AMO Seeks B & L

Implications: Currently the ophthalmic device market is organized into an oligopoly including Alcon, AMO and Bausch.  AMO has shown fairly dramatic growth with its acquisition of VISX, Intralase and Wavefront Sciences.  However, AMO's potential acquisition of Bausch is on a grander scale.  There are multiple areas in which these two companies currently compete, including phacoemuslfication systems, viscoelastics and intraocular lenses on the cataract side, excimer laser technology on the refractive side (VISX with WaveScan v Technolas with Zyoptix, Intralase v Hansatome), and contact lenses and solutions on the vision side.  The open question for us to ponder is what will happen to these competing technologies if they are all under one roof.  There are also important areas unique to Bausch, for example, pharmaceuticals and surgical instruments (Storz).  Keeping these within AMO could significantly change the profile of the company. 

Analysis: Diversity and competition tend to favor innovation.  In the world of ophthalmic devices we have become accustomed to innovation occurring primarily in start up companies (such as eyeonics, Visiogen, AcuFocus and Intralase) and eventually being acquired by the big three (if it shows promise).  If the big three become the big two it is possible that innovation will suffer.  On the other hand, AMO has shown itself to be supportive of innovation with its acquisitions while Bausch has seemed uncertain at times about its direction.  For example, Bausch acquired the Sarfarazi elliptical accommodating IOL several years ago but did not more forward with it, allowing Visiogen to initiate clinical trials of the first dual optic accommodative IOL.  The same could be said of Catarex, the vortex phacoemulsification system that showed promise for cataract extraction through a tiny 1 mm capsulorhexis (thus facilitating injection of a polymer into the capsular bag).  Meanwhile, Bausch's new phacoemulsification system, Stellaris, announed with much fanfare at last year's ESCRS meeting in London, has yet to materialize.  More recently, however, Bausch acquired an option to buy AcuFocus, the intracorneal ring for presbyopia correction.  Clinical trials outside the US have shown promise, and some key opinion leaders such as Dick Lindstrom and Jack Holladay have been vocal about it success.  One potential area of synergy between AMO and Bausch in fact relates to AcuFocus: Intralase is recommended for flap construction prior to placement of the ring.  Here at least is one area where the technologies of the two companies are truly complementary. 

Overall, I am sanguine about the potential for positive growth and development of Bausch's technology under AMO.  Nevertheless, there are plenty of reasons for surgeons to feel anxious about the loss of one of our big three.