Abbott seeks to cash in on growing global vision-care market with AMO acquisition

By Howard Larkin

Looking to seize a leadership position in the €17bn global vision-care market, Abbott Laboratories is acquiring Advanced Medical Optics (AMO). Valued at nearly $2.8bn, or about €2.1bn, in cash and assumed debt, the deal was approved by the boards of both firms. Pending regulatory approvals, Abbott officials expect the sale to close in the first quarter of 2009.

Abbott’s move comes just 18 months after AMO attempted to acquire Bausch & Lomb, and six years after AMO was spun off from Allergan. The acquisition is the 120-year-old firm’s first venture in ophthalmology.

Abbott approached AMO with the deal because it offers an opportunity for Abbott to further diversify its growing medical device business, Abbott spokesman Scott Stoffel told EuroTimes. “Our global presence will help fuel growth opportunities internationally, particularly in emerging markets where there are favourable demographics and growing demand for advanced eye care products.”

With revenues of nearly $26bn in 2007, Abbott dwarfs AMO. Indeed, Abbott’s blockbuster immunotherapy biologic Humira alone generated $4.4bn. That’s roughly four times AMO’s total revenue for the year.

One might expect that AMO could easily disappear into such a dominant partner. But that is not Abbott’s plan, Mr Stoffel said. “Once the deal closes, the idea would be that [AMO] would continue to operate as a separate division of Abbott. I can’t speak directly on the idea that every process and procedure will remain the same, but the focus will be on serving the needs of patients and doctors in a way that is effective for them.”

Mr Stoffel confirmed that Abbott intends to retain the AMO management team and production facilities led by AMO Chairman and CEO Jim Mazzo. “Let me assure you that we remain fully committed to providing a full complement of superior refractive, cataract and corneal products and services. We intend to make this transaction as seamless as possible to you and, as always, the entire AMO organisation stands ready to deliver life-enhancing vision to eye care professionals and their patients,” Mr Mazzo said in a written statement to AMO customers.

Since Abbott Chairman and CEO Miles D White took over in 1999, Abbott has pursued a strategy of diversifying into new pharmaceutical and medical device markets through acquisitions, Mr Stoffel said. These include Knoll Pharmaceutical in 2001, which gave the firm Humira, and Guidant’s vascular business in 2006, which resulted in Abbott taking the leading position in the global market for vascular stents. Many of these acquisitions, including the Guidant operations and Nutrition International, continue to work as independent units within the company.

Abbott also has pursued an increasingly global strategy. In 2007, more than half the firm’s revenues came from outside the US for the first time, and that share continues to grow. Some of Abbott’s latest acquisitions, including Nutrition International and Guidant, are strongly focused on international growth.

The global recession and the resulting downturn in demand for laser vision correction created the conditions for the AMO buyout. With laser vision correction volume down 35 per cent in the third quarter, AMO’s stock briefly fell below $3 a share from a 2008 high of just over $24. After AMO announced a small profit for the third quarter due to rising cataract sales, the stock gradually climbed back to almost $9 in the session before Abbott announced the acquisition offer of $22 per share. While cataract surgery is AMO’s biggest market segment, the firm is much more highly exposed to the volatile laser refractive market than competitors such as Alcon and Bausch & Lomb.

Abbott sees the AMO acquisition as a long-term investment, Mr Stoffel said. Abbott projects that the acquisition will break even in 2009 and will begin generating a profit in 2010. The firm intends to continue supporting development of new vision technology, he added.

“One thing Abbott has been effective in as it manages through acquisitions is to take the best of the existing culture and maintain it, and use Abbott’s resources to enhance the business,” Mr Stoffel said. “Together with Abbott, AMO will be even stronger.”

The sky is not falling - ophthalmology will survive

The Obama feel-good factor was not shared by all of those attending the joint meeting of the American Academy of Ophthalmology (AAO) and the European Society of Ophthalmology (SOE) in Atlanta, Georgia, US.

Big drops in the share price of the leading ophthalmic companies and reports from individual doctors of a reduction of more than 40 per cent in LASIK procedures in the last three months have put a dampener on the post-election celebrations for some doctors.

The global economic meltdown is showing up on the bottom line of finance companies specialising in LASIK and other discretionary medical procedures. Capital One and Care Credit both reported a slowdown in business in the past two months. Tightening credit standards mean it’s getting harder to qualify some patients for loans and default rates on outstanding commitments are climbing.

But every cloud has a silver lining and one of the biggest growth areas in the next 12 months will be the market for practice management consultants and practice management seminars.
Ophthalmologists in the desperate search for a bang for their buck can expect to be bombarded with literature inviting them to pay top dollar for seminars on topics including, "Good news in a depression" and "The sky is not falling".

But ophthalmology, like other medical disciplines, should not be just about money and while doctors should also listen to the advice of practice management experts and other economic consultants, they should also set themselves standards that they will strive to achieve in good times and bad times.

