11 May 2020 - Deborah Wilkes
Worldwide sales by Bausch Health Companies' Global Consumer business increased by 9% as reported to USD353 million in the first quarter of 2020. The company said growth had been driven by PreserVision and its other eye vitamin brands, Lumify drops for eye redness, and pantry loading in response to the COVID-19 pandemic.
Chief financial officer Paul Herendeen said organic growth at the Global Consumer business had reached 12%, with a rise of 24% in the US and 4% outside the US.
Worldwide sales of the company’s eye vitamin brands – Ocuvite and PreserVision – rose by more than a tenth to USD72 million in the first quarter of 2020.
Herendeen said PreserVision sales in the US had increased by 26%, driven by an “impactful DTC campaign and successful promotional activities with Costco”.
US sales of Lumify eye drops had grown by 91% in the first quarter of 2020 to around USD19 million, added Herendeen, noting that Lumify was “not one of the brands with significant pantry loading”.
Line extensions to Lumify
Bausch Health noted that it was working on line extensions to Lumify, with further clinical studies planned for late 2020/early 2021.
Commenting on the pantry loading, Herendeen said his takeaway was that consumers intended to stick with their Bausch Health consumer products.
“They loaded up ahead of sheltering at home and I expect that many found and will find ways to continue to purchase our consumer products whether that is on trips to the pharmacy, via home delivery or internet fulfilment,” he said. “Some brands will be more resilient than others, but overall there are reasons for optimism for our global consumer portfolio through this situation.”
Looking ahead, Bausch Health said it expected Global Consumer to be one of its least impacted businesses during the COVID-19 pandemic.
The Global Consumer business is part of the Canadian company’s Bausch + Lomb/International division, which reported sales of USD1.11 billion in the first quarter of 2020. Sales were flat as reported but up by 2% on an organic basis once currency and portfolio changes were excluded (see Figure 1 below).
Bausch + Lomb/International generated 55% of Bausch Health’s sales of USD2.01 billion in the first quarter of 2020. Sales were flat both as reported and on an organic basis.
Joseph Papa, Bausch Health’s chairman and chief executive officer, said: "While the COVID-19 pandemic has presented significant challenges to our business, Bausch Health has a global, diversified and durable business model, and we believe the company is well-positioned to return to growth after the impact of the pandemic fades.”
Papa added that COVID-19 had reduced sales by around USD35 million or approximately two percentage points.
He said pantry loading had had a positive impact of around USD30 million, including for the Global Consumer and US Vison Care businesses, as customers stocked up on supplies ahead of the shutdown.
However, Papa added that this had been offset by a negative COVID-19 impact of around USD65 million.
The postponement of elective procedures by public health authorities had affected the Global Solta and Global Surgical businesses, he said, while the Global Ophtho Rx business had been hit by a decline in pre/post-operative prescriptions.
Meanwhile, the International Vision Care business had been affected by retail store closures as well as reduced contact lens wearing due to decreased social interaction, said Papa, and the Ortho Dermatologics and Dentistry businesses had been hit by prescription declines in March due to office closures in the US.
New guidance for 2020
In the wake of the COVID-19 pandemic, Bausch Health is expecting its 2020 sales to be between USD7.80 billion and USD8.20 billion. Guidance released in February had forecasted sales of between USD8.65 billion and USD8.85 billion.
Assumptions about COVID-19
Herendeen said Bausch Health’s broad assumptions about COVID-19 were that a potential resurgence of the virus in the second half of 2020 would not see severe social restrictions put in place by local authorities. Furthermore, global economies would recover as COVID-19 ran its course and social restrictions were eased.
Commenting on the company’s assumptions about recovery, Herendeen said the largest impact to Bausch Health’s businesses seen in the second quarter had been due to stay-at-home orders, office closures, retail closures and deferral of surgical procedures.
Recovery was expected to begin towards the latter part of the second quarter and continue into the third and fourth quarters, he continued, adding that the company expected its businesses to return to pre-COVID-19 levels at different rates, starting as early as the third quarter but spreading into the fourth quarter and beyond.
Herendeen noted that some of Bausch Health’s businesses – Global Surgical, Ortho Dermatologics and Dentistry – were expected to lag in the recovery, some possibly beyond 2021.
Finally, he noted that all of this assumed “no major interruptions in our supply chain and distribution channels”.
“Sitting here today,” stated Herendeen, “it is unclear what the new normal might look like.”