$5.69 Billion ($57.9 B total)
No. of Employees: 25,500 (135,000 total)

Here’s a startling fact. About 800 million people worldwide live with some form of visual impairment, and nearly 40 million of them are blind. Yet at least 90 percent of vision problems or blindness can be prevented, treated or cured—if people have access to treatment.

Cataracts cause more than half of all cases of blindness and about one-third of all visual impairment today. A clouding of the lens inside the eye, cataracts are a natural part of growing older and predominantly affect people over the age of 55, according to the National Institutes of Health. Cataracts sufferers compare vision to seeing life through a cloudy window—objects are often blurred and colors may be dull. In addition, seeing at night can be more difficult.

The World Health Organization estimates that by the year 2020 more than 32 million cataract procedures will be carried out worldwide each year.

Officials at Alcon, the eye care division of Basel, Switzerland-based pharmaceutical giant Novartis, view these numbers as not just market opportunity but as an imperative.

“We’re looking for areas of big unmet patient need where genuine technological innovation can make a real difference in their lives,” said Kevin Buehler, Division Head of Alcon. “Our mission is to provide products that enhance quality of life by helping people see better.” Buehler retired from the company in 2014 after a 30-year career at Alcon. He was replaced by Jeff George who previously had been a division head at the Sandoz division of Novartis.

During surgery, an ophthalmic surgeon removes the clouded lens of the eye and replaces it with an artificial intraocular lens. It’s a common, safe and cost-effective procedure. But there remains room for improvement.

Such improvement comes through consistent new product development efforts through a combination of iterative and revolutionary strides in innovation.

During fiscal 2013 (ended Dec. 31) Alcon introduced a cataract refractive suite—launched in Europe and the United States—designed to improve a surgeon’s ability to provide patients with the sharpest possible vision by increasing precision at each step of the procedure.

The goal of the system, called the Cataract Refractive Suite, is to allow surgeons to better plan for and perform some of the most challenging steps of cataract surgery with automation and precision, while helping to meet the current unmet need of improving the refractive outcomes of cataract patients.

“Although cataract surgery is one of the most effective health interventions, resulting in more than 95 percent of the patients undergoing the procedure experiencing improved vision, a substantial number of patients experience visual acuity that is less than optimal,” said Paul Soye, global head of research and development for Alcon’s cataract franchise. “By launching our new Cataract Refractive Suite, Alcon is delivering the industry’s most advanced technologies designed to work together in the operating room, enabling eye surgeons the opportunity to provide significantly better refractive outcomes.”

The suite of four technologies starts with improved surgical planning using pre-operative diagnostic information and goes through improved execution of the cataract procedure steps.

The new Verion image-guided system, composed of the Verion reference and digital marker systems, is an advanced surgical planning, imaging and guidance technology designed to provide greater accuracy and efficiency during cataract surgery. It allows eye surgeons to capture a high-resolution, diagnostic reference image of the patient’s eye pre-operatively, quickly determine an optimized surgical plan that enables surgeons to see all incisions and alignment in real-time, and integrate the surgical plan into the operating room using a tracking overlay.

The LenSx Laser with SoftFit patient interface allows eye surgeons to use the precision of a femtosecond laser to perform the most challenging manual steps of cataract surgery through an image-guided, reproducible laser treatment. This includes lens fragmentation, corneal incisions, and creating an opening within the eye so that the surgeon can access and remove the cloudy, natural lens (called a capsulotomy).

The company’s new Centurion vision system—introduced in the fall of 2013—improves Alcon’s existing phacoemulsification technology, offering eye surgeons capabilities for cataract surgical removal and lens replacement. The system automatically and continuously adapts to changing conditions within the eye, provides anterior chamber stability during each step of the procedure, and places optimized energy technology into the surgeon’s hand piece.

Alcon’s LuxOR surgical microscopes are used to provide visualization during cataract surgery by delivering greater depth of focus and improved red reflex stability and integrates the Verion image-guided system to provide overlays of key information needed by the eye surgeon to optimize the surgical procedure.

