Why Consolidation Has Not Tamped Down Innovation
Despite what some see as consolidation among drug and device companies in ophthalmology, a number of factors continue to drive innovation – from unmet needs and the eye’s critical role as a “window” to other disease states to transparency of the ophthalmology space and the synergies that exist when large and small companies team up to commercialize ideas. That’s the consensus of the “Masters of The Universe” panel of the big players in ophthalmology at OIS@ASCRS 2016.
Moderator Jim Mazzo, executive chairman and CEO of AcuFocus, put this question to the panel: Has consolidation in the ophthalmic industry impacted innovation? Here’s what the “Masters” had to say.
Alcon CEO Mike Ball said a driver of innovation, regardless of consolidation, is the unmet need, particularly in presbyopia. “It’s huge,” he said. “If you look at advanced technology IOLs [intraocular lenses], they’ve only penetrated the market 10 to 12%. That should be up in the 20 to 30% range.” The key for innovators to draw the interest of big companies like his and investors “is to come up with a good game plan,” he said. “If you show the potential for growth, they’ll go for it.”
Ashley McEvoy, group chairman for Johnson & Johnson Vision Care, said innovation revolves around two premises: activating the interest of patients with chronic disease and understanding the value of eyes as “the window to 265 other different disease states.” She noted that a third of people with diabetes get their first diagnosis from their eye doctor. “We have a unique opportunity to transform not just eye health, but total health care,” McEvoy said. The key is engaging consumers “and getting them to honor their eyes, having them fall in love with their eyes. Sight matters.” She added: “Let’s really leverage the asset base we have globally around the eyes as windows to address many other diseases.”
Tom Frinzi, president of Abbott Medical Optics (AMO) and senior VP of Abbott Laboratories, challenged the notion that the industry has consolidated. “I think there’s a change of ownership, but you look across this dais, and it’s all the same companies that are still here,” he said. Tracing the history of his own company, Frinzi said, “I don’t think, certainly for AMO, innovation has been stifled, whether as part of Allergan, whether it’s a standalone, or whether it’s part of Abbott.” AMO’s pipeline today “is probably the richest it’s been,” he said.
Frinzi also declared himself an “agnostic” when it comes to innovation – whether it’s from the R&D department of companies like his, from small, focused preclinical and clinical-stage companies, or from collaborations between the two. “Big companies struggle sometimes with being able to be minimalist enough to meet the needs of the marketplace, but I think there’s a healthy balance that you have to strike,” he said. “There’s good technology on the outside that can, as I said before, fit strategically and make a difference in terms of outcomes. We have to avail ourselves of that.”
As managing director of Versant Ventures, William Link, PhD, has directed investments in a multitude of ophthalmology innovator companies. He said innovation would continue to thrive as long as investors find value in the space – a place where analysts play a key role in getting the word out. “But, you should understand where analysts fit in terms of our constituents,” Link added. “They want one thing: they want news about new products, new technologies, and new strategies.” He held up the “new frontier” in glaucoma as one example that’s attracting growing interest from analysts and, more importantly, investors.
Carl Zeiss Meditec president and CEO Ludwin Monz, PhD, agreed that analysts creating transparency in the market helps to drive innovation. “The transparency of the emerging market has attracted a lot of investors, and certainly that has also helped smaller companies to grow in that space,” he said. “A lack of transparency and fewer analysts might result in a less attractive market to investors.” At the same time, transparency is not the only driver of innovation. “Ophthalmology is a very attractive market because it’s driven by mega-trends,” Monz said. Those trends would override any stifling effect of consolidation.
Calvin Roberts, MD, senior VP and chief medical office of Bausch + Lomb, said the assets a large company like his brings to the table coupled with those of a smaller company help drive innovation even as consolidation happens. He mentioned B+L’s acquisition last year of Synergetics. “So, what does a big company like ours do well? We do regulatory, sales and marketing,” he said. “What do the small companies do well? They do that initial R&D and early clinical and clinical work.”