Health of the ophthalmic market remains 'strong'

April 16, 2005

Washington, DC &#8212 The ophthalmic industry was given a sound bill of health in an independent analysis of the market. Kenneth P. Taylor, OD, provided an overview of the ophthalmic market in terms of trends, growth, and the view from Wall Street in a presentation at the American Society of Cataract and Refractive Surgery annual meeting.

April 17 - Washington, DC - The ophthalmic industry was given a sound bill of health in an independent analysis of the market. Kenneth P. Taylor, OD, provided an overview of the ophthalmic market in terms of trends, growth, and the view from Wall Street in a presentation at the American Society of Cataract and Refractive Surgery annual meeting.

"We will see continued growth, though a bit lower than 2004," Dr. Taylor said. A number of underlying fundamentals supporting that growth include product life-cycles, currency, reimbursement, expanded labeling and indications, and consumer confidence.

"These factors should also continue to drive merger and acquisition activity as we saw this past year," he added. Dr. Taylor is managing director of Taylor Consulting Group LLC, Marblehead, MA.

Dr. Taylor projected that ophthalmic growth will be in the cataract (4% to 6%); pharmaceutical (8%); contact lens (8% to 10%); and refractive (12% to 15%) markets.

There are a number of reasons for optimism in the cataract surgery segment, he explained. Cataract procedures continue to grow as the population ages. Also, the convergence of cataract and refractive IOLs creates new opportunies. In addition, there are numerous IOL options for presbyopia under development or becoming available.

In the refractive surgery market, improved economic conditions are providing a lift, according to Dr. Taylor. LASIK procedure volume is moving upward. The average pricing of LASIK has increased to about $1,700. In addition, there is increasing conversion-approaching 50% for custom procedures-and continued growth with non-LASIK procedures.

While ophthalmic pharmaceutical growth slowed a bit this past year (8% to 9%), it still outpaces the overall pharmaceutical market, he said. There was reduced growth in third-generation fluoroquinolones, and anti-inflammatory and allergy products. Higher growth was seen in glaucoma medications and dry eye products.

The growing availability of new drugs for age-related macular degeneration will drive the overall segment.

From Wall Street's perspective, there has been significant financial activity in the past year with mergers and acquisitions and initial public offerings. More analysts are recommending a "strong buy" than 1 year ago, Dr. Taylor said.

In summary, the ophthalmic market continues to have solid growth potential for both companies and practices. Conditions continue to be driven by changing demographics, advances in technology, and growth in non-reimbursed procedures.