$5.48 Billion ($56.6B total)
Joseph Jimenez, CEO, Novartis
Kevin Buehler, Division Head, Alcon
Robert Karsunky, Chief Financial Officer
Laurent Attias, Head, Global Commercial Strategy
Sabri Markabi, Chief Medical Officer and Sr. VP, Research & Development
Ed McGough, Sr. VP, Global Manufacturing and Technical Operations
Sue Whitfill, Head, Global Quality
Roy Acosta, Area President, Asia
Sergio Duplan, Area President, Latin America and Caribbean
Seiichiro Matsumura, Area President, Japan
Stuart Raetzman, Area President, Europe, Middle East and Africa
Robert Warner, Area President, U.S. and Canada
NO. OF EMPLOYEES: 23,874 (127,724 total)
GLOBAL HEADQUARTERS: Basel, Switzerland
Having worn glasses or contact lenses for most of his life, Brent Cannon knew his eyesight gradually would worsen as he plodded through middle age. But the Salt Lake City, Utah, firefighter and paramedic never expected his vision to deteriorate as rapidly as it did early last year.
“In the course of about six weeks I went from 20/20 vision with contact lenses to about 20/50,” he said. “A couple of weeks later I was suddenly down to 20/80. Reading the label of medications was virtually impossible. It finally reached the point that I told my crew I wouldn’t be back to work until I had my vision fixed.”
Cannon didn’t get much time off, though. Less than 24 hours after undergoing outpatient cataract surgery, his vision had returned to 20/20 and those troublesome small-print medication labels were clearly in focus again. “Immediately following surgery I was able to walk out of the clinic and see; the next morning I was 20/20,” the fire captain recalled. “Reading vision was there as well, and I [now] have peripheral vision and depth perception again.”
Cannon’s vision restoration was a relatively simple fix—his ophthalmologist swapped the afflicted organ’s natural lens for a biomechanical/biocompatible multifocal substitute manufactured by Alcon, a division of pharmaceutical giant Novartis International AG. Alcon considers itself a world leader in eye care, having developed phaco- emulsification (a procedure that uses an ultrasonic device to remove cataract-clouded lenses) and the AcrySof brand of foldable intraocular lenses, which have helped reduce both incision size and recovery times since their 1991 worldwide debut.
“Cataract surgery used to mean at least two weeks in the hospital. Because of the large incisions used to remove and replace the diseased lens, patients were required to lie in bed with their head immobile between two sandbags because surgeons were afraid of disturbing the wound,” noted Paul Soye, Ph.D., vice president and research and development head of Alcon’s Cataract Franchise. “Today it is an outpatient procedure. The actual surgery is relatively short, and in most cases, patients see with excellent vision within a couple of hours.”
Ophthalmologists performed roughly 19 million cataract surgeries worldwide in 2011, but World Health Organization officials expect that number to top 30 million by 2020 as the planet’s population ages, access to healthcare increases in developing countries, and technological advances enable patients to undergo cataract removal procedures at earlier stages of the disease.
Such prognostications bode well for Alcon, which generates about one-third of its annual revenue from ophthalmic surgical device sales. In 2012 (year ended Dec. 31), Surgical franchise proceeds comprised 36.7 percent of the division’s $10.2 billion jackpot—nearly identical to the previous year’s 36.02 percent share. Ophthalmic pharmaceutical products (ocular vitamins, eye/nasal allergy solutions, treatment options for glaucoma, vitreomacular adhesion, bacterial infections/bacterial conjunctivitis, inflammation and pain) constituted a slightly larger slice of the Alcon sales pie (39 percent), while contact lenses and solutions claimed the remaining 24 percent.
Despite its smaller wedge, however, Alcon’s Surgical unit outshined its Ophthalmic Pharmaceutical sibling last year by a considerable margin. Net sales rose 5 percent to $3.7 billion; the growth rate was more than double the 2 percent increase logged by the pharmaceutical franchise.
