Advanced Medical Optics (AMO; Santa Ana, California), a global ophthalmic surgical and eye care products company, has voluntarily recalled 18 lots of its 12-ounce Complete MoisturePlus multipurpose contact lens care solution and Active Packs in the U.S. after three lots sold in Japan were found to have bacterial contamination which compromised sterility. The problem was traced to a production-line issue at AMO’s manufacturing plant in China.
Of the 2.9 million units being recalled, 183,000 units were shipped to the U.S. and the remainder was shipped to Asia Pacific and Japan. Products made in AMO’s facility in Spain, which produces the vast majority of its contact lens solution products distributed in the U.S. and Europe, are not affected by the recall, the company said.
Steve Chasterman, a spokesman for AMO, told Medical Device Daily that “this is an isolated issue, not a formulation issue” and that the recall is being done as a precautionary measure “in the best interest of our consumers.”
“Because three lots of products we sold in Japan were found to have sterility issues we decided we would recall the lots in the U.S. that were produced on the same production lines in the same production period,” Chasterman said.
The recalled units were produced between mid June and the end of October, Chasterman said.
Non-sterility of a contact lens solution may have serious health consequences, including eye infection and microbial keratitis, the company said. AMO said it has not received any reports of adverse health events associated with the recalled product lots in the U.S.
AMO expects the recall to reduce its revenue for the remainder of 2006 and 2007 by $40 million to $45 million.
The recall does not include 4-ounce and 16-ounce bottles, or professional samples and packs provided to eye care practitioners. AMO has temporarily ceased all manufacturing at its China facility and scheduled a special cleaning and sanitation of the manufacturing areas and all applicable equipment.
Earlier this year eye care products company, Bausch & Lomb (B&L; Rochester, New York), faced a similar battle when it recalled its ReNu with MoistureLoc contact lens solution to all markets worldwide in May, saying the product may increase the risk of a potentially blinding eye infection called Fusarium keratitis (Medical Device Daily, May 16, 2006). The company had already pulled the product from the U.S. in April and in parts of Asia earlier in the year after it was linked to a rash of the fungal infections which can scar the cornea and potentially blind its victims.
That is why AMO is being quick to differentiate its recall problem, which it says is strictly a production-line issue, from the B&L recall which was reportedly linked to a number of factors, including the formulation of MoistureLoc itself.
“While this issue is limited to two of the four production lines in the China facility, we have temporarily ceased all manufacturing there to clean and sanitize the plant,” said Jim Mazzo, AMO chairman, president/CEO. “We want to be abundantly certain that eye care practitioners and their patients know they can continue to rely on and trust AMO for products that meet high quality standards. We are working aggressively to replace recalled product and minimize the inconvenience this action may cause.”
The 183,000 units recalled represents less than 1% of Complete MoisturePlus contact lens products distributed in the U.S. each year. Based on its investigation to date, AMO believes the likelihood of users experiencing an adverse reaction is low.
As a result of the recall and related manufacturing capacity constraint, AMO expects its 2006 revenue to be between $985 million and $1 billion, compared to prior guidance of $1.01 billion to $1.02 billion. For 2007, the company now expects revenue to be in the range of $1.06 billion and $1.08 billion, compared to $1.08 billion and $1.1 billion.
AMO also expects to incur about $35 million to $40 million in charges and costs to complete the recall, remedy the manufacturing issue and restore market share. Those costs include primarily inventory writedowns, recall costs, plant costs, freight and logistics costs, as well as anticipated increased marketing expenses.
As a result of the change in anticipated revenue and the associated reduction in margin, coupled with recall-related spending for the balance of 2006 and the increased effective tax rate due to reduction of earnings outside the U.S., AMO now expects 2006 adjusted EPS to be between $1.30 and $1.40, compared to previous guidance of $1.85 to $1.90. For 2007, the company now expects adjusted EPS to be between $1.85 and $2.00, compared to prior guidance in the range of $2.25 to $2.35. These actions will affect other financial metrics such as adjusted gross margin and adjusted operating margin for 2006 and 2007.
“AMO is committed to taking all necessary measures to remedy this production-line issue and protect the trust physicians and patients place in our products,” said Randy Meier, executive vice president of operations; president of global eye care and chief financial officer. “Complete MoisturePlus products have been used safely by millions of contact lens wearers since their introduction in 2003 and are supported by our 50-year heritage of meeting high safety and efficacy standards.”
AMO expects production at the China facility to be suspended for about 10 to 12 weeks. Operations at the company’s eye care facility in Alcobendas, Spain are unaffected by this action and production continues uninterrupted.
AMO has operations in 24 countries and markets products in about 60 countries.