07.27.10
25. Alcon
$3 Billion ($6.5B total)
KEY EXECUTIVES:
Kevin J. Buehler, President and CEO
Richard J. Croarkin, Sr. VP, Finance, Chief Financial Officer and Corporate Strategy Officer
William K. Barton, Sr. VP, International Markets
Dr. Sabri Markabi, Sr. VP, Research & Development and Chief Medical Officer
Ed McGough, Sr. VP, Global Manufacturing and Technical Operations
Elaine E. Whitbeck, Sr. VP, Chief Legal Officer/General Counsel and Corporate Secretary
NO. OF EMPLOYEES: 14,664
GLOBAL HEADQUARTERS: Hünenburg, Switzerland
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.
$3 Billion ($6.5B total)
KEY EXECUTIVES:
Kevin J. Buehler, President and CEO
Richard J. Croarkin, Sr. VP, Finance, Chief Financial Officer and Corporate Strategy Officer
William K. Barton, Sr. VP, International Markets
Dr. Sabri Markabi, Sr. VP, Research & Development and Chief Medical Officer
Ed McGough, Sr. VP, Global Manufacturing and Technical Operations
Elaine E. Whitbeck, Sr. VP, Chief Legal Officer/General Counsel and Corporate Secretary
NO. OF EMPLOYEES: 14,664
GLOBAL HEADQUARTERS: Hünenburg, Switzerland
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.