Executives attributed the Surgical unit’s growth to strong demand for Alcon’s AcrySof IQ Toric intraocular lenses, particularly in Europe, where the ReSTOR +2.5D Multifocal and ReSTOR +2.5D Multifocal Toric debuted last fall. The company claims it latest AcrySof handiwork provides sharp distance vision with an additional range of sight beyond a standard monofocal lens.
While the AcrySof devices failed to jumpstart overall cataract intraocular lens sales last year—they remained flat at $1.2 billion—they certainly contributed to overall cataract product revenue, which rose 3 percent to $2.9 billion, Novartis’s 2012 annual report indicates. Top growth drivers included the LenSx femtosecond refractive lasers (sales of those devices more than doubled last year) and the LenSx SoftFit Patient Interface, a proprietary soft contact lens technology that enables the natural curvature of the cornea to conform to a soft contact lens insert during cataract surgery. “[This] new interface is the most significant advancement for Alcon’s LenSx Laser platform since the introduction of the laser itself,” Houston, Texas-based cataract surgeon Stephen Slade, M.D., proclaimed upon the product’s U.S. debut last November.
That launch, though, was somewhat marred by a Dec. 3 warning letter from the U.S. Food and Drug Administration (FDA) accusing Alcon of marketing its LenSx laser without first gaining the proper regulatory clearance for software updates and other improvements. Regulators expressed concern over the company’s alleged failure to seek approval for such upgrades as better graphical user interface, and technical service routines performed outside of the surgical procedure. FDA officials also faulted the company for not submitting a plan to address manufacturing problems. The warning letter stemmed from a summertime inspection of the company’s Aliso Viejo, Calif., manufacturing plant.
Alcon executives resolved the warning letter fairly quickly—in mid-February (2013), a company spokesman claimed the FDA acknowledged the firm’s “corrective actions” addressed the agency’s concerns.
Other donors to Alcon’s cataract product sales growth were the eye-tracking and intraocular lens positioning devices the company gained in its November acquisition of German eye tracking system developer SensoMotoric Instruments GmbH as well as the surgical guidance and planning software it obtained from computer programming guru Athanassios Kontos and Jack Holladay, M.D., a clinical ophthalmology professor at Baylor College of Medicine in Houston.
Yet neither deal matched the bargain Alcon received with the purchase of Cumming, Ga.-based Endure Medical Systems last July. The microscope manufacturer’s LuxOR ophthalmic surgical microscope (with Illumin-i technology) is suitable for both cataract and vitreoretinal procedures; the addition allows Alcon to diversify its overall device portfolio and boost earnings in two product categories.
Despite its binary benefits, the Endure deal had little impact on Alcon’s bottom line last year. The 9 percent increase in vitreoretinal product revenue came mostly from overseas sales of Constellation Vision System equipment, Novartis’s annual report states.
Refractive products and “other” devices garnered the least proceeds for Alcon in 2012 but posted the highest growth rate (21 percent). Executives linked the upsurge to the launches of Wavelight FS200 and EX500 lasers, the latter of which features a multi-dimensional 1,050 Hz tracker synchronized at 500 Hz, non-contact pachymetry and a 500-Hz pulse frequency laser capable of a 1.4 sec/D ablation. In product literature, Alcon touts the EX500 as the nation’s fastest laser.
Product launches boosted sales in the Ophthalmic Pharmaceuticals and Vision Care franchises as well, but only minimally. Global Ophthalmic Pharmaceuticals sales grew 2 percent to $4 billion and worldwide Vision Care revenue climbed 1 percent to $2.45 billion. Contact lens sales drove much of Vision Care’s growth, contributing $1.73 billion to the unit’s overall sum thanks largely to solid sales of Air Optix products (the multifocal lens market leader), robust U.S. demand for daily disposable contacts and the debut of Dailies Total1, the industry’s first water-gradient silicone hydrogel contact lens, on three continents (Europe, America and Japan).
New product launches augmented revenue in Novartis’s Pharmaceutical division, too: First-timers generated $11.4 billion last year, a 28 percent increased compared with 2011. But generic competitors dragged down overall net sales by 3 percent to $56.7 billion. Pharmaceutical sales fell 1 percent to $32.2 billion as generic competition knocked $1.9 billion off turnover.