Alcon, the eye care business
Alcon, Novartis’s AG (NVS) eye care segment, researches, develops, manufactures, and markets eye care products in over 180 countries. The business is divided into two sub-segments—Surgical and Vision Care. The Ophthalmic Pharmaceuticals business was transferred to the Pharmaceuticals segment in 4Q16.
Analysts expect Alcon’s 4Q16 revenues to decline due to lower equipment sales in the Surgical franchise, as well as lower sales in contact lens products in the Vision Care franchise.
Global surgical sales have reported lower equipment sales for LenSx technology in Asia and the US in recent quarters. Also, the sales of intraocular lenses (or IOLs) have been impacted by declining volumes in ReSTOR multifocal lenses as well as competition in mono focal lenses.
These sales levels support analysts’ estimates of declining revenues for 4Q16. However, the Surgical franchise has noticed the continued uptake of cataract consumables.
Novartis’s (NVS) global sales of its vision care products have shown a declining trend due to the continued market shift of consumers to daily disposable lenses, which affect the sales of contact lens care products. This trend substantially offsets the growth and continued uptake for Dailies Total1, AirOptix Colors, Dailies AquaComfort Plus Toric, and DACP multifocal products. Analysts estimate a declining trend of revenues for 4Q16 for the Vision Care franchise.
Overall, the 4Q16 revenues for Alcon are estimated to be nearly constant at constant currencies. The factors contributing to this trend include products with positive growth and a strong base of installed surgical equipment, offsetting lower surgical sales and vision care products.
Ophthalmic Pharmaceuticals products, including Patanol, were transferred from Alcon to the Innovative Medicines segment in 2Q16.
Investors can consider ETFs like the VanEck Vectors Pharmaceutical ETF (PPH), which holds 7.7% of its total assets in Novartis, in order to divest the risk.