Novartis' ($NVS) Alcon business has been struggling for some time now, and the company's efforts to help its eye-care business get back on track don't seem to be doing much to stanch the bleeding. So Novartis is kicking things into crisis mode, planning to launch a game plan this year to revive its flailing unit.
The Swiss drugmaker will unveil a "growth acceleration program" for Alcon with its 2015 financial results on Jan. 27, Reuters reports. Alcon is already feeling the sting from generics to some of its top sellers, and last month's patent expiration for its glaucoma drug, Travatan Z, didn't do anything to help matters. That generic competition, along with disappointing numbers for its intraocular lens implants and contact lens solution business, have left the unit in a bind.
New products could help Alcon get things back on track, but no one should expect a "quick fix," Berenberg analyst Alistair Campbell told the news outlet. Novartis knows "they have lagged behind on innovation in both the intraocular lens and drug segments but fixing both will not happen overnight," Campbell said, especially given the unit's ongoing financial woes and recent corporate overhaul. Over the summer, Alcon helmsman Jeff George replaced two-thirds of his top managers in a bid to revive business.Novartis CEO Joe Jimenez
Plus, Novartis already has enough on its plate. The company is busy ramping up business for some of its new products, including heart failure med Entresto, which won FDA approval back in July. The drug is expected to be the company's biggest-ever launch, with some analysts expecting Entresto to bring in $3 billion-plus in sales and others predicting double-digit numbers, but the rollout has started off slowly.
For Alcon, a better course of action might be for Novartis to unload its contact lens solution businesses, some analysts say. The cash from a sale would offset new investments. "There are risks of a ramp-up in research and development and marketing spending. However, they might just say we are selling parts of the business and not ramp costs up as much as they might otherwise have to," Deutsche Bank analyst Tim Race said, as quoted by Reuters.
Novartis CEO Joe Jimenez, for one, doesn't seem opposed to the idea. Jimenez has said that he would consider selling off Alcon's underperforming businesses if worse comes to worst, Reuters points out. And while he's committed to reviving the company's eye-care unit, he's staying realistic about Alcon's prospects. "You have an on-trend business with an aging population," Jimenez said back in October. "If it doesn't improve, then we've got a different conversation.
- read the Reuters story
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