Out From Under Novartis, Alcon Is Its Own Company Now
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Alcon is officially a standalone company. The eye care specialist has officially spun out from Swiss pharma giant Novartis. Alcon began trading today on the SIX Swiss Exchange and New York Stock Exchange under the symbol “ALC.”
David Endicott, Alcon’s chief executive officer, said that for more than 70 years, Alcon has been dedicated to eye care and health. Now, as a standalone company, Alcon is pursuing additional opportunities to further that mission, he said.
“We are poised to achieve sustainable growth and create long-term shareholder value as a standalone company. We have a long history of industry firsts and, as a nimble medical device company, we are sharply focused on providing innovative products that meet the needs of our customers, patients and consumers,” Endicott said in a statement.
Novartis announced plans to spin Alcon off into a standalone business in June of last year. Spinning the company off will allow for both Novartis and Alcon to focus on individual growth strategies. As an independent company, Geneva-based Alcon said it will have more focus and flexibility in pursuing its own growth strategy driven by rapid iterative innovation. The company will have a distinct investment identity with a more efficient capital structure that will allow it to expand markets, enter promising adjacencies and introduce new business models. These benefits, combined with Alcon’s industry-leading customer relationships, favorably position the company to achieve sustainable growth, the company said in its coming-out statement.
In September 2018, after plans for the spinout were disclosed, it was announced that Alcon’s management would leave its longtime home in Texas for Switzerland, which is the home of Novartis. Alcon's current global divisional headquarters in Fort Worth will remain a major operational, commercial, and innovation hub for the company. Along with its new headquarters and ticker symbol, Alcon also launched a new global website, www.alcon.com.
“Demand for eye care is growing significantly as our population ages and people spend more time in front of screens and mobile devices. As we mark this new chapter in the life of our company, all of us at Alcon are committed to addressing the growing consumer need for improved vision and eye health and to expanding access to quality eye care all around the world,” Endicott added.
The eye care industry is a $23 billion market and Alcon is one of the most dominant players. Last year the company has sales of $7.1 billion, including $4 billion in surgical, which was a percent increase from the prior year. Also, the company posted $3.1 billion in vision care revenue, up 3 percent.
Under terms of the spinout from Novartis, shareholders of the Swiss pharma company will receive one share for Alcon for every five shares of Novartis they hold in their portfolio.
As Alcon steps out from underneath the Novartis umbrella, the company will be backed by a debt financing plan of $3.5 billion from a number of banks, the Swiss pharma giant said ahead of the spinout. Alcon has been given a credit rating of Baa2 and BBB, respectively by Moody's Investor Service and S&P Global Ratings.
For Novartis, spinning out Alcon means the company can focus its attention on developing pharmaceuticals. In its own announcement this morning, Novartis said the spin-off gives Novartis a financial profile closer to its pharmaceutical industry peers, including higher group margins. Novartis said it is “well-positioned for sustained top- and bottom-line growth.” The company plans to improve Innovative Medicines core margins into the mid-30s by 2022, Novartis said.
“This is an incredibly exciting day for both Novartis and Alcon. Alcon has demonstrated consistent growth, and is coming to market from a position of strength. We wish them the very best for the future. At Novartis, we continue to reimagine ourselves as a leading medicines company powered by breakthrough medicines, data science and advanced therapy platforms. We are well positioned for the future and I am excited for our associates, our investors, and most importantly for patients," Novartis CEO Vas Narasimhan said in a statement.