Biocompatibles, the UK-based maker of Proclear Comptatible contact lenses, has acquired its British competitor, Hydron, whose assets and goodwill outside the Americas had been sold by Allergan to a group of institutional investors in 1993. The acquisition propels Biocompatibles into the second spot in the UK after Johnson & Johnson, with a 16 percent market share, and gives it a platform for expansion in Europe, where Hydron claims a 7 percent share of the overall contact lens market and a 25 percent share of the toric contact lens market.
Hydron controls the distribution in the UK, France, the Netherlands, Italy, Portugal, Spain, South Africa, Hong Kong and Australia. Biocompatibles will integrate its own smaller sales force into that of Hydron's European division, and add its own US eye care operations. Biocompatibles will use Hydron's know-how to develop a toric version of its Proclear lenses, and it will use Hydron's existing UK factory to expand the manufacture of its own products. Last year, Hydron had transferred the production of its own Zero 6 lenses from the UK to its other plant in Australia.
Biocompatibles is financing the £38 million (e61m-$57m) acquisition of Hydron with £7 million in cash and £31 million through the issue of 6,645,161 new shares at 465 pence each. The integration of the two businesses into a single eye care division of Biocompatibles, which will be run by Crispin Simon, is expected to generate annual cost savings of £3 million (e5m-$4.5m) after one-off charges of about £2 million, leading to an operating margin of 10 percent by the second half of this year.
In the year ended last Dec. 31, Biocompatibles had a net loss of £19 million (e30.5m-$32.9m), down from £44 million in 1998, and its turnover grew by 39 percent to £22.5 million (e36.1m-$33.5m). Its eye care division raised its sales by 35 percent to £12.6 million (e20.2m-$18.8m). For its part, Hydron last reported an operating profit of £2 million (e3m-$3m) and an EBIT (earnings before interest and tax) margin of 7 percent on sales of £29.8 million (e47.8m-$44.4m) for the year ended May 31, 1999. Europe accounted for sales of £25.2 million (e40.4m-$37.5m), and Japan £1.2 million (e1.9m-$1.8m). Toric lenses represented 37 percent of the turnover.