Novartis considers sale of Alcon’s contact lens solution business

Alcon manufactures eye care pharmaceuticals and products at its main campus located off I-35W south of downtown Fort Worth.
Alcon manufactures eye care pharmaceuticals and products at its main campus located off I-35W south of downtown Fort Worth. STAR-TELEGRAM/KELLEY CHINN

Novartis is considering the sale of Alcon’s contact lens care products business as the Swiss drugmaker seeks to improve growth at the Fort Worth-based eye-care unit, according to people with knowledge of the matter.

The lens-care business may draw interest from competitors, the people said, asking not to be identified because the deliberations are private. The proposed sale is at a preliminary stage and the company may decide against a disposal, the people said.

A slump in the contact lens care business contributed to curtailing growth at Alcon in the second quarter, leading to Novartis missing analysts’ estimates for profit in the three-month period. Novartis is doing a “deep analysis” of Alcon’s businesses, and in January will report on a plan “to get this business back to a decent growth rate,” Chief Executive Officer Joe Jimenez told analysts and investors in October.

“With the market shift to daily disposable lenses, Novartis will be questioning whether the lens care business is core or unnecessary,” said Nick Turner, an analyst at Mirabaud Securities.

A representative for Novartis declined to comment.

Revenue at Novartis’s contact care business — which sells products to clean, store and moisturize lenses — fell 7.4 percent to $646 million last year. A sale of the business may generate as much as $1.6 billion, according to Fabian Wenner, an analyst with Kepler Cheuvreux in Zurich.

Alcon’s performance this year has been impaired by a decline in surgical equipment sales in the U.S. and in emerging markets, as well as increased competition from generics for some eye treatments. Its revenue dropped 8 percent to $7.5 billion in the first nine months.

In an interview with the Star-Telegram earlier this year, Alcon CEO Jeff George said he was working with employees and customers to spur innovation and drive stronger growth.

“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,” said George, who took over as Alcon’s top executive in 2014 after running the Sandoz generics business for Novartis.

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

In July, Novartis said the biggest opportunity for the lens-care business was in emerging markets, where most people still use monthly and weekly contact lenses that require cleansing and storage. The company started using new pricing and packaging for the products in June.

Staff writer Steve Kaskovich contributed to this report.