Alcon CEO, Kevin J. Buehler, looks for ‘more shots on goal’

Shortly after the announcement that 25-year Alcon veteran Kevin J. Buehler would assume the position of Chief Executive Officer of Alcon Laboratories, Ocular Surgery News sat down with him in Fort Worth to discuss his vision for the company.

His theme was clear. A deep, steady history of Alcon’s growth and leadership has paved the way for him. His job is to maintain the elements of the corporation that are successful and make changes that will ensure “more shots on goal” for new products and innovation.

– Joan-Marie Stiglich, ELS

Vice President, Publishing Operations

Ocular Surgery News: You’ve been with Alcon for 25 years. How different are the challenges facing the company today compared with what you have seen over that time?

Kevin J. Buehler: When I came to Alcon, it was a relatively small company, and we were U.S.-centric. We were a company that was just starting down the process of building our three business lines. When I came, I joined the consumer group, which only had a daily cleaner system and a weekly cleaner system. At the time, we didn’t have sales reps calling on optometrists. We were primarily driving products through retail promotion.

Kevin J. Buehler

Today, Alcon has more than $6 billion in sales. We are a global company in every major country with our own organization and capability. All three business lines – surgical, pharmaceutical and consumer products – have become not just expansion projects, but drivers for international growth. We’ve had a long-standing commitment of spending 10% of revenues in research and development. So the changes have been dramatic.

OSN: Under your leadership, is Alcon still committed to spending 10% of revenue on research and development given the current global economic situation?

Mr. Buehler: I would say right now we are strengthening our long-standing commitment. Our first priority will be to increase our pace of innovation during good times and during challenging times. In this business, revenue growth is driven directly from the ability to launch new products. We want to aggressively build our product pipeline across the three businesses and continue to invest.

The other part of our research and development is the understanding that we spend more research dollars on actual product development than basic research. We rely on partners to bring us molecules or to bring us technology, primarily in the pharmaceutical area. Surgical products are more internally developed. But for pharmaceuticals, for example, molecules from big pharma that have applications in one indication may also work in ophthalmology. We are going to spend time developing partnerships with people who can bring us more molecules and more “shots on goal” for new products.

OSN: Let’s stay on partnerships. Are there any particular partnerships that you currently have that you’re excited about as a short-term goal for Alcon?

Mr. Buehler: I can’t name a lot of partnerships directly for obvious reasons, but it is a range of approaches.

For example, we are a significant owner of WaveLight, but don’t yet own it 100%. That relationship is important for us to build out the refractive business, in terms of excimer laser. We will also look at other products in the refractive space, such as femtosecond laser technology and diagnostic products.

Looking at our relationships with big pharma, we have a couple of choices. We need to look at opportunities where we have gaps in our product portfolio and also focus on the aging demographic categories, such as glaucoma, retina and prescription dry eye, and also inflammation, which is a key component to a lot of those diseases. We are going to look at partners that have the capability to deliver those sorts of molecules that can be repurposed for the eye.

Developing new mechanisms of action in glaucoma or better ways to control IOP would be another key area for us to look for partnerships.

On the surgical side, we have a parallel pathway for accommodative technology. No one knows whether multifocal technology or accommodative technology is going to win at the end of the day. What we do know is that there’s a market and there are competing technologies, so if we saw a partnership with somebody who we felt had accommodative technology that we could add to our AcrySof platform, then that would be a target for us.

OSN: You took the helm in early April. Have you started cultivating a vision for the company?

Mr. Buehler: You have to be very careful to not want to go in and tinker with what has obviously worked. I started by putting together the inventory of what’s working.

Our commitment is to the eye and not being defocused on multiple areas. Having three businesses is also something that works quite well for us because when one business area is up, maybe another area is down, which allows us to balance our risk of revenue and profit management. We are a global company and have Alcon people in most markets, and our customers are not dealing with distributors, which is a strength. Also, if the U.S. is challenged with some of the recessionary impact issues, we have the international markets to count on for growth. All of these things are going to stay just the way they have in the past.

