Sale of B&L commands spotlight

Chain Drug Review, Oct 1, 2007 by Geoff Walden

NEW YORK -- The eye care category has been awhirl with activity of late, much of it centered on the sale of Bausch & Lomb Inc. (B&L).

B&L shareholders last month approved the company's all-cash $3.7 billion buyout by private equity firm Warburg Pincus. The vote in favor of the $65-a-share deal followed Advanced Medical Optics Inc.'s withdrawal of its offer to buy B&L at a higher price ($75 a share).

Advanced Medical ended its pursuit over the summer, citing "unrealistic hurdles" from B&L.

The latter's board had decided against giving Advanced Medical time to persuade its shareholders to support the $4.3 billion takeover bid.

The approval of the Warburg Pincus purchase followed the urging of four proxy advisory firms to support the deal. The recommendations "confirm our board of directors' unanimous view that the transaction with Warburg Pincus delivers significant cash value and that it is in the best interests of B&L and all of our shareholders," pointed out chairman and chief executive officer Ronald Zarrella.

"This back-and-forth between two eye care companies was great for the category," notes one chain drug merchandiser, "because it kept attention focused on the market.

The more people are thinking and talking about a segment, the more they're looking into what products are available and trying them out. At the same time suppliers--including B&L and Advanced Medical--were thinking about what's not available and how it could be developed."

The eye/lens care solutions segment was especially strong in the past year, posting 8% growth in drug stores. That was significantly higher than the 5.6% advance recorded by the subcategory in the mass market overall (excluding Wal-Mart Stores Inc).

Alcon Inc.'s Opti-Free RepleniSH led the gain in drag stores as sales more than tripled to $27.8 million, good for a second-place 6.1% category share.

No. 4 Systane from Alcon also performed strongly (up more than one-quarter), as did sixth-place Similasan (up more than half) and No. 7 Clear Care from Ciba Vision (up 42%).

Multipurpose solutions comprise the biggest and most rapidly expanding segment in eye care. Some of the 32 million contact lens wearers think all solutions are the same, but formulation differences can affect lens wear and comfort. The disinfection system in Opti-Free RepleniSH has been proven effective against bacteria and fungal organisms, according to Alcon.

The company developed the product to help enhance the comfort of new-generation silicone hydrogel lenses, which account for the vast majority of soft lenses being fitted in doctors' offices. The product contains the Tear-Glyde reconditioning system to allow a thin layer of moisture to be maintained on the lens surface throughout the day.

Advanced Medical, meanwhile, has reentered the multi-purpose solution segment with Complete Easy Rub, focusing on comfort and disinfection efficacy.

It also incorporates the importance of proper handling and care of contact lenses per guidelines set forth by professional eye care associations, including the American Academy of Optometry, the American Optometric Association and the American Academy of Ophthalmology.

EYE/LENS CARE TABLETS & ACCESSORIES

TOTAL DOLLAR SALES * $45.5 mil. (-0.2%)

DRUG STORES $28.5 mil. ( 6.3%)

                        Market     Dollar       Dollar sales
LEADING BRANDS **       share    sales (000)      % change

Ocusoft                 11.3%      $3,232            21.7%
Magnivision             11.1%       3,153            47.9%
Ciba Vision              6.2%       1,778             6.0%
Foster Grant             5.1%       1,456           568.2%
Amo Uitrazyme            4.3%       1,225             0.8%
Ciba Vision Aosept       4.2%       1,185         -  16.7%
Pro Optics Optic Shop    3.3%         928         -  42.5%
Laml                     3.1%         879         -  11.1%
Coverlet                 2.8%         789         -   1.5%
Ciba Vision Unizyme      2.2%         625            39.9%

TOTAL UNIT SALES * 12.8 mil. (-1.2%)

DRUG STORES 7.8 mil. ( 3.5%)

                        Market     Dollar       Dollar sales
LEADING BRANDS **       share    sales (000)      % change

Magnivision              9.9%        767            25.0%
Foster Grant             6.6%        510               --
Pro Optics Optic Shop    6.2%        482          - 42.1%
Lami                     5.7%        441          - 11.6%
Ocusoft                  3.6%        280            19.6%
Flents                   2.7%        207             2.6%
No brand                 2.7%        206          - 16.4%
Ciba Vision Aosept       2.1%        165          - 16.9%
Scunci Swipes            2.0%        156          - 10.2%
Ciba Vision Eye Scrub    1.7%        131             8.4%

* Total of drug stores, supermarkets and discount stores, excluding
Wal-Mart Stores Inc.

** In drug stores only. Private label products account for a 28.6%
dollar share and a 40.2% unit share.

Source: Information Resources Inc. For the 52 weeks
ended August 12, 2007.