Rank: #16 (Last year: #17)
Prior Fiscal: $6.77 billion
Percentage Change: +5.6%
No. of Employees: 22,787
Global Headquarters: Geneva, Switzerland
David J. Endicott, CEO
Tim Stonesifer, Sr. VP and CFO
Jeannette Bankes, President and GM, Global Surgical Franchise
Andy Pawson, President and GM, Global Vision Care Franchise
Laurent Attias, Sr. VP, Head Global Corp.
Dev. Strategy, BD&L, M&A
Heather Attra, Sr. VP, Head Global Quality
Ian Bell, President, International
Franck Leveiller, Sr. VP, Head Global R&D
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.”