Recently, according to the Financial Times, Bausch Lomb, the world's second-largest ophthalmic giant, is seeking to sell itself and completely spin off from its parent company, Bausch Health. In recent years, under the implementation of merger and acquisition strategies, Doctoral Health has developed its business pipeline comprehensively. However, due to being trapped in a huge debt crisis, it had to reduce its burden and slim down. Bausch&Lomb is one of the targets of its sale and spin off this time.

Mergers and acquisitions are both successful and unsuccessful
Bausch&Lomb was founded in New York, USA in 1853 and was listed on both the New York Stock Exchange and the Toronto Stock Exchange in 2022. It has a development history of nearly 170 years. At first, Bausch&Lomb was just a small eyewear store, but over the years, it has become one of the world-renowned eye care companies. From the perspective of product pipeline, Bausch&Lomb has a full line of eye health products, including contact lenses, colored contact lenses, and contact lens care solutions. Nowadays, Bausch&Lomb has approximately 10000 employees worldwide and its products have been sold to over 100 countries.

In 2013, the predecessor of Doctoral Health, Canadian pharmaceutical giant Valeant, bought Bausch&Lomb from the US based Huaping Investment Group for $8.7 billion. The addition of Bausch&Lomb made Valeant one of the largest contact lens manufacturers in the world at that time, while Bausch&Lomb retained its original name and became its subsidiary.

This acquisition allows Valeant to join the ranks of the world's top 15 pharmaceutical companies and extends its product pipeline of eye medicines, contact lenses, and contact lens care products, as well as adding ophthalmic surgical equipment and instruments.

In August 2020, Dr. Kang announced that the Bausch&Lomb brand would be operated as an independent company. After independence, Bausch&Lomb was valued at between $20 billion and $30 billion, approaching the valuation of global ophthalmic leader Alcon and becoming the world's second-largest ophthalmic equipment company.

According to Baidu Stock Connect, as of the close of September 20th, the latest market value of Bausch&Lomb was $7.024 billion. As mentioned earlier, the reason for Doctoral's sale of Bausch&Lomb this time is due to Doctoral's huge debt, which was acquired through mergers and acquisitions, and also due to its acquisition strategy.

Since 2008, Valeant, the predecessor of Doctoral Health, has been obsessed with the benefits of mergers and acquisitions and has completed nearly 100 acquisitions. In the first few years, the merger and acquisition strategy did indeed bring it considerable profits. But the turning point began in 2015, and at the end of 2015, Valeant encountered a series of storms. Such as being caught in controversies over price increase strategies and the use of professional pharmacies to distribute drugs, as well as accusations of accounting fraud. As a result, Valeant's stock price plummeted, and at that time Valeant had already taken on a total debt of over $30 billion. For most of 2017, Valeant was "slimming down" to save itself.

In July 2018, Valeant officially changed its name to Doctoral Health. The executives of Doctoral Health have proposed a plan to investors, hoping to increase revenue again and begin actively repaying huge debts. But the effect is not significant. Currently, Dr. Kang still faces a huge debt of 21 billion US dollars, of which nearly 10 billion US dollars of debt will mature by the end of 2027. It should be noted that the patent for Dr. Kang's star product Xifaxan will expire in 2029, and the debt crisis and patent cliff are imminent.

As the world's second-largest ophthalmic equipment company, the value of Bosch's products goes without saying, and it has become one of the goals of Dr. Kang's weight loss and burden reduction efforts. Currently, Dr. Kang holds 88% of Bosch's shares. According to media reports, Bausch&Lomb is currently evaluating the interest of potential buyers and hopes to bypass the obstacles set by investors for the spin off by selling.

Morgan Stanley analyst Robbie Marcus analyzed that it seems most likely that Bausch&Lomb will be sold to private equity investors, as transactions with companies such as Alcon, Johnson&Johnson, or Cooper may face antitrust scrutiny due to their market share in the contact lens market. Selling to pharmaceutical companies like AbbVie is also likely to be challenging, as it holds a significant market share in the dry eye market.

And the analyst pointed out that after years of underinvestment by its parent company, Bausch&Lomb's contact lens and surgical product portfolio will require significant investment to be competitive, so it is not realistic for potential investors to profit by cutting costs and reselling after completing the acquisition.

Stable growth in multiple businesses
The future of Bausch&Lomb is still an unsolved mystery, but from the perspective of Bausch&Lomb itself, its own strength is quite remarkable. According to Bosch's Q2 financial report, its Q2 revenue was $1.216 billion, a year-on-year increase of 17.5%, but its net profit was a loss of $151 million and it had $4.6 billion in long-term debt.

From the perspective of business sectors:
The vision healthcare business is steadily growing, with revenue of 697 million US dollars in Q2 2024, a year-on-year increase of 8%. Mainly due to the dry eye product portfolio in the consumer eye care business, LUMIFY ® (bromonidine tartrate ophthalmic solution 0.025%) and eye vitamins, as well as the multifocal silicon hydrogel (SiHy) daily throw contact lenses and ULTRA in the contact lens business ® The sales.

The surgical business is also continuing to grow, with revenue of $209 million in Q2 2024, a year-on-year increase of 7%. Mainly due to the increase in demand for equipment, consumables, and implants driven by the high-end IOL product portfolio.

The ophthalmic drug business grew rapidly in the quarter, with revenue of 310 million US dollars in Q2 2024, a year-on-year increase of 60%. Mainly due to the acquisition of XIIDRA ®、 MIEBO's strong launch performance and sustained growth in US generic drugs and international business.
In the second quarter of 2024, all departments of Bosch have shown strong growth momentum, and with the growth of prescription and over-the-counter products, Bosch's leadership position in the dry eye disease product field has been strengthened. In addition, Bausch&Lomb has also launched multiple innovative new products, including dry eye nutritional supplements, INFUSE astigmatism day throw contact lenses, and EnVista Envy trifocal IOL.

The Chinese market is also a region that Bausch&Lomb highly values. As early as 1987, Bausch&Lomb entered the Chinese market and was one of the earliest foreign brands to enter China. At present, Bausch&Lomb has three independent operating companies in China, namely Beijing Bausch&Lomb Eye Care Products Co., Ltd., Bausch&Lomb (Shanghai) Trading Co., Ltd., and Shandong Bausch&Lomb Furuida Pharmaceutical Co., Ltd.

Among them, Beijing Bausch&Lomb mainly produces and sells eye care products, including transparent lenses, colored lenses, care products, etc; Shanghai Bausch&Lomb's main products are ophthalmic surgical products, including cataract, vitreoretinal surgical equipment, artificial lenses, related consumables, and surgical instruments; Shandong Bosilen's main business is the research and production capacity of ophthalmic drugs, surgical drugs, dermatological drugs, and internal medicine drugs. Its ophthalmic products "Runshu", "Runjie", and osteoarthritis treatment drug "Shipaite" have become well-known brands in China.

In addition, Bausch&Lomb is actively collaborating with local Chinese enterprises and institutions to further expand its presence in China.

During the earnings conference call in August of this year, Thomas Appio, CEO of Foxconn, stated that "the complete separation of Bausch&Lomb remains a strategic priority. According to sources cited by foreign media, private equity firms including Blackstone Group, Advent International, TPG Capital, CVC Capital, and Hellman&Friedman are evaluating a potential acquisition offer for Bausch&Lomb.

Source: https://news.yaozh.com/archive/44260.html