Medical Device Daily Contributing Writer

SAN FRANCISCO – The ophthalmology world was taken aback on Jan. 12 by the unexpected news that Abbott Laboratories (Abbott Park, Illinois) was purchasing Advanced Medical Optics (AMO; Santa Ana, California) (Medical Device Daily, Jan. 13, 2009).

Whether this stimulated interest in the other ophthalmic companies presenting at the annual J.P. Morgan Healthcare Conference, which opened that same day, is probably sheer conjecture, but it certainly seemed that the proposed acquisition stirred interest in the sector.

The world's largest ophthalmic company, Alcon Laboratories (Fort Worth, Texas), enjoyed a large attendance at its presentation early on the morning of the 12th. Its longtime and venerable CEO, Carey Rayment, who very recently announced his retirement, told his audience that Alcon performed very well in 2008.

Indeed it has, as previously reported sales for the nine months ended Sept. 30 grew over 16% above 2007, while reported net income leaped 34%. Alcon will report its full-year fiscal 2009 results on Feb. 12.

Rayment noted that this stellar performance has been spearheaded by three key factors: market share gains across most its major business segments, new product approval and the introduction of key products into new markets.

Discussing its market share gains, Rayment noted that "we have performed especially well in pharmaceuticals," where Alcon has garnered share in key therapeutic categories such as glaucoma, anti-infectives and anti-histamines.

Glaucoma medications represents the largest global eyecare prescription drug category and Alcon's already strong market position will benefit in 2009 by the recent CE-mark approval of Azarga, a combination drug that Rayment said will offer "powerful efficacy and superior comfort over competing products.

He also expressed confidence in the anti-histamine nasal spray Patanase, which was launched in the U.S. in May 2008, too late to participate in the 2008 allergy season. Rayment believes that Patanase will fare very well in 2009.

Rayment admitted that he was surprised by the decline in the domestic eyecare drug market in the last half of 2008, speculating that it was related to the slumping economy. However, Alcon has registered growth in this category with its impressive market shares gains.

Within its medical device segment, Alcon's performance also has been solid, with noteworthy share advances in intraocular lenses (IOLs), phaco-emulsification (cataract removal equipment) and viscoelestics, used during cataract surgery.

Looking ahead, Rayment cited the recent FDA approval of the ReSTOR 3.0 multifocal IOL, which received a CE mark in 3Q08 and FDA approval late in 4Q08. He presented data showing that the 3.0 version provides improved vision at all distances over the predecessor 4.0 model, but especially in the intermediate zone, where the 4.0 model was mediocre.

"We are very excited with this approval and expect that the ReSTOR 3.0, which has received enthusiastic support from our clinicians, will be a very important new product for us," Rayment said.

Alcon has been facing vigorous competition from the Eyeonics Crystalens, which has been marketed by Bausch & Lomb (Rochester, New York) since its acquisition about one year ago. With a robust performance in 2008, especially in the second half of the year following the debut of the third-generation Eyeonics HD Crystalens, Eyeonics has captured an increased share of the premium IOL market, mostly at Alcon's expense. In fact, with a robust fourth quarter, it appears that Eyeonics took over the No. 1 position in the domestic premium IOL market.

Privately owned, venture capital-backed Visiogen (Irvine, California) made its first appearance at an investment conference last week, presenting information on its premium IOL tradenamed Synchrony. This unique and proprietary IOL addresses the same market as ReSTOR and Crystalens and is poised to become a sturdy competitor.

President and CEO Reza Zadno, PhD, said that the premium IOL market offered "uniquely aligned incentives," providing a "win-win-win" for patients, physicians and manufacturers.

He explained that patients profit by having access to superior vision and an "improved lifestyle," ophthalmologists enjoy "attractive procedure economics" earning about $2000 per IOL implant, compared to about a Medicare reimbursement of $650 for a standard IOL.

IOL manufacturers participate in a large and growing market with a "compelling financial model," because of an average selling price of about ten times the $100 revenue for a standard monofocal IOL. As such, it affords a lucrative gross margin well in excess of 80%.

Zadno, who has earned an excellent reputation for his deft management since founding the company in 2001, characterized Synchrony as an advanced generation premium IOL. Featuring a dual optic, accommodating lens that has been proven with advanced imaging technology to truly accommodate, as well as an easy-to-use, procedure simplifying pre-loaded injector, its clinical performance has been excellent.

For example, Zadno cited a randomized double masked study presented at the European Society of Cataract and Refractive Surgeons (Dublin, Ireland) in Berlin in September 2008 that compared the ReSTOR lens with Synchrony. Whereas 76% of ReSTOR patients achieved 20/40 intermediate vision, 100% of Synchrony patients did. Synchrony also demonstrated a remarkable freedom from halos and glare, which plagued about 25% of ReSTOR patients.

Intermediate vision is particularly important to patients because this is the distance function that they use while using a computer or in any type of "Blackberry activity."

Visiogen already has achieved CE-mark approval and will begin to commercialize in Europe this month. In the U.S., the company has completed enrollment of its pivotal PMA trial and the mandated one-year follow-up. It will shortly file its PMA and hopes to launch in mid-2010.

He concluded his talk by saying that his management team has delivered on budget and on time and expects to make a significant impact on the premium IOL market.

Another presenting ophthalmic company was Cooper Companies (Pleasanton, California), which consists primarily of its CooperVision global contact lens (CL) company (84% of revenue) and the smaller (16% of revenue) CooperSurgical women's health division.

The company's CEO, Bob Weiss, said that Cooper is the third-largest player in the $5.5 billion to $6 billion global CL market, with an approximate 16% share. It trails Johnson & Johnson (New Brunswick, New Jersey), which has a 44% share and Ciba Vision (Duluth, Georgia), with a 22% share. It leads Bausch & Lomb, which has a 14% share.

Weiss discussed recent trends in the CL industry, indicating that the slumping economy appears to be having an impact on demand. He noted that Cooper's contact lens revenue in October, the last month of its fiscal year, was "dismal," while November also was "bad." Volume in December appears to have stabilized and grown modestly.

He quipped that "perhaps we are not recession-proof as we thought, but maybe we are recession-resistant."