This point was emphasised at the Meet the Masters presentation, sponsored by AMO, where residents attending the AAO/SOE meeting were invited to hear pearls of wisdom from Dr Michael Colvard (pictured above), Dr Bobby Osher and Dr Ralph Chu.

We won't go into a speaker-by-speaker check list of the individual messages from the masters but below are some of the pearls of wisdom they offered to the young doctors attending the meeting.

* Never ridicule anyone's new idea.
* People will forget everything you tell them but they will never forget how you make them feel.
* It's a very small world. Be honest when you speak.
* Always ask yourself what do you like doing and be passionate about what you do.
* It's not always about economic gain.
* Don't allow yourself get stale.
* Treat your patients like you would treat your families.
* You can't always cure but you can always comfort.
* Nobody can train you how to develop emotionally as a doctor.
* Never get cocky about your surgical skills.

Ophthalmology in the new Europe

This month EuroTimes looks at ophthalmology in the new Europe. Among those featured is Levon Barseghyan, MD, professor and head of the Ophthalmology Department of the National Institute of Health in Armenia.

Dr Barseghyan (pictured above) says his country faced a lot of difficulties after the break-up of the Soviet Union, but ophthalmologists have continued contacts with the major centres in Moscow and Ukraine.

Dr Barseghyan, who studied at the Filatov Eye Institute in Odessa, Ukraine and in Moscow, says that while contacts among Russian-speaking ophthalmologists are not as frequent as before, they continue. And that is why the Fyodorov meeting is so important, he says.

Other major influences on Armenian ophthalmology come from outside the region. One such influence is Roger Ohanesian, MD, the founder of the Armenian EyeCare Project. Dr Barseghyan explains that Dr Ohanesian has brought doctors to Armenia from abroad, helped to train Armenian doctors in the US, and donated such equipment as phaco machines. “He has also brought a mobile hospital to Armenia, which is very well equipped,” Dr Barseghyan adds.

While older ophthalmologists continue to promote ophthalmology in their countries, the future of the specialty lies with a new generation of young Armenian ophthalmologists, Dr Barseghyan says.

“There are better opportunities for our young ophthalmologists than there was in my time,” he says. “They can travel to international conferences, they can gather information from the Internet. By getting more knowledge, they can become better doctors.”

Ophthalmologists are never at war

Political tensions may continue to cast a shadow over relations between Russia and some of the other countries that were once part of the Soviet Union. Despite such clouds, the clear message from the delegates attending the recent IXth International Congress of the Russian Society of Ophthalmologists is that the international brotherhood and sisterhood of ophthalmology is, if anything, growing stronger.

This point is strongly borne out by Merab Dvali, MD, professor and chief of the Eye Department at the Tbilisi State Medical University Ophthalmology Department in Georgia.

“Years ago we were one big country with a common education, the same teachers and the centre of ophthalmology in the Soviet Union was Moscow,” Dr Dvali remembers during a break in the congress at the Fyodorov Complex in Moscow.

“I worked in Moscow for 19 years, and it continues to be a very important centre. Unfortunately, over the last 12 months, we have had political differences with Russia but I think the doctors in both of our countries have stayed friends. We were, and will be, brothers and sisters. We have no borders. Ophthalmologists never war. I hope our governments will take the same approach."

Dr Dvali says for Georgian ophthalmologists it is very important to have close links both with Russia and other European countries.
“It is very difficult for our patients to go abroad and get treatment. We are a small country and we do not have enough eye surgeons, but we are doing our best and we try to use the latest technologies.”

While state-funded clinics in Georgia often struggle for funds, an increasing number of private clinics are being developed, says Dr Dvali. Young ophthalmologists in Georgia are also being encouraged to travel overseas for training. “We are supporting one young doctor who we have sent to India to get training in vitreo-retinal surgery. He knows the theory, but he needs practical experience and in India he will get that experience. Another doctor has gone to Spain to study keratoplasty surgery.”

So what should be the model for developing ophthalmology in Georgia? While Dr Dvali is full of admiration for the work done at the Fyodorov Complex, he does not think that a complex of that size should be replicated in his country.
“It is my opinion that eye clinics should not be as big as Fyodorov. Under the old socialist system it was possible to build a big clinic like Fyodorov, but I do not think it is necessary to have a complex of that size,” he says. “For example, my own clinic is a 200-square-metre outpatient clinic. We do laser, we do phaco, and we do all surgery in this clinic. The most important thing is good equipment and good doctors.”

In 1999, Prof Dvali bought the first excimer laser into his clinic. “It was very difficult to raise the money,” he recalls. “But I was able to raise the finance with the help of five friends who were not ophthalmologists. They believed in me and they supported me and that was very important.”