What will change? On the pharmaceutical side of the business, we need to look at how to improve so that we can be more innovative at a faster rate. That starts with doing more proof-of-concept testing in humans. The next step would be proof-of-concept in humans and the capability for us to assess impact earlier in humans with more “shots on goal.”

So the ability for us to review many molecules within a specific class, to make the assessment in humans quickly and to identify more opportunities for full-fledged development is one of the changes that we’re looking at.

Secondly, we will look at changes in the pace of investment in some of our international markets, specifically emerging markets. The next step for me is the real investment phase where, for example, in China we will add almost 100 people in the context of training and developing phaco as the preferred procedure for cataracts. We are talking about market building and a scale of investment at a much higher level.

The third area of change is to aggressively fill in the pipeline gaps; for example, pharmaceutical retina and the next mechanism of action for glaucoma.

OSN: Where are Alcon’s areas of largest growth outside of the U.S.?

Mr. Buehler: In 2008, on an organic growth basis, if you strip out currency, we had positive growth on a double-digit basis in Asia, in Latin America and, ironically, we also had it in Europe. Now part of that is a mix issue in Europe, where you’re getting the benefits of Eastern Europe and some of the developing markets, such as Turkey, driving growth faster than, for example, some of the established markets, such as France and Spain. Clearly, we’re going to rely on the international markets in total for growth, and then we’re going to rely on the hyper-growth markets such as India, Russia and China, where they’re in different stages of development.

Right now if you looked at the three markets, India is a market that has a very large number of cataract procedures, but very few are phaco. In China and Russia, both are under-indexed, even in the rate of cataract surgeries per their population. The opportunity for us is to not only increase the number of procedures but also convert them to phaco. The challenge for us is resource allocation because as we move from the growth and profit that we generate in the United States to the markets outside of the United States, we have a mix. We are getting good growth from the established international markets just based on the launch of new products, as well as the ability to trade up our product line through our different price point options, like we do on the AcrySof line. As a result of growing share, we are able to grow in those markets at an attractive rate.

OSN: Is there anything that Alcon is doing differently in the U.S. because of the current global economic situation?

Mr. Buehler: If we had had this conversation 10 years ago, we may have said something a little naïve in the context of thinking of ophthalmology as almost immune from these sorts of issues. On the other hand, we do have to think about our product mix. Our pharmaceutical products are, for the most part, either chronic or serious acute eye infection and ear infection, where the opportunity to simply skip consumption is not readily available to the patient. In our surgical product line (other than refractive, which is clearly elective), procedures are already resulting in the patient having restricted sight, so again the patient is not going away. And our over-the-counter business is primarily contact lens care and dry eye products, which probably serve as good value alternatives in terms of taking care of your eyes. So for the most part, we’re well-positioned to deal with these sorts of issues in the marketplace.

OSN: Where does presbyopia-correction technology development stand for Alcon?

Mr. Buehler: The products that have been brought to market to date suffer because they are not truly meeting the clinical needs of either the surgeon’s expectations or the patient’s expectations. That is why we set out to make changes to the ReSTOR platform with aspheric and +3 D.

The priority for us, first and foremost, is to take that multifocal platform and continue to advance it with feature changes that continue to improve the clinical results. For example, correction of astigmatism is still a gap, and the ability to combine the correction of astigmatism with the multifocal platform would be an added value to some of the complaints, which are still partially related to the non-correction of residual astigmatism.

There is also clearly a laser scenario if, in fact, you could treat for presbyopia. There are combinations of treatment that could also meet that need, and we would want to invest in all of the options for this large segment.

OSN: Do you have any concluding thoughts?

Mr. Buehler: I hope that people will see this as just the normal evolution of a very successful company. If you look at the management group at Alcon, we’ve been here for a long time. The experience and the tenure of the management group is one of the reasons why we have been successful. The depth of our management group allows us to make organizational changes to go to the next generation, which is a natural process.

At the end of the day, what every one of our 15,000 people should remember is that they each have their own individual job. But the end goal is to create products and bring products to the market that help people correct their vision. And that’s a pretty good career no matter what level you are inside of the company.

• Kevin J. Buehler can be reached at Alcon Laboratories, 6201 S. Freeway, Fort Worth, TX 76134.