editor's perspective

More on the Big Picture

BY JOSEPH T. BARR, OD, MS, EDITOR
FEBRUARY 1999

We try to give you the most up-to-date information in Contact Lens Spectrum. It is one of our convictions. We publish our annual report each January, but in this rapidly changing field, you need more than one update a year. So here's some information (and speculation) that didn't get into last month's report.

Overall in the North American market, contact lens sales at the manufacturer level account for about 1.2 billion dollars, solutions account for about 0.8 billion and ophthalmic drugs account for about 1.9 billion dollars. Contact lens sales in the third quarter of 1998 were flat relative to the same period in 1997. In the third quarter of 1998, planned replacement sales were up, but disposable sales were off by 3 percent, and conventional lenses were off by 6 percent. This reduced growth of disposable market share may be somewhat due to toric planned replacement lenses, but reduced costs on disposables due to competition will change this in early 1999.

All companies and practices will attempt to improve profits by emphasizing specialty (toric, bifocal and colored) frequently replaced lenses. We can justify the increased price and service fees for these value-added products, but widespread de-emphasis of clear spherical lenses would be a mistake because they are the bread and butter of our contact lens patient base.

One problem with measuring growth is due to the glut of lenses on the planet and non-practitioner providers such as 1-800-Contacts, who account for nearly 70 million dollars of "grey market" purchases. The grey and black markets are getting bigger, and it seems like they could be nearly 10 percent of lens dollars. This doesn't make it any easier for the practitioner or the manufacturer to compete in the lens price area. Fee for service is of greater importance.

"Free" trial lenses cost the manufacturers nearly $80 million per year, or 8 percent of market sales. This is fine with most practitioners but is a double-edged sword for manufacturers, who will likely cut back on these lenses rather than fall on the sword, similar to what happened with sample solutions. But what will the impact of more one-day lenses be?

Consumer advertising in 1999 will continue as companies realize the value of this in specially targeted demographic segments. The astute practitioner can capitalize on this advertising, regardless of the message. The patient asks for a product, and you either provide it or provide a good reason to recommend something else.

And here's a wild card, just to start a rumor (really, we have no insider information). With large corporate partnerships becoming a trend in the oil and computer world, could the same happen in the contact lens field? It seems like more consolidation is all too logical, given pricing pressures and need for low-cost production.

We acknowledge that much of the aforementioned data were reported by CIBA Vision and Wesley Jessen.