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How Did Novartis’s Eye Care Business Perform?

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Jan. 17 2017, Updated 10:36 a.m. ET

The eye care business

Alcon, the eye care segment of Novartis AG (NVS), is divided into two subsegments: surgical and vision care. The 3Q16 revenues fell ~2% to $1,436 million, which included a decline of ~3% in sales and a 1% positive impact of foreign exchange. All of Alcon’s subsegments reported a fall in 3Q16 revenues.

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Surgical sales

Global surgical sales have seen lower equipment sales, particularly for LenSx technology in Asia and the US in recent quarters. Also, the sales of intraocular lenses fell over 8% at constant exchange rates due to the volume decline in ReSTOR multifocal lenses as well as competition in mono focal lenses in the Europe and Japan markets. This led to a 4% decline at constant exchange rates in surgical sales for 3Q16 to $845 million as compared to $884 million for 3Q15. The surgical franchise has noticed continued uptake of cataract consumables, and the consumables sales rose 4% at constant exchange rates during the quarter.

Vision care

The global sales of vision care products have shown a declining trend as consumers have shifted to daily disposable lenses instead of regular contact lenses, thereby affecting sales of contact lens care products. The vision care franchise reported flat revenues at $591 million for 3Q16 as compared to $585 million for 3Q15. The revenues from contact lenses rose 1% at constant exchange rates to $456 million, driven by increased revenues from Dailies Total1. However, the revenues from contact lens care products reported a 3% decline at constant exchange rates to $135 million during 3Q15 due to competition and a consumer shift to daily disposable lenses.

Investors can consider ETFs like the VanEck Vectors Pharmaceutical ETF (PPH), which holds ~7.8% of its total assets in Novartis, 5.1% in Merck (MRK), ~10.3% in Johnson and Johnson (JNJ), and 4.9% in Bristol-Myers Squibb (BMY).

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