Ready for some big news? Johnson & Johnson announced they have entered into a definitive agreement to acquire Abbott Medical Optics (AMO) for $4.325 billion in cash. AMO’s business segments include cataract surgery, laser refractive surgery, and consumer eye health, and reported sales in 2015 were $1.1 billion.
Ready for some big news?
Johnson & Johnson (J&J) announced it has entered into a definitive agreement to acquire Abbott Medical Optics (AMO) for $4.325 billion in cash. AMO’s business segments include cataract surgery, laser refractive surgery, and consumer eye health, and reported sales in 2015 were $1.1 billion, according to the company.
“We’ve been keeping our eye on the eye health space for quite some time,” said Ashley McEvoy, company group chairman, responsible for Johnson & Johnson’s Vision Care Companies. “We really look to eye health as it’s one of the largest health care segments, growing north of 5%. With the acquisition of Abbott Medical Optics’ strong and differentiated surgical ophthalmic portfolio, coupled with our world-leading ACUVUE contact lens business, we will become a more broad-based leader in vision care.
"Importantly, with this acquisition we will enter cataract surgery – one of the most commonly performed surgeries and the number one cause of preventable blindness,” McEvoy added.
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AMO is widely known for its IOLs and specialty in cataract surgery. With more than 100 million eyes worldwide compromised by cataract-related visual deficiencies, cataracts are of the most common surgeries performed and are the primary cause of preventable blindness.
In the refractive world, AMO also has advanced LASIK technologies designed which are aimed to enhance surgeon productivity and correct myopia, presbyopia, and astigmatism.
The acquisition also includes AMO’s consumer eye health products, which include over-the-counter dry eye drops, as well as cleaning solutions for contact lenses.
The transaction is expected to close in the first quarter of 2017. Following the expected closing, sales will be reported in the medical devices segment as a separate platform within vision care. The net impact of the acquisition is not expected to impact Abbott's overall targeted ongoing earnings per share in 2017, according to prepared statements from the companies.
"We've been actively and strategically shaping our portfolio, which has recently focused on developing leadership positions in cardiovascular devices and expanding diagnostics," said Miles D. White, chairman and chief executive officer, Abbott. "Our vision care business will be well-positioned for continued success and advancement with Johnson & Johnson, and I'd like to thank our employees for building a successful business." â¨
A coming home story
This is not J&J’s first rodeo with the ophthalmic space. In the 1980s, the corporation acquired IOLAB, an ophthalmic product line, and sold it to CIBA Vision in 1994. At that time, reimbursements were significantly low and deceasing in cataract areas, McEvoy said. However, reimbursement rates have been consistent over the past 10 years and cataract equipment is becoming more and more affordable, which makes the acquisition an appropriately timed "coming home" story.
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It’s also a coming home story for Tom Frinzi, current senior vice president of AMO, who previously worked at J&J as a vice president and national sales manager early in his career.
“I believe this will be a better environment for AMO. I got the impression that AMO’s purchase by Abbott was somewhat restricting in that there was a huge corporate culture from Abbott that was not interested very much in the eye care aspect of their business,” said Richard Hoffman, MD, Casey Eye Institute, Oregon Health and Science University, Eugene, OR. “The new relationship with J&J will hopefully be more ‘eye-friendly’ since many of their products are currently in the ophthalmic and optometric sphere. I am hopeful that the new relationship will be a good thing for AMO and J&J.”
Dr. Hoffman is also a member of the Ophthalmology Times editorial advisory board.
“As ophthalmologists, we understand the importance of continued innovation in the field of ophthalmology given the consistent rise in patients with eye conditions from an aging baby boomer population,” said Joshua Mali, MD, The Eye Associates, Sarasota, FL, who is also a regular blogger with Ophthalmology Times. “Therefore, I definitely support and applaud Johnson & Johnson's decision to acquire a well-established and trusted ophthalmic company in AMO. The expanded research and development budget of a pharmaceutical giant like J&J will help advance ophthalmic surgical technology and consumer eye health products to benefit our patients. Now, J&J will be a powerful player in the ophthalmic surgical space in addition to its world-class consumer health products and pharmaceutical business."