Updated June 22, 2016.
Revenues and costs
Alcon, the eye care division of Novartis (NVS), provides the widest range of eye care products worldwide. The Alcon division includes the surgical, ophthalmic pharmaceutical, and vision care segments. Nearly 19.8% of Novartis’s total revenues came from the Alcon segment in 2015.
Revenues for the Alcon division fell by 9% to $9.8 billion in 2015 as compared to $10.8 billion in 2014. Considering constant currency, the sales fell by 1% in 2015. Around 44% of revenues came from the US, 25% came from Europe, and 22% came from Asia, Africa, and Australasia. The remaining 9% came from Canada and Latin America.
The costs for the Alcon division are compared in the chart above. Overall, the gross profit margin has been around 48% for 2015, which was much less than the pharmaceuticals division, but more than Sandoz, the generic pharma division.
- The cost of sales as a percentage of revenues rose in 2015 as compared to 2014 due to the change in product mix.
- The R&D expenses remained constant at 9% in 2015 as compared to 2014.
- The M&S expenses remained constant for 2015, primarily due to similar marketing strategies as 2014.
- The general and administrative expenses remained nearly the same as a percentage of sales in 2015.
Some of the key products for the Alcon division include Centurion and LenSx for cataract surgery, Azarga and Simbrinza for glaucoma treatment, Ilevro for ocular inflammation treatment, and AirOptix Colors and Dailies Total1 contact lenses. As a part of the growth plan, the company is focused on the development of new intraocular lenses for cataract surgery.
Major competitors for Alcon include Johnson & Johnson (JNJ), Allergan, Bausch and Lomb, Merck (MRK), and Pfizer (PFE). Investors can consider the VanEck Vectors Pharmaceutical ETF (PPH), which holds about 5.5% of its total assets in Novartis, or the First Trust Value Line Dividend ETF (FVD), which holds ~0.5% of its total assets in Novartis.