vitreoretinal products increased 14.3%.

Alcon’s refractive laser product line was the company’s loser for the year. Sales were a disappointing $52 million, a 0.2% decline compared with 2006, due to consistent declines in procedural revenues, market share losses and the removal of Alcon’s LADAR6000 excimer lasers from the market. However, in November, Alcon purchased the majority of assets for WaveLight AG, giving it access to WaveLight’s Allegretto Wave 200Hz excimer laser system and the Allegretto Wave Eye-Q 400 Hz system (which Alcon said is the fastest laser in the US market). By the end of the year, sales from WaveLight for November and December added $15.1 million to Alcon’s bottom line.

Consumer products, some of which are used with Alcon’s myriad contact lens offerings, achieved sales growth of 14% to $786 million. The majority of this gain was attributed to sales of contact lens disinfectants (sold under brand names such as Opti-Free), which grew 18.8% to $440.2 million. Artificial tear products also grew 16.4% to $233.2 million.

In terms of pharmaceutical products, which accounted for just over 41% of Alcon’s total sales in 2007, revenues were $2.3 billion, a 15% increase from 2006. Most of these sales came from glaucoma therapies.

One reason for the company’s continued success has been its investments in R&D. In 2007, spending in this area increased 10.2% to $564.3 million. In the intraocular lens segment, by the end of the year Alcon had fully enrolled a clinical study of the AcrySof ReSTOR Aspheric +3.0, designed for greater functional working distance for reading and to improve immediate vision, and it has been continuing its study of AcrySof Phakic lens for patients with extreme myopia.

For the first quarter of 2008, Alcon reported global sales of $1.5 billion, with surgical sales rising more than 20% to $679.9 million. In April, Alcon’s parent company, Nestle, agreed to sell 74 million of its Alcon shares of common stock to pharmaceutical heavyweight Novartis for $143.18 per share. Once completed, Novartis will own approximately 25% of Alcon, with the option to purchase another 52%.”

$2.2 Billion ($4.9B Total)
No. of Employees: 13,000

Alcon may be majority owned by Nestle, but you won’t find a chocolate bar or bag of Purina Dog Chow in sight—though sight is the key word we’re looking for. Alcon is a manufacturer of ophthalmic surgical devices and pharmaceutical products, in addition to a consumer vision care line of solutions and eye drops.

Based in Hünenberg, Switzerland—with US operations in Fort Worth, TX, where it originally was founded—the company had a strong year with particularly rosy profit picture.

Alcon reported sales of $4.9 billion for fiscal 2006, compared to $4.5 billion in 2005. Net earnings jumped significantly to $1.4 billion, compared to $931 million for fiscal 2005, a 50% increase. Sales in 2006 were balanced with a near-even split between sales generated in the United States and in international markets, the company said. While all major regions contributed to growth, emerging markets were the fastest growing part of Alcon’s business, growing 21%. Emerging markets now account for 14.6% of its sales, and the company said markets such as China, India, Russia and Latin America retain significant potential for future growth. Developed markets, which represented 85.4% of Alcon sales in 2006, grew at a combined rate of 10.7%.

Though growing 9.3% for 2006, the company’s surgical division lagged behind its pharmaceutical (13.5%) and consumer vision care (17.4%) counterparts as sources of overall sales expansion for the year. Surgical sales increased to $2.2 billion in 2006, representing faster growth (by about two times) than the overall market. According to Alcon, the average annual growth rate for its surgical product line has been 10.2% during the last five years.

The company said its strategy for the surgical group is to offer a complete line of products for all aspects of cataract, vitreoretinal and refractive surgery, allowing it to meet most of an eye surgeon’s needs. In particular, Alcon’s AcrySof series of intraocular lenses for cataract surgery experienced sales growth of 16.2%. Sales of the AcrySof IQ lens jumped 163.2%, while sales of the multifocal AcrySof ReSTOR lens increased 88.5% to $102.2 million—though the company noted sales growth softened during the year as the US market for presbyopic-correcting lenses flattened. Alcon maintains that vitreoretinal products represent an area of consistent long-term growth and that it is the market leader in products for surgery on the back of the eye.

In July last year, Alcon reached a settlement with Santa Ana, CA-based Advanced Medical Optics (AMO). The settlement brought an end to all pending lawsuits, including an AMO initiated case concerning Alcon’s Infiniti vision system and the Advantec and Everest software upgrades for its Legacy brand surgical system, as well as three suits filed by Alcon against AMO concerning AMO’s Sovereign, Sovereign Compact and Prestige surgical systems in addition to various viscoelastic products. Resolution of the legal activities also allowed both parties to continue marketing their current phacoemulsification product lines on a royalty-free basis and contained provisions designed to reduce the likelihood of patent disputes on future product offerings. Alcon paid AMO $121 million.

