Novartis has raised its sales and cost-savings forecasts for its Alcon eyecare unit, acquired in a $51 billion deal which closed earlier this year, saying it provides a platform for robust, long-term growth.
The manufacturer of eye medications and ophthalmic devices has been a highly profitable business for years, with strong revenue growth thanks to the aging of the world's population, a strong R&D pipeline and latterly expanding operations in emerging markets.
Over the last seven years, both eye medications and ophthalmic devices have outperformed the overall pharmaceutical market in terms of average annual growth, rising 13% and 8%, respectively, according to Novartis' chief executive Joe Jimenez.
In the coming years he expects Alcon sales to grow by high single-digit or low double-digit percentages, ahead of earlier forecast of mid- to high single digits. Alcon reported sales of $7.8 billion in 2010 as a separate company.
Part of the increase in revenues will come from growth in the number of cataract procedures carried out, with greater adoption of more advanced and expensive phacoemulsification techniques which boosts the return per procedure. Jimenez also sees great potential in new implantable intraocular lenses (IOLs).
Cost-savings from the integration are also coming in higher than expected, at $350 million a year by 2013, up from $300 million. Moreover, productivity improvements across the group as a whole helped Novartis achieve $1.2 billion in savings in the first half, with the full-year likely exceeding the $1.9 billion achieved in 2010.
"This transaction was about long-term growth and not just cost synergies," said Jimenez. "We believe that Alcon has significant growth potential by leveraging the Novartis expertise in research, market access, and reimbursement, among others."
The company also announced that long-standing head of drug development, Trevor Mundel, will be leaving the company in December to join The Bill & Melinda Gates Foundation as executive director of its global health programme.