Xavier Fontanet, chairman and chief executive of Essilor International, gave a flat ?no? to questions about the group's interest in acquiring CooperVision at the annual conference in Paris where the management comments on its results. However he indicated that Essilor is exploring possible areas of diversification from its core business in ophthalmic lenses, while banking on emerging markets to sustain future growth.
Brain science is shaping up as a promising new domain of exploration for Essilor, which has been following among other things the studies conducted in a Canadian research institute on the ways in which the brain adapts itself to different visual situations.
Essilor is particularly interested in a new vision enhancement program, developed by a company in Singapore by the name of NeuroVision, that trains the brain to see more sharply, processing and understanding better the images sent through the eye without the use of corrective lenses or drugs or surgery. Essilor's R&D team is now convinced that it can help to correct various forms of presbyopia, myopia, ambyopia and certain effects of LASIK surgery.
Essilor has reportedly acquired an equity stake in NeuroVision, after encouraging test results, and it also has the right to distribute the company's programs through its own optometric channels in Asia, Europe and the USA. It plans to start this in Singapore, using a specially developed goggle that should become available for commercial use by 2008.
The partnership with Neurovision is part of a more wide-ranging network of collaborative efforts that Essilor is conducting with outside laboratories and universities in the areas of brain science, materials, digital technologies, etc., complementing its own in-house R&D work. No major technological breakthroughs are expected from these efforts in the short term, however.
The major new product launches planned or under way for this year are Essilor's new anti-static coating, which is based on nanotechnologies, and a variation of Varilux Physio for its BBGR sales network and for key accounts, called Anateo in certain markets and Accolade in others.
Last year's organic sales rise of 8.1 percent was exceptional. It included double-digit sales increases even in some mature markets such as Canada or Australia, where they grew by 11 percent and 13.5 percent, respectively. In terms of volume, total deliveries of all kinds of products rose by 7.2 percent, including a 12 percent increase for Transitions, against a global market that probably went up by only 2 percent.
Looking at the medium term, Fontanet predicts that Essilor will continue to grow faster than the market, raising sales at an average annual rate of between 5 and 6 percent before acquisitions, or between 8 and 10 percent after acquisitions.
This is based on expected annual organic growth of 5-6 percent in the mature markets of Europe, North America and Japan, and of 15 percent overall in Eastern Europe, Latin America, India and the rest of Asia. Acquisitions could help boost these growth rates by 3-4 percentage points in the mature markets and by 4-5 percent in the emerging markets.
Fontanet is particularly bullish about Essilor's chances of development in India and China, two countries with a huge population whose economy and standards of living are growing rapidly and where their needs for vision correction are far from being satisfied. Essilor's sales grew by 28 percent to around €20 million in both countries last year. Sales rose by more than 17 percent in Eastern Europe.
Essilor already controls 27 laboratories in India. The company claims to be the market leader already in China at the high end, a position that will be reinforced with the arrival of the 50-percent-owned Nikon brand from Japan. It says that Essilor has gained the leadership in the unbranded Chinese lens market, outdistancing all its local competitors.
Aside from this, Essilor is experiencing good growth in peripheral activities such as instruments. Their sales grew by 12 percent on an organic basis last year and now account for more than 5 percent of the company's total turnover.