Orange County’s status as a center of the eye device industry has gotten some emphasis with a couple of deals that highlight the breadth of the sector here.
Bausch & Lomb Inc.’s Aliso Viejo-based eye surgery unit signed an agreement to distribute products from a business unit of Danaher Corp., which also has a large OC presence.
The Bausch & Lomb Global Surgical unit will add ophthalmic surgical microscopes and accessories made by Danaher’s Leica Microsystems GmbH to its sales lineup in select U.S. and international markets.
The pact with Leica Microsystems follows a filing for an initial public offering by Bausch’s owner, New York-based private equity firm Warburg Pincus LLC. The IPO could raise up to $1.5 billion and peg Bausch’s value at $9 billion to $10 billion, according to analysts.
Rochester, N.Y.-based Bausch makes contact lenses, contact lens solutions, and prescription drugs, in addition to surgical equipment. The company made OC its eyesurgery hub after acquiring Aliso Viejo-based startup Eyeonics Inc. in 2008.
Bausch executives have described Orange County as “right in the center of the heartbeat of where the ophthalmic innovation world resides—southern OC. This is where the action is.”
The company remained tight-lipped on the Leica Microsystems deal, citing a quiet period on the IPO filing with the Securities and Exchange Commission. A statement issued by John Barr, the Aliso Viejo-based surgical unit’s president, indicated it could be seeking similar distribution deals.
Praises
Bausch is a “perfect partner for companies such as Leica Microsystems looking to broaden their market reaches though a powerful worldwide commercial infrastructure,” Barr said.
Leica Microsystems President Eoghan O’Lionard hailed the deal as a way to give ophthalmic surgeon customers “a single-source supplier for their equipment needs.”
Bausch has more than 3,700 workers in its sales organization, 11,200 workers in total, and sells products in more than 100 countries, according to its SEC filing. It employs about 200 in Aliso Viejo.
Leica Microsystems is based in Wetzlar, Germany. It’s one of many companies owned by Washington, D.C.-based conglomerate Danaher, which is no stranger to Orange County and its medical device sector.
Danaher’s local units include Beckman Coulter Inc., a Brea-based maker of medical diagnostic machines and supplies, and Orange-based diversified dental product maker Sybron Dental Specialties Inc.
Leica Microsystems is part of Danaher’s life sciences and diagnostic division, along with Beckman. The division accounts for about a third of Danaher’s annual sales of $18 billion. Beckman’s yearly revenue is estimated in the $2 billion-to-$3 billion range. Industry sources estimate Leica Microsystems at about $750 million in revenue.
Leica Microsystems is “regarded highly” within the industry and has “performed very well,” said Richard Eastman, an analyst who follows Danaher for Milwaukee-based brokerage Robert W. Baird & Co.
Sybron is part of Danaher’s dental business, which had $2 billion in sales in 2012, or 11% of the conglomerate’s total.
Local Competitors
Bausch, which had $3.1 billion in sales last year, has several competitors along various parts of its business, including: Irvine-based drug maker Allergan Inc.; Abbott Medical Optics in Santa Ana, a unit of Chicago-based Abbott Laboratories; and Alcon Inc., a Fort Worth-based unit of Novartis AG in Switzerland. It has 850 workers in Orange County.
Bausch’s filing gives some details about its Aliso Viejo unit, which includes the Crystalens, SofPort, Akreos and enVista replacement intraocular lenses and Victus, a femtosecond laser for cataract, vision correction and therapeutic procedures. It had $508.1 million in sales, down slightly from a year ago, and accounted for about 17% of overall revenue for the company.
Other Ties
Bausch’s second-largest unit, pharmaceuticals, accounted for $1.3 billion in sales last year. It includes drugs it acquired through its $488 million buy of Irvine-based Ista Pharmaceuticals Inc. last year—a deal seen as a key strategic move in preparation for the IPO.
The Ista buy brought Bausch Bromday to treat inflammation after cataract surgery and Bepreve for eye allergies.
Bausch reportedly sought Ista as a way to improve its prospects for a new IPO—the Wall Street Journal last year cited unnamed sources as saying that the company had put off consideration of an IPO in favor of acquisitions to beef up its product lineup.
Brent Saunders, Bausch’s chief executive, had told the newspaper that management’s focus was to build a strong company with no timetable for an IPO. The sources, however, said IPO timing would depend on market conditions and progress in integrating Ista.
Another local tie: Warburg acquired Bausch only after a hot pursuit by what was then Santa Ana-based Advanced Medical Optics Inc., now Abbott Medical Optics. Bausch rejected Advanced Medical’s $4.23 billion offer in favor of Warburg’s all-cash bid.
Bausch had several challenges in the late 2000s prior to its buyout by Warburg.
Those included accounting problems that forced it to restate its financial results. It was also forced to recall its ReNu with MoistureLoc contact lens solution after a link was found to a potentially blinding eye infection.
