Senior Staff Writer
Visions of a much wider scope in the eye industry – and an entry in the cataract surgery market – are behind Johnson & Johnson Family of Companies' (J&J) plan to acquire Abbot Medical Optics Inc. (AMO) for nearly $4.33 billion in cash.
Ashley McEvoy, company group chairman for J&J's vision care unit, said the addition of AMO's surgical ophthalmic portfolio to Johnson & Johnson's Acuvue contact lens business will give the company a more broad-based reach in the eye health arena, but the cataract surgery opportunity makes it an especially important acquisition.
Considered the primary cause of "preventable blindness," McEvoy said cataract surgery is also the most commonly performed type of eye surgery.
J&J, of New Brunswick, N.J., said the deal should close in the first quarter of 2017 and also includes AMO's laser refractive surgery and consumer eye health products. Abbott Laboratories, of Abbott Park, Ill., payed about $2.8 billion in 2009 to enter the vision care segment by acquiring AMO, which at the time was known as Advanced Medical Optics. (See Medical Device Daily, Sept. 4, 2009.)
Abbott CEO Miles White attributed the decision to sell the vision care business to the company's recent efforts to "shape its portfolio" with more of a cardiovascular and diagnostics focus.
J&J's bid for AMO wasn't exactly a surprise, according to Larry Biegelsen, of Wells Fargo Securities LLC, because the company previously expressed an interest in expanding its eye care franchise beyond contact lenses. But the analyst said it is unclear if the deal negates Abbott Laboratories' need to raise funds for its $5.8 billion acquisition ($56 a share) of Alere Inc., assuming that deal even goes through.
Abbott and Alere agreed earlier this week to work with a mediator to resolve its court battle, which was Waltham, Mass.-based Alere's legal push to force Abbott to honor the deal that it agreed to earlier this year.
Abbott's initial interest in Alere seemed to diminish after Alere delayed filing its annual financial report.
A Department of Justice subpoenae for sales documents related to the Foreign Corrupt Practices Act in March didn't make the deal any more enticing.
Abbott tried to back out of the commitment, but Alere promptly rejected the offer. (See Medical Device Daily, Feb. 2, Aug. 31, and Sept. 13, 2016.)
AMO reported sales of about $1.1 billion in 2015. Biegelsen said AMO's Lasik business has "been under pressure recently from a sluggish market and competition" but its cataract business has done well recently due to new products such as the Symfony intraocular lens. Sales of AMO's contact lens solutions is a flat-to-declining business though, he added.
Johnson & Johnson's shares (NYSE; JNJ) slipped 38 cents (0.32 percent) Friday, closing at $118.25, while Abbott's stock (NYSE; ABT) bumped up 75 cents (1.82 percent) to close at $41.87.