“This comprehensive settlement resolves numerous complex patent issues involving our two companies,” said Cary Rayment, Alcon’s chairman, president and CEO, following the settlement. “Alcon will continue to market all existing phacoemulsification platforms while focusing our development efforts on technological advancements that will continue to revolutionize cataract surgery.”

So far, for fiscal 2007, Alcon reported surgical sales rose 10.6% to $581 million for the first quarter (ended March 31). Overall, company sales increased 14.3% to $1.3 billion, with earnings increasing 17% to $346 million.

$2 Billion ($41.3B Total)
No. of Employees: 12,700

Alcon, a subsidiary of Nestlé Company since 1977, boasts one of the most comprehensive product portfolios for the ophthalmic surgical industry, manufacturing and marketing products for virtually all ocular surgical procedures. As such, fueled largely by new product introductions and global expansion, 2005 sales of Alcon’s surgical product line reached $2 billion, an increase of 11% over $1.8 billion in 2004.

Alcon’s surgical division is comprised of three product lines: cataract, vitreoretinal and refractive.

The most prominent of Alcon’s accomplishments in 2005 was the introduction of the AcrySof ReSTOR lens. Approved by the FDA in March that year, the product is the only apodized diffractive intraocular lens for cataract patients with and without presbyopia, providing patients with a full range of vision and greatly reducing their reliance on glasses. With clinical studies showing that 80% of patients did not require glasses after surgery, lens sales accelerated quickly in the United States, contributing to overall global sales of $54 million in 2005. Moreover, the US Centers for Medicare and Medicaid Services also offered patients the right to select this technology for cataract surgery, if needed.

Sales of cataract and vitreoretina equipment, procedure packs, solutions and accessories were beneficial to the company as well, growing 10% to $1.3 million in 2005; cataract equipment sales alone increased 26% on record sales of the company’s Infiniti vision system. Sales of vitreoretinal surgical equipment also jumped 21%, while sales of related disposables were up 19%.

Additionally, Alcon introduced the OZil torsional handpiece for use with the Infiniti system.

During 2005, Alcon invested $422 million in new product development.

Although approximately 85% of Alcon’s sales presently come from developed markets, sales in emerging markets grew more than twice as fast during 2005. Alcon has answered that calling by expanding its global infrastructure developed over the past 45 years to delve into new markets.

“Over the next 25 years, the number of people over the age of 65 in less developed countries will more than double to over one billion,” said Cary Rayment, Alcon president, chairman and CEO. “These will be people who are most at risk for the majority of serious eye diseases, and Alcon intends to provide them with the best drugs and devices to preserve, restore and enhance their vision.”

The big picture shows that not all segments performed equally well for Alcon. Due to decreases in global equipment sales and procedure fees, revenues for refractive surgical products declined 11% to $56.2 million and slightly offset the gains made in cataract and vitreoretinal segments.

Another conern is Alcon’s involvement in a patent infringement lawsuit, filed by Advanced Medical Optics (AMO), challenging certain features of the Inifiniti vision system. A December ruling favored AMO and set damages at $213.9 million. This year, the court also awarded AMO interim damages, prejudgment interest and reasonable attorney’s fees and costs. Alcon, however, is appealing the decision. Due to the court’s final judgment, Alcon recorded a fourth-quarter provision of $240 million related to the litigation.

An unfortunate calamity developed after fires and explosions at an oil depot in Hemel Hempstead, England damaged Alcon’s nearby office building and warehouse, as well as equipment and inventories housed in those facilities. The company had to shell out $8.7 million for repairs.

Some personnel changes have been occurring in Alcon as well. Alcon’s management structure was shook up last year with the election of Cary Rayment, the company’s CEO since October 2004, to chair the board of directors, replacing retiree Timothy R. G. Sear.

In December 2005, Wolfgang Reichenberger, director of Alcon since the company’s initial public offering in 2002, stepped down from his post.

This year looks promising for Alcon as first-quarter 2006 global sales were $1.2 million, an increase of 8% over last year. The United States contributed half of total sales and grew 11% to $577 million.

Surgical sales were up 8% as well, accounting for 45% of total sales, and intraocular lenses increased 19%, primarily driven by the success with AcrySof ReSTOR intraocular lenses—especially in the United States, where the product was not available in the first quarter of 2005. Global sales of AcrySof ReSTOR lenses in the first quarter of 2006 were a huge victory, having jumped nearly $20 million to $23.3 million (compared to $3.2 million in the first quarter of 2005). Vitreoretinal surgical products, including equipment and disposables, continued to grow faster than the market as well.

“Our strong sales and profit results for the first quarter were consistent with our expectations and reflected the continued success of our brand building across many product lines and gross margin improvement due to favorable mix shift,” Rayment said. “The breadth of our product line as well as global new product introductions are integral to our consistent performance and will be important contributors to our performance in the future.”