(Source: Business Wire)
Alcon, Inc. (NYSE:ACL) reported global sales of $1,677 million for the second quarter of 2009, a 3.3 percent increase excluding the impact of foreign exchange fluctuations, or a decrease of 3.4 percent compared to the second quarter of 2008 on a reported basis. Net earnings for the second quarter of 2009 rose 2.6 percent to $582 million, or $1.94 per diluted share, compared to $567 million, or $1.88 per diluted share, in the second quarter of 2008.
"Organic sales growth is coming in as expected in 2009, as we continue to execute our sales and marketing strategies that allow us to grow even in the face of global economic weakness," said Kevin Buehler, Alcon's president and chief executive officer. "We expect that further development of key businesses like glaucoma, advanced technology intraocular lenses and emerging markets will enable us to achieve our full year guidance of mid-single digit organic sales growth with somewhat higher organic growth in the second half of the year than in the first, and to translate that growth into solid earnings performance."
Sales Highlights
Summarized below are the key drivers of sales in the second quarter of 2009. All growth comparisons are for the second quarter of 2009 compared to the second quarter of 2008. Organic sales growth rates exclude currency impacts and acquisitions and are non-GAAP measures that are reconciled in a table at the end of this release.
International organic sales growth was 5.9 percent (-6.4 percent reported), with emerging markets rising 8.1 percent organically (-8.2 percent reported).
U.S. sales stabilized as they increased 0.3 percent due to strong contributions from advanced technology AcrySof® intraocular lenses and share gains and market growth in glaucoma offset by generic competition to TobraDex® ophthalmic suspension.
Advanced technology intraocular lenses rose 38.3 percent organically, (+30.1 percent reported) due to market share gains by the AcrySof® ReSTOR® Aspheric +3.0 lens, which was launched in the United States in January of 2009, and the continued rapid adoption of AcrySof® IQ Toric by cataract surgeons.
Glaucoma sales rose 16.6 percent organically (+8.3 percent reported) led by a 23.6 percent organic rise (+15.4 percent reported) in global sales of TRAVATAN®, TRAVATAN Z® and DuoTravTM ophthalmic solutions, as these products continued global market share growth in the prostaglandin category. The launch of Azarga® ophthalmic solution in the European Union contributed to unit growth of 15.5 percent for the Azopt®/Azarga® family.
Sales of allergy products declined 1.8 percent organically (-4.8 percent reported), consistent with the company's expectations for a weaker spring allergy market in the United States. The company increased combined Patanol® and Pataday ophthalmic solutions U.S. market share to 78.6 percent May year-to-date, an improvement of 0.8 percent over the prior year.
Earnings Highlights
Summarized below are the key drivers of earnings in the second quarter of 2009. All growth comparisons are for the second quarter of 2009 compared to the second quarter of 2008.
Operating income margin rose from 37.2 to 37.7 percent of sales and net income margin increased from 32.6 percent to 34.7 percent of sales.
Cost management programs and foreign exchange fluctuations led to a sharp reduction in selling general and administrative expenses from 30.4 to 27.9 percent of sales.
Other income in the second quarter of 2009 was $19 million compared to $4 million in the second quarter of 2008, due primarily to gains from foreign currency transactions.
The effective tax rate for the second quarter of 2009 was 10.6 percent, which included approximately one percentage point of period benefits related to settlement with tax authorities on prior year taxes.
Other Highlights
Alcon has entered into a five-year collaborative research agreement with AstraZeneca for the exclusive ophthalmic discovery and potential development rights to AstraZeneca's compound library. The agreement covers multiple classes of small molecules with lead compounds targeting development of drugs to treat sight-threatening conditions such as glaucoma, wet and dry age-related macular degeneration and other retinal diseases, as well as ocular allergy, dry eye and other inflammatory eye conditions.
Alcon has entered into a research and licensing agreement with PhiloGene, Inc. for rights to a VEGF protein. The company plans to develop this protein for the treatment of wet age related macular degeneration and diabetic macular edema.
The company plans to launch TOBRADEX® ST ophthalmic suspension, a new formulation of tobramycin/dexamethasone formulated with the ZexioTM delivery system that enhances bioavailability to targeted tissues.
Alcon completed the European Union decentralized registration procedure for Vigamox® ophthalmic solution. National licenses have been issued by Bulgaria, Iceland and Romania and the company is awaiting licensing from the remaining 23 countries.
The company filed an NDA supplement requesting approval of Patanase nasal spray for use in patients from 6 months to 12 years of age.
Alcon filed a drug approval application in selected European Union markets for CILODEX® otic suspension for the treatment of middle and outer ear infections. CILODEX® is the European trade name for CiproDex® otic suspension marketed in the United States.
Alcon commenced a Phase 2 clinical trial of the aganocide compound NVC-422 for viral conjunctivitis. This compound is licensed from NovaBay, Inc.
Alcon notified its publicly-listed German subsidiary, WaveLight AG, that it plans to acquire the remaining publicly-held WaveLight shares at a price of EUR 20.02 pursuant to German securities law.
The court vacated the July 27, 2009 trial date that had been scheduled for Alcon's patent infringement action against Apotex related to Patanol®. The court said a new trial date would be set by a separate order.
Financial Guidance
The company reaffirmed its previously-issued sales guidance forfull year 2009 organic sales growth to be in the mid-single digits. The company raised its guidance for full year 2009 diluted earnings per share on a U.S. GAAP basis to between $6.20 and $6.35 and between $6.25 and $6.40 on a non-GAAP adjusted basis (excluding restructuring charges taken in the first half of 2009). This increase reflects positive earnings performance in the first half of the year, which is expected to be partially mitigated by higher R&D and SG&A expenses in the second half of the year.
About Alcon
Alcon, Inc. is the world's leading eye care company, with sales of approximately $6.3 billion in 2008. Alcon, which has been dedicated to the ophthalmic industry for 65 years, researches, develops, manufactures and markets pharmaceuticals, surgical equipment and devices, contacts lens solutions and other vision care products that treat diseases, disorders and other conditions of the eye. Alcon operates in 75 countries and sells products in 180 markets. Alcon's majority shareholder is Nestlé, S.A., the world's largest food company. For more information on Alcon, Inc., visit the Company's web site at www.alcon.com.
ALCON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (Unaudited) (in millions, except share data) Three months ended Six months ended June 30, June 30, 2009 2008 2009 2008 Sales $ 1,677 $ 1,736 $ 3,170 $ 3,272 Cost of goods sold 415 415 769 813 Gross profit 1,262 1,321 2,401 2,459 Selling, general and administrative 468 527 940 1,011 Research and development 157 142 303 287 Amortization of intangibles 5 6 12 15 Operating income 632 646 1,146 1,146 Other income (expense): Gain (loss) from foreign currency, net 9 (3 ) (1 ) 3 Interest income 13 20 24 46 Interest expense (5 ) (14 ) (10 ) (32 ) Other, net 2 1 6 (10 ) Earnings before income taxes 651 650 1,165 1,153 Income taxes 69 83 131 157 Net earnings $ 582 $ 567 $ 1,034 $ 996 Basic earnings per common share $ 1.95 $ 1.90 $ 3.46 $ 3.34 Diluted earnings per common share $ 1.94 $ 1.88 $ 3.44 $ 3.30 Basic weighted average common shares 298,744,287 298,477,807 298,663,437 298,100,370 Diluted weighted average common shares 300,638,975 301,986,076 300,328,778 301,558,546 -------------------------------------------------------------------------------
ALCON, INC.