In February, the company rolled out hardware and software upgrades for its Infiniti Vision System to provide surgeons greater control during cataract surgery. As part of the upgrades, Alcon is introducing the innovative Intrepid AutoSert IOL Injector, which enables automated delivery of the intraocular lens (IOL). According to many cataract surgeons, having surgical hardware that can enable automated IOL delivery is an important step in standardizing the consistency and control of cataract surgery.

The Numbers in Focus

For Alcon full year net sales were up 3 percent (up 5 constant currency) to $10.5 billion in 2013, driven by growth in all three franchises. Operating income of $1.2 billion was down 16 percent (2 percent constant currency); it was impacted by integration and restructuring charges, but partially offset by sales growth and productivity gains. Core operating income of $3.7 billion was in line with prior year in reported terms, but up 6 percent in constant currencies. Core operating income margin grew by 0.1 percentage points (in constant currency), as productivity gains were reinvested in key product launches.

The Surgical division—which makes surgical equipment, intraocular lenses, and surgical packs, among others—sold $3.9 billion, up 7 percent, and was the fastest-growing franchise, driven by growth in the installed equipment base, including the LenSx femtosecond laser and the newly launched Centurion vision system. Cataract procedure growth and market share gains in intraocular lenses also contributed to Surgical franchise performance.

The Ophthalmic Pharmaceuticals franchise recorded $4.1 billion in sales, up 5 percent in constant currency and experienced broad market share gains across key segments.

The Vision Care unit, maker of contact lenses and lens care solutions, grew sales by 4 percent to $2.5 billion—contact lens sales were $1.79 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.) Contact lens performance was driven by strong global growth of the AirOptix contact lens portfolio. Alcon’s Dailies portfolio also experienced continued growth, driven by a strong market response to Dailies Total1, with its continued success in Europe and launches in the United States and Canada. Growth in the contact lens business was partially offset by declines in the contact lens solutions market.

Forty percent of Alcon’s total sales were generated in the United States; 27 percent were from Europe and Asia/Africa/Australasia comprised 23 percent, while remaining 10 percent was from sales in Canada and Latin America. A total of 75 percent of sales were from established markets.

For Novartis overall, fiscal 2013 sales were $57.9 billion, up from $56.7 billion in 2012. Earnings per share were down slightly from $3.83 to $3.76 for FY13. Net income dropped from $9.38 billion to $9.29 billion.

$5.3 Billion ($58.6B total)
NO. OF EMPLOYEES: 22,987

Forgive the pun, but you might say that pharmaceutical giant Novartis saw the light with its purchase of eye product heavyweight Alcon.

Novartis began buying interest in Fort Worth, Texas-based Alcon from multinational food conglomerate Nestlé in 2008, but sealed the deal for total control in April 2011 to the tune of nearly $13 billion. Once the deal was sewed up, Alcon became Novartis’ second-largest division. It also was the company’s fastest-growing unit for the 2011 fiscal year, ended Dec. 31.

Alcon recorded net sales of $10 billion, a 10 percent increase on a pro forma basis, driven by strong global Ophthalmic Pharmaceuticals product growth of 12 percent, Surgical products growth of 11 percent, and by the top six emerging markets (led by China, South Korea and India), which grew 26 percent compared with 2010.

While 3.9 billion in Alcon’s sales are the result of the company’s Ophthalmic Pharmaceuticals segment, Alcon’s largest slice of revenues comes from device-related products such as contact lenses and surgical systems.

Global Surgical net sales were $3.6 billion, an increase of 11 percent over the previous year. Emerging markets grew strongly, while intraocular lens unit sales (IOL) in the United States showed slower growth versus 2010. Global sales of advanced technology intraocular lenses rose 16 percent, mostly due to strong sales of the AcrySof IQ Toric and AcrySof IQ ReSTOR+3.0 intraocular lenses, the company reported. The successful launch of the LenSx femtosecond refractive cataract laser, with more than 500 surgeons now trained to use the technology, expanded the cataract surgical market opportunities for the company. The Constellation vitreoretinal surgical system contributed strong sales growth within the vitreoretinal category. Strong growth in the refractive segment was driven both by sales of equipment and increased market share in the United States.

