07.24.12
16. Novartis (Alcon)
$5.3 Billion ($58.6B total)
KEY EXECUTIVES:
Joseph Jimenez, CEO, Novartis
Kevin Buehler, Division Head, Alcon
Ed McGough, Sr. VP, Global Manufacturing & Technical Operations, Alcon
Dr. Sabri Markabi, Sr. VP, Research & Development and Chief Medical Officer, Alcon
Erwin Vanhaecke, Ph.D., Sr. VP, Global Quality Operations, Alcon
Stephen Wilson, VP of Global Compliance, Alcon
NO. OF EMPLOYEES: 22,987
GLOBAL HEADQUARTERS: Basel, Switzerland
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.
$5.3 Billion ($58.6B total)
KEY EXECUTIVES:
Joseph Jimenez, CEO, Novartis
Kevin Buehler, Division Head, Alcon
Ed McGough, Sr. VP, Global Manufacturing & Technical Operations, Alcon
Dr. Sabri Markabi, Sr. VP, Research & Development and Chief Medical Officer, Alcon
Erwin Vanhaecke, Ph.D., Sr. VP, Global Quality Operations, Alcon
Stephen Wilson, VP of Global Compliance, Alcon
NO. OF EMPLOYEES: 22,987
GLOBAL HEADQUARTERS: Basel, Switzerland
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.
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