Novartis slims down Alcon

Novartis announced plans to revive its ailing eye care division, as Alcon contributed to a 57% decline in fourth-quarter net profit. 

Novartis will narrow Alcon's focus to its surgical and vision-care products, such as contact lenses, while transferring Alcon’s ophthalmic drugs to Novartis' pharmaceuticals division. Some mature, non-promoted pharmaceutical products will go to Sandoz.

Alcon’s surgical sales declined due to a weak performance in IOLs and cataract equipment. Net sales for Alcon were reported at $9.8 billion, a 9% decrease for 2015. Earnings were reportedly also hit by the strength of the U.S. dollar and a one-time charge related to losses at Novartis’ Venezuela business.

Joseph Jimenez, CEO of Novartis, said his company would invest about $200 million in a plan that should boost Alcon’s performance, and that he expects the unit would begin to “return to growth by the end of this year.” Jimenez, who previously stated he was open to selling off underperforming parts of Alcon, indicated the company planned to keep all of the business for now.

The Swiss-based firm also appointed former Hospira CEO Mike Ball to lead the slimmed-down Alcon division, replacing Jeff George.

"With the plan we announced today, we intend to return the Alcon business to growth and strengthen our leading competitive position. Across the group we will further focus our divisions, create even greater innovation by integrating drug development, and lower our costs by centralizing our manufacturing across divisions. This will position the company well for the future,” Jimenez said.