Global net sales of Vision Care products rose 5 percent in FY11 to $2.4 billion. Contact lens growth was driven by the continued strong performance of Air Optix, which according to Alcon leadership, leads the marketplace in the multifocal segment and achieved 18 percent growth compared with the previous year, and by strong growth of “Dailies” (disposable contact lenses for daily use) in the United States. Sales of contact lenses were impacted by the discontinuation of the firm’s specialty contact lens business as well as slower market growth in European countries. Contact lens solutions sales were led by strong growth of the Clear Care hydrogen peroxide solution, offset by weakness in the category for multi-purpose product sales.

Excluding pharmaceutical sales and contact lens solutions, Alcon’s device-related business totaled $5.3 billion for the fiscal year.

Executives at Novartis and Alcon often reference the synergies that made the marriage of the two companies a good match. But for Novartis, part of the appeal was the demographics and market potential fueling the ophthalmic sector.

“Several hundred million people around the world live with blindness or serious vision impairment,” Alcon Division Head Kevin Buehler said during a company leadership conference, “but 80 percent of all visual impairment can be prevented, treated or cured.”

Globally, uncorrected refractive errors are the main cause of visual impairment and cataracts remain the leading cause of blindness. About 90 percent of the world’s visually impaired live in developing countries, according to the World Health Organization. By 2020, the Institute of Eye Research estimates 2.5 billion people worldwide will be affected by myopia (nearsightedness) and 60 million people are expected to have open-angle glaucoma, the second-leading cause of blindness after cataracts. By Novartis estimates, ophthalmology is a $30 billion industry and growing about 5 percent per year.

“These numbers are staggering, and as an industry we have just started to address these clinical needs. As the leader in eye care, Alcon must strive for breakthrough innovations that bring relief to millions of patients,” Buehler added. “There is potential to accelerate growth and access to treatment in each of our businesses and in every region of the world.

We have a unique opportunity to build a division where one plus one translates into a number much bigger than two.”

Buehler said that while Alcon clearly has already benefitted Novartis’ bottom line, there’s still a lot his company can learn from its new parent.

“Productivity has not been a core strength at Alcon,” he acknowledged. “It is something that we hope to learn from Novartis. We obviously can benefit from procurement efficiency and also leveraging our manufacturing footprint.”

Novartis CEO Joseph Jimenez wrote in a letter to shareholders that the Alcon acquisition primarily was about long-term growth, not cost synergies.

“In eye care, just as with other Novartis segments, innovation is the key driver of success. The aging population and areas of significant unmet medical need make it likely that eye care will remain an industry with strong growth well into the future,” Jimenez wrote. “The Alcon Division adds another growth platform to Novartis, and we expect that, because of the complementary nature of Alcon and Novartis, the companies will grow faster together than they would have otherwise.”

Alcon plans to invest more than $5 billion in research and development (R&D) over the next five years, which the company claims is the largest corporate commitment to R&D in the eye care industry.

During 2011 Alcon introduced the LenSx Laser that delivers the accuracy of a femtosecond laser to refractive cataract surgery. The LenSx Laser is designed to predictably perform many of the most challenging aspects of traditional cataract surgery with highly reproducible computer precision, according to the company. Alcon bought LenSx Lasers Inc., a privately held company based in Aliso Viejo, Calif., for $361.5 million in cash in 2010.

For Novartis overall, net sales rose 16 percent to $58.6 billion, with a positive currency impact of 4 percent from the weakness of the U.S. dollar against most major currencies during much of 2011.

Recently launched product sales grew 38 percent compared with 2010 to $14.4 billion, in large part thanks to the addition of Alcon. Net income decreased 7 percent to $9.2 billion, more than the decline in operating income as a result of lower associated company income, and higher financing costs following the Alcon acquisition, partly offset by a lower tax rate 14.2 percent. Earnings per share declined 11 percent, more than the decline in net income, mainly as a result of the increase in issued shares following the Alcon merger.