With a management team experienced in healthcare and ophthalmology, and market trends like aging increasing the need for ophthalmic care and a rich pipeline of innovative products, Alcon is well poised to succeed as a stand-alone company, company executives told investors and analysts last month in New York.
“Does Alcon have what it takes to maintain growth in the near term and what it takes to accelerate growth beyond the category to drive share in the longer term? My answer to you is an unequivocal yes,” Andy Pawson, president and general manager of Alcon’s Global Vision Care Franchise, said at the first of two Capital Markets Day events the company held. A second was held in London.
As part of its spin-off from Novartis, Alcon filed a Form 20-F registration statement with the US Securities and Exchange Commission that included a detailed overview of its business, strategy, and financials. If the transaction proceeds, shares in Alcon will be listed on the SIX Swiss Exchange and the New York Stock Exchange.
The Company’s Foundation
Alcon had $6.8 billion in sales last year and is considered number 1 or 2 in all categories within surgical and vision care in which the company competes, said Mike Ball, chairman-designate. Following a plan started in 2016 to turn sales around, the company has seen eight consecutive quarters of sales growth since 2017 and significantly reduced employee turnover.
Ball noted that Alcon also has launched new products such as the PanOptix trifocal intraocular lens (IOL), its NGENUITY 3D system to enhance visualization of the back of the eye for digitally assisted vitreoretinal surgery, and Dailies Total1 disposable multifocal contact lenses. With its foundation strengthened, he said the company is now moving to its 2018–20 growth phase with CEO David Endicott.
Eye care devices such as contact lenses and equipment represent a large and growing $23 billion market, providing lots of opportunities for business, Endicott pointed out. A number of “megatrends” are contributing: the aging population with its growing eye care needs, increasing wealth from an expanding middle class, and a rise in myopia prevalence driven by increased screen time and mobile device use. By 2050, he said, 5 billion people will be myopic.
Alcon’s Growth Focus
Alcon is focusing on these four near-term growth drivers:
- advanced technology intraocular lenses;
- vitreoretinal surgical technology;
- multifocal lenses; and
- dry-eye solutions, such as its Systane Complete drops.
Together, the last two drivers are expected to result in nearly 80% of the company’s near-term growth, Endicott said. The company has started an aggressive advertising campaign for its Dailies Total1 multifocal contact lenses. Pawson noted that dry eye disease represents a large market with untapped potential for the Systane product line, with 352 million people worldwide affected.
Longer term, the company is investing in new contact lens materials, new robotics for laser eye surgery, and new contact lens designs for presbyopia, among other areas. The technologies, he said, will allow Alcon to expand to additional international markets such as in China, Latin America, and India. Through these plans, he stated, Alcon is positioned to achieve a mid-single-digit compound annual growth rate and a core operating margin of low-to-mid 20% by 2023.
Alcon had $3.1 billion of the $14 billion global vision care sales last year, Pawson said, with a predicted 4% growth rate over the next five years in contact lenses and ocular health products such as dry eye drops. Three key tailwinds are impacting the contact lens market, he said: a shift from reusable to daily disposable lenses, increasing demand for premium intraocular lenses, and accelerating growth in international markets.
Alcon’s vision care business has a strong pipeline, Pawson added, including new silicone hydrogel disposable contact lenses, which the company will launch selectively in 2019, as well as plans to release a version of Dailies Total1 toric contact lens plus digital platforms to help patients more easily schedule eye exams.
Alcon is investing $2.5 billion in research and development over the next five years, said Franck Leveiller, senior vice president and head of global R&D. Alcon already has a pipeline of 100-plus products, he explained; 35 or more of which are in the later stages of development or are under regulatory review prior to launch. One is an accommodating IOL containing fluid that redistributes in response to the ciliary muscles to permit distance or close vision.
The company is expected to start paying regular cash dividends to shareholders in 2020, said David Murray, Alcon’s chief financial officer.
Completion of the spin-off is subject to approval by Novartis’ board of directors and shareholders at the annual meeting in February 2019. If approved, the spin-off should be completed in the first half of 2019. The company will be headquartered in Geneva, Switzerland, but will retain space in Fort Worth, TX.
For questions about this article, please contact Karen Blum at email@example.com.
STAY UP TO DATE WITH OIS
Get the Latest News, Podcasts and Videos.