Stiff competition from Johnson & Johnson has caused CooperVision and other major players like CIBA Vision and Bausch & Lomb to lose share in the U.S. soft contact lens market, according to Cooper Companies' management. J&J has seen success in this market with its high-priced silicone hydrogel lens, the Oasis, triggering price increases for similar products by competitors. In this field, Cooper is bullish about its own Biofinity product, but it seems to be resigned to losing further market share out to J&J in the USA. According to company officials, CIBA has all but disappeared from this market segment, while B&L has lost some share, too.
Nevertheless, Cooper has been gaining market shares in other parts of the world with its daily disposable/single-use lenses. These lenses still account for 60 percent of the global soft lens market. Single-use lens sales comprise 40 percent of this market in Europe, 8 percent in the Americas and 60 percent in Asia-Pacific, Cooper's management stressed in a recent conference call.
Cooper's statistics, which come from an undisclosed source used also by J&J, suggest that sales of silicon hydrogel lenses were a key growth driver behind the 9 percent rise of the overall soft contract lens market in the Americas during the company's 3rd quarter, which ended July 31. The silicon hydrogel business represented 37 percent of the market in the quarter, as compared to about 28 percent a year ago. In Europe, silicone hydrogel sales accounted for 15 percent of the soft lens market whereas in Asia-Pacific, which represents 33 percent of the global soft lens market, they accounted for a mere 2 percent. On the other hand single-use lenses make up 60 percent of the market in Japan, 80 percent in Taiwan, 70 percent in Korea and 17 percent in China.
CooperVision's sales of toric contact lenses dropped by 4 percent in the USA during the latest period in a market that rose by an estimated 16 percent. But in the rest of the world, where the toric lens market crept up by 3 percent only, CVI's turnover in this product segment grew by 25 percent.
Meanwhile, Cooper's continued restructuring of CVI's distribution in the USA and in Europe weighed heavily on the company's 3rd quarter results, causing the group's net income to fall to $20,977,000 as compared to $37,619,000 in the year-ago period. CVI had restructuring costs of $5.6 million in the period, compared with 1.4 million in last year's quarter.
Operating income for the CVI division decreased by 28.7 percent to $33.1 million. Cooper's total operating income was down by 29.7 percent to $32.3 million. The gross margin narrowed to 61.0 percent from 62.3 percent a year ago. Cooper Companies' total sales were mostly flat at $225.8 million, with CVI's turnover down by 1 percent to $194.2 million and sales for the Cooper Surgical unit up by 17 percent to $31.6 million.
CVI plans to launch four new products before the end of this calendar year, followed by another four in 2007. In the conference call, management refused to comment on the company's ongoing legal dispute with CIBA Vision. Last Apr. 11, Cooper filed a patent infringement lawsuit against CIBA in Texas, saying that the company's O2Optix contact lens encroach upon several of Cooper's U.S. patents. On the same day, Cooper filed a separate suit in Delaware, seeking a judicial declaration that its Biofinity contact lens does not violate any of CIBA's U.S. patents.