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ALLERGAN'S "NEVER ENDING" SEARCH FOR CONTACT LENS MANUFACTURER CONTINUES

Executive Summary

Allergan remains committed to acquiring a contact lens manufacturer to penetrate what it estimates as a $1 bil. 1986 market, after failed attempts in recent years with Hydron and American Optical. "We have our never ending search for a contact lens company," Allergan President William Shepherd told analysts Dec. 16 at SmithKline Beckman's biannual analysts meeting in Philadelphia. "In 1984 we tried to buy one; in 1985 we tried to buy one . . . but we continue [to try]." In its recent "Dutch auction" filing, SmithKline reported that it is in negotiations for an acquisition (or acquisitions) valued at $250 mil. A contact lens business would be an obvious choice given the company's continued interest in expanding into that market. Asked why the company has been unable to succeed in acquiring a contact lens manufacturer, Shepherd replied that "the honest answer is they always want more than you're willing to pay." He said that the Hydron deal fell through when its earnings slipped following commencement of the CooperVision/Bausch & Lomb "bidding war" in 1983. The other announced merger effort, with American Optical, was scrappe by the Federal Trade Commission for competitive reasons. Allergan sees a $1 bil. market for contact lenses in 1986 growing at 8-10% through 1990. In spite of its lack of presence in the contact lens manufacturing field, Allergan has built an eye care business that will climb past $400 mil. in 1986. Allergan indicated it had worldwide sales of approximately $47.6 mil. in diagnostic instruments, $51.8 mil. in IOLs, $15 mil. in surgical equipment, $159.3 mil. in contact lens care products, and $138 mil. in ophthalmic drugs. To sell its products, Allergan has been rapidly expanding its sales force. At the end of 1986 there were 250 sales reps in the U.S., up from 109 two years ago.
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