Alcon’s top executive is out as eye-care sales plummet

Novartis named a new executive to lead Fort Worth-based Alcon on Wednesday as part of a broad restructuring in the wake of plummeting sales at the maker of eye-care drugs, products and surgical equipment.

Mike Ball, 59, who served as CEO at Hospira from 2011-2015 before its acquisition by Pfizer, will replace Jeff George as Alcon’s division head and chief executive officer as of Feb. 1. Novartis said George, 41, is leaving the company.

Novartis also said Alcon’s ophthalmic drug unit — which generated more than a third of its revenue last year — will shift to become part of the Novartis pharmaceutical division. The Alcon division as a result will focus on its surgical equipment and vision care, or contact lens, businesses.

The announcement came as Novartis, based in Basel, Switzerland, said its fourth-quarter net income fell 57 percent to $1.05 billion, partially due to poor results from Alcon as well as the impact of a strong U.S. dollar on global sales.

Global sales in the fourth quarter fell 4 percent, with revenue from the pharmaceutical division unchanged at $7.9 billion and the Sandoz unit shrinking by 8 percent to $2.3 billion. Sales at Alcon fell 13 percent in the quarter to $2.3 billion, and its operating income fell 64 percent to $132 million.

On Wall Street, shares of Novartis (ticker: NVS) dropped $4.45 a share, or nearly 5.5 percent, to $78.19.

In Fort Worth, Novartis does not anticipate job reductions at this time related to the upcoming restructuring, said spokeswoman Elizabeth Harness. The company’s ophthalmic drug unit will continue to be based in Fort Worth and led by Frederic Guerard, formerly head of Alcon’s global pharmaceutical sales. He will lead teams working on eye-care drugs in Fort Worth, East Hanover, N.J., and Basel, Switzerland.

Novartis, which acquired Alcon in 2011, employs about 4,400 at the Alcon campus in south Fort Worth. About 1,500 work in pharmaceuticals.

On a conference call with analysts, Novartis CEO Joe Jimenez said the changes are designed to reignite product innovation in Alcon’s businesses, including ophthalmic drugs, where Alcon is an industry leader. The new structure, he said, is designed to speed up product development for both drugs and surgical equipment.

“Importantly, we’re going to maintain the Alcon brand name both from a sales rep standpoint and from a product standpoint. And the reason for that is that the Alcon name is a tremendous asset,” he said.

Regarding the change in leadership, Jimenez said he has a lot of respect for George, who previously led Novartis’s Sandoz generics drug business.

“He’s had a very difficult year and he’s made the decision that now that we’re making these changes at Alcon, it would be a good time for him to step down and think about what he wants to do next,” Jimenez said.

Novartis also said it will move some mature drug products with sales of $900 million into the Sandoz generics unit. Jimenez said Novartis would invest $200 million into the Alcon business, which he expects to begin a turnaround toward the end of 2016 with mid-single-digit growth.

The drugmaker aims to trim more than $1 billion from annual costs by 2020 as it centralizes manufacturing and combines some drug development operations. Novartis will also accrue one-time restructuring costs of $1.4 billion that will be spread over five years.

Alcon has expanded its campus in south Fort Worth, located near I-35W and I-20, since being acquired by Novartis. It added more than 1,000 jobs in Fort Worth as it combined some Ciba Vision operations from Atlanta and added its Finance Service Center for North American operations. And in September, Novartis opened a global data center in Fort Worth.

George was named CEO at Alcon in April 2014 after spending about eight years in Europe at Novartis’ generic division Sandoz. As division head, he was credited with building Sandoz sales to $9.2 billion in 2013 from $7.5 billion in 2009. He also oversaw its expansion to 164 countries, where it has more than 26,000 associates, Novartis said.

Before joining Novartis, George held executive positions with Gap and McKinsey & Co. in San Francisco, a global management consulting firm.

In an interview with the Star-Telegram last year, George said he was working with employees and customers to spur innovation at Alcon, traveling frequently around the globe to meet personally with surgeons and others.

“I would say that our innovation and our pipeline development in the last decade has been strong in some areas and not as good in others,” he said.

George said that while the company’s work in surgical equipment, such as cataract systems, had been outstanding, innovation in areas such as intraocular lenses and drug treatments for dry eye had not been as strong.

This story was originally published January 27, 2016 at 6:48 AM with the headline "Alcon’s top executive is out as eye-care sales plummet."