Johnson & Johnson to Acquire Abbott Medical Optics for $4.325 Billion
In a major acquisition that will consolidate and reshape the eye care landscape, Johnson & Johnson announced on Friday a definitive agreement to acquire Abbott Medical Optics (AMO) for $4.325 billion in cash. The acquisition, the latest in a wave of mergers among medical device companies, will include ophthalmic products in three business segments: cataract surgery, laser refractive surgery, and consumer eye health.
"Eye health is one of the largest, fastest growing and most underserved segments in health care today. So we think that the acquisition of Abbott Medical Optics and their strong, differentiated surgical ophthalmic portfolio, coupled with our world-leading Acuvue contact lens business, really enables us to be much more broader-based as a leader in eye health,” Ashley McEvoy, company group chairman, responsible for Johnson & Johnson's vision care companies, said in an interview with Eyewiretoday.com. “When you couple that with the backdrop of a Johnson & Johnson, we really get energized at our ability to reach more patients, and really grow the entire category.”
Ms. McEvoy said that the acquisition provides Johnson and Johnson a great opportunity for growth, particularly in the cataract surgery business.
“Cataract procedures are growing pretty much consistently – around 3 and a half percent globally. And it’s really about the adoption of premium intraocular lenses. I think the technology has gotten a heck of a lot better than 10 years ago, and the capital equipment used to do the procedures has gotten more efficient with really the penetration of the lasers,” Ms. McEvoy said. “I think when we look around the world, there are still a lot of patients who are not getting managed. When we look in the developing world, we see low penetration of some of these premium solutions to deliver superior care.”
“When we look at the shortage of practicing surgeons around the world, we really would like to partner with that community to go make sure that the access is there for the patients. So those are the areas, particularly related to cataract, that we think will have some nice value going forward,” Ms. McEvoy added.
In addition to the cataract business, AMO, which reported sales of $1.1 billion in 2015, has LASIK technologies and consumer eye health products, which include over-the-counter drops for dry eye, as well as multipurpose solutions and hydrogen peroxide cleaning systems for patients who wear contact lenses.
"We've been actively and strategically shaping our portfolio, which has recently focused on developing leadership positions in cardiovascular devices and expanding diagnostics," Miles D. White, chairman and chief executive officer, Abbott, said in a company news release. "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."
In January 2009, Abbott purchased Advanced Medical Optics for $2.8 billion, including debt.
Last year, Johnson & Johnson, based in New Brunswick, New Jersey, reported $25.1 billion in medical-device sales, while AMO's parent company Abbott had $20.4 billion in total revenue.
The transaction is expected to close in the first quarter of 2017. Following the closing, sales will be reported in the Medical Devices segment of Johnson & Johnson as a separate platform within vision care. Meanwhile, Abbott said the net impact of the transaction is not expected to impact Abbott's overall targeted ongoing earnings per share in 2017.
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