Bausch & Lomb Shares Plunge After Eye Infection Link

Archives Admin · #1 (**permalink**) 04-11-2006, 12:51 PM

Shares of Bausch & Lomb Inc. fell the most in five years after world's fourth-biggest maker of contact lenses shipping a cleansing solution linked to a rare fungal infection that can cause blindness.

The shares dropped as much as 21 percent and at least four analysts downgraded the stock. Bausch & Lomb suspended the solution ReNu with MoistureLoc, its fastest growing product for cleaning contact lenses, after the U.S. Centers for Disease Control and Prevention in Atlanta said it was reviewing reports of 109 cases of suspected fungal keratitis.

Of 30 cases reviewed so far, 26 involved wearers of soft contact lenses who were using Bausch & Lomb's ReNu products, the Rochester, New York-based company said. While ReNu with MoistureLoc accounted for $45 million in 2005 sales, other products in the ReNu line may also be tarnished, said Michael Weinstein, a J.P. Morgan analyst in New York, in a note to clients today.

``Halting lens-care sales in the U.S. represents a worst- case scenario of sorts, reminiscent of Johnson & Johnson's 1982 Tylenol scare,'' Weinstein said. He called the solution Bausch & Lomb's ``flagship product within the company's most profitable segment.''

J&J recalled 31 million bottles of Extra Strength Tylenol in 1982 after seven people died of poisoning by cyanide introduced into pill bottles on store shelves. The company subsequently packaged the pills in tamper-proof containers. The incident became the textbook case for product-crisis management after the medicine quickly recouped lost sales, partly because of the safety steps.

Market Leaders

More than 30 million Americans wear contact lenses, according to the St Louis-based American Optometric Association, representing 34,000 optometrists, students and technicians. According to Alcon Inc., the largest eye-care company with 2005 sales of $4.4 billion, Bausch & Lomb and Alcon each account for about 26 percent of the U.S. market for contact-lens solution.

Bausch & Lomb, a 153-year-old maker of optical products, gets 23 percent of its sales from lens-care products and 30 percent from contact lenses, according to its 2004 annual report. The company had 2004 sales of $2.2 billion.

The shares fell $9.81, or 17 percent, to $47.63 at 12:33 p.m. in New York Stock Exchange composite trading, after dropping as low as $45.50. Today's decline was the biggest since a 36 percent plunge on Aug. 24, 2000, when the company reduced its earnings forecast and fired Chief Executive Officer Carl Sassano. Analysts at First Albany Corp., Robert W. Baird & Co., Piper Jaffray & Co. and J.P. Morgan issued downgrades today.

Alcon, Advanced Medical

Shares of rival producers Alcon and Advanced Medical Optics jumped. Alcon, based in Hunenberg, Switzerland, and 75 percent- owned by Nestle SA, jumped $3.08, or 3 percent, to $104.30 in New York Stock Exchange composite trading.

Advanced Medical Optics, the Santa Ana, California-based, maker of the competing Complete and UltraCare lines of contact lens solutions, gained $2.53, or 5.6 percent, to $48 in New York Stock Exchange composite trading.

Walgreen Co. spokesman Michael Polzin said the Bausch & Lomb product hasn't been recalled and is still on the shelves of the biggest U.S. drugstore chain, based in Deerfield, Illinois.

``Should we get any further instructions from Bausch & Lomb today or some point in the future, we will of course act on that,'' Polzin said.

The U.S. Food and Drug Administration didn't declare the Bausch & Lomb action a recall. The agency declined to comment further as it investigates the matter, said Susan Cruzan, an agency spokeswoman, in an e-mailed statement.

Eye Fungus

The eye fungus can cause severe corneal infections that can lead to blindness, according to the American Optometric Association. Symptoms include sudden blurred or fuzzy vision, red, irritated eyes, pain and sensitivity to light.

Some patients reported significant vision loss and needed corneal transplants, the FDA said in a statement yesterday. Contact lens users may want to ``rub and rinse'' their lenses to reduce the risk of germs and infection rather than just immersing them in cleanser, the agency said. The source of the infection hasn't been identified, the FDA said.

``Until now, fungal keratitis has been rarely reported in the healthy soft contact lens-wearing population,'' the optometric association said in a note on its Web site.

Bausch & Lomb has no estimate how long shipments may be halted, spokeswoman Meg Graham said yesterday. Graham didn't return calls today seeking additional information.

FDA Chief

``There is not yet enough evidence to suspend the use of the product or to withdraw it,'' said Acting FDA Commissioner Andrew von Eschenbach in an interview today on the television network CNBC. ``We want patients to be aware of the concern.''

Antifungal drugs can be used to treat the infection and surgery may be necessary, depending on the amount of damage to the eye, according to the optometric association. Alcon's Natacyn is the only approved topical treatment for fungal keratitis and is often effective against strains like Fusarium, according to the association.

Bausch & Lomb stopped selling the product earlier this year in Singapore and Hong Kong following an unusual increase in the fungal disease. The New York and New Jersey health departments, with the CDC, issued an alert last month saying the Asian outbreak of severe corneal infections had surfaced in the U.S. It isn't clear whether the U.S. and Asian cases are related.

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Bausch & Lomb Shares Plunge After Eye Infection Link

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