Murthy Simhambhatla took over the top job at Abbott Medical Optics from Jim Mazzo six months ago with word that he planned to focus on “building on the foundation” laid by his prominent predecessor.
The new president of the Santa Ana-based unit of Abbott Laboratories made good on the pledge last week with a pair of deals that ranged from Silicon Valley to South America.
Abbott Medical is buying OptiMedica Corp. in Sunnyvale for $250 million, plus additional payments that could total as much as $150 million depending on milestones.
OptiMedica makes laser devices used in cataract surgery.
Its Catalys device is designed to allow surgeons to replace manual steps in cataract surgery with “a precise … laser technology,” Abbott Medical said in a press release.
Catalys has been cleared by the Food and Drug Administration and has European regulatory approval.
Abbott Medical also said it bought Vistatek, a Brazil-based company that has distributed its cataract and laser vision correction products. Financial terms weren’t disclosed.
“We see laser cataract surgery as a field that can further enhance our leadership position in vision care,” Simhambhatla said.
OptiMedica’s “talent and technology” drew Abbott’s interest, said Simhambhatla, who took over for longtime Abbott Medical boss Jim Mazzo in January.
“When it comes to laser cataract surgery, it’s still early days,” Simhambhatla said. “However, we believe that this technology will very quickly evolve to become a mainstay of cataract surgery.”
Abbott’s buy of OptiMedica is scheduled to close by the end of the year, pending regulatory approvals. Simhambhatla said there are no plans to move the company to OC from Sunnyvale.
“It’s not uncommon for us to have these remote sites,” he said.
Abbott Medical employs about 600 people in Orange County and more than 3,500 companywide, with annual sales of about $1.1 billion—about 3% of Chicago-based parent Abbott Laboratories’ total in 2012.
Abbott Medical’s sales totaled $550 million for the first half of this year, or 10% of the parent company’s total of $5.5 billion. The increased percentage of overall sales from the OC operation owes largely to Abbott Laboratories’ move to spin off its branded drug business, which brought in nearly half of its revenue last year.
Simhambhatla said the deal for OptiMedica came after Abbott Medical had been “scanning the landscape” of companies it could acquire to grow its cataract surgical business.
“Certainly, laser cataract surgery rose to the top as one of those opportunities,” he said.
Buying OptiMedica “builds upon [Abbott’s] strength in cataract treatments,” Danielle Antalffy, a medical device analyst with Boston-based investment bank Leerink Swann LLC, said in a note issued on the deal.
“Catalys is already approved in both the [European Union] and U.S. and will add to [Abbott’s] large—and growing—treatment modalities for cataracts,” Antalffy wrote, adding that cataract surgery now accounts for around 60% of Abbott Laboratories’ vision care sales.
Vistatek
“We believe that Brazil has tremendous potential and Latin America more broadly,” Simhambhatla said about the acquisition of Vistatek.
He said the primary rationale for the deal was to bring the company closer to its customers and that “we really see this acquisition as the keystone of our ability to continue our expansion in Latin America.”
Brazil has a population of some 200 million with an aging population and a market for cataract surgery estimated at $80 million to $90 million, Simhambhatla noted.
Simhambhatla also said vision correction surgeries are “somewhat underserved in Brazil,” and that by having a direct sales outlet there, “we hope to ignite interest in and develop that market, as well.”
