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Alcon: Performance, Products, Pipeline and Potential
Espicom Business Intelligence Ltd, Dec 2008, Pages: 50
Alcon is a research and development-driven global company which develops, manufactures and markets pharmaceuticals, surgical equipment and devices, and consumer products to treat diseases and disorders of the eye. It has operations in over 75 countries and its products are sold in over 180 countries. A subsidiary of Nestlé, Alcon is a Swiss corporation.
On 7th April 2008, Novartis reached an agreement with Nestlé providing the right to acquire majority (77 per cent) ownership of Alcon in two steps. The transaction's first step, to purchase a 25 per cent stake in Alcon from Nestlé for US$143.18 per share, or US$10.4 billion, was completed in July 2008. The optional second step provides Novartis with exclusive rights to acquire the remaining 52 per cent Alcon stake held by Nestlé between 1st January 2010 and 31st July 2011, for a fixed price of US$181 per share, totalling about US$28 billion; Nestlé has the right to require Novartis to buy this stake.
If majority ownership is transferred from Nestlé during the second step, Novartis and Alcon will identify the best way to realise synergies from combining their complementary eye-related businesses. Potential benefits could include creating a broader portfolio of eye care products, in particular with CIBA Vision's contact lens business and Novartis medicines, such as Lucentis (ranibizumab), for severe eye diseases not addressed by Alcon's portfolio. Other opportunities include research and development activities, and an even more aggressive expansion in fast-growing regions, particularly Asia, where Novartis has long-standing operations. In addition, the relationships of Novartis with healthcare payers and strong health economics activities could contribute to Alcon's marketing programmes.
On the other side, Alcon would help limit risks within the Novartis portfolio based on its diversified payor structure, with reduced risks of price regulation, leadership in a specialty healthcare area and greater access to businesses with discretionary consumer spending.
Sales growth was seen in all pharmaceutical categories in 2007, and in the short term this looks set to continue. However, as patent expiries begin to affect the sales of a number of Alcon's major products, the company will face an increasingly challenging environment as it seeks to advance development products to market. In addition, Alcon faces significant competition in ophthalmic pharmaceuticals, including competition from other companies with an ophthalmic focus and from larger pharmaceutical companies. The successful approval of Alcon's major late-stage development product, Retaane, will be crucial, along with the population of the pipeline with further new projects.
Pharmaceutical company intelligence reports from Espicom provide a full review of the company's activities together with five-year sales forecasts for its key products. The company's financial performance is covered in-depth, from its latest results to a complete analysis of its latest full fiscal year and an outlook for the future. A section on company strategy covers mergers, acquisitions and divestitures, key agreements, products and R&D. An overview of key products and R&D is followed by a comprehensive review of the company's product portfolio and research and development pipeline by therapeutic area. In addition, supplementary appendices provide more in-depth information on financials, agreements and corporate events.
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