Because of the lack of resources in government clinics – like the one he runs – Dr Dvali is using his private clinic to train his residents.
He notes that in many western European countries, ophthalmologists are concerned about the growth of the private ophthalmology sector at the expense of the public sector. In Georgia, however, private clinics are essential for the development of ophthalmology, he says.

“Public and private patients get the same treatment,” he says. “We also have a mobile clinic that allows us to go to small villages and carry out surgery. If a patient does not have money, he does not get a poor service.”

* A full report on Ophthalmology in the new Europe will be published in December EuroTimes. You can also visit our website at www.eurotimes.org

ESCRS booth draws a crowd

The ESCRS Winter Meeting in Rome is attracting lots of interest from ophthalmologists attending the AAO/SOE meeting in Atlanta. Doctors from the US and elsewhere are flocking to the booth to sign up for the ESCRS Winter Meeting, the EURETINA meeting in Nice and the 2009 Congress in Barcelona.

The high quality of the scientific content of all three programmes are big draws for US ophthalmologists and the recent decline of the euro against the dollar and lower costs for airfare are making the trip more attractive for folks on this side of the pond.

Ophthalmologists check out new WaveLight laser

Though it won’t be available until the end of 2009, demonstrations of WaveLight’s just-revealed UltraFlap femtosecond laser concept platform drew a steady stream of interested ophthalmologists – as well as a few spies from the competition – throughout the day. The 200 kHz system will be capable of cutting a LASIK flap in under 15 seconds, matching or bettering the performance of the fastest lasers currently on the market, according to Mario Klafke, WaveLight’s director of product management for ophthalmology.

Designed to enhance quality, safety, comfort and efficiency, the laser’s high repetition rate, small focal area and low pulse energy produce exceptionally smooth flap surfaces with sharp edges that make flap lifting easy, Mr Klafke added. Tests on pig eyes show low standard deviation in flap thickness. The UltraFlap integrates seamlessly with the Allegretto excimer platform. The two can be placed side by side, allowing the patient to be rotated from one to the other during a procedure in an office space as small as nine square metres. They also share data, enabling safety features such as a warning if the surgeon chooses a flap size too small to accommodate the ablation zone. UltraFlap also supports other surgical applications, including sub-Bowman keratomileusis, intracorneal ring segments, lamellar keratoplasty, penetrating keratoplasty and self-sealing keratoplasty.

Faith affects treatment compliance in glaucoma

A broad awareness among ophthalmologists regarding the religious beliefs of the patient groups they treat will allow them to formulate management plans in keeping with these beliefs without compromising care, according to research presented at the joint meeting of the American Academy of Ophthalmology (AAO) and the European Society of Ophthalmology (SOE) in Atlanta, Georgia.

Increasingly, ophthalmologists care for patients of diverse backgrounds and this trend is accelerating the need for reliable information on the interaction of religious beliefs and compliance with prescribed treatments.

The effectiveness of glaucoma treatment, in particular, often depends on patients’ ability and willingness to self-administer eye drop medications on a regular schedule over months or years. Glaucoma patients often notice no symptoms in the early stages of the disease, which poses challenges for physicians in motivating patients to stick to treatment regimens. If patients neglect treatment until their vision noticeably declines, the damage is often irreversible.

Many of the world’s religions practise obligatory or voluntary fasting (abstaining from food and often also fluid) during periods that can last from a few days to more than a month, on an annual basis. Researchers led by Nishant Kumar, MBBS, of the University Hospital, Liverpool, UK, studied patient compliance in relation to fasting by analysing 350 surveys completed by members of the world's major faiths: Islam, Hinduism, Jainism, Christianity, Judaism, Bahai, and Buddhism (50 surveys per religion) — the first study of its kind, the researchers believe.

Population reports show that approximately 20 per cent of the world’s people are Muslim and about 15 per cent are Hindu; fasting is important to both religions. It is mandatory during the daylight hours of the month of Ramadan for Muslims; for Hindus fasting is generally voluntary.
Dr Kumar’s team previously surveyed Muslim patients on their use of prescribed eye drops during Ramadan and concluded that treatment compliance was significantly reduced in patients who kept the fast. If patients reduced or stopped their glaucoma treatment for an extended period, such as the month of Ramadan or other continuous fasting periods, their vision could be adversely affected.

In the new survey, the majority of patients self-identified as Hindus, Muslims and Jains stated that the use of eye drops during their fasting hours would break their fast, and therefore they would not use drops while fasting. However, these patient groups said they would be more likely to use drops while fasting for painful eye conditions or if vision was affected. The majority of Christian, Buddhist, Bahai and Jewish survey respondents did not believe that using drops would break their fasts, and stated that they would use eye drops during their fasting periods.
“A broad awareness among ophthalmologists regarding the religious beliefs of the patient groups they treat will allow them to formulate management plans in keeping with these beliefs without compromising care,” said Dr Kumar.