Eyeworld

3 EW ASCRS NEWS September 2018 by Steve Speares ASCRS Executive Director the U.S. That product has a unique technology replacing all of the layers of the tear film. It's the first one to do that. Potentially, the diagnostic space around dry eye is interest- ing to us. We're not in it but we're watching it carefully to see how practices adopt, and if we can offer something technologically superior to what is out there, we may enter. Finally, if you look at the process of cataract surgery we think there is a lot that could be done to simplify the process. There are a lot of surgeons out there doing great work, but unfortunately it is not as easy for everyone, and what we're trying to do is ask, "How can we simplify the whole process for peo- ple to make decisions so that 90% of procedures are 20/20 postop?" It's a big project we're working on internally. Mr. Speares: Alcon has a widespread geographical commercial footprint. How might your organizational structure change or evolve as Alcon disengages from the Novartis infra- structure? Mr. Endicott: The good news of where we are right now is that we're re-emerging as a startup with $7 billion in revenue and 20,000+ employees around the world. Our footprint has only gotten bigger since we've been part of Novartis, so people who knew us before will not see any noticeable change in the way we operate. I do think we will be more focused, and that is where some may. Our focus near term is to continue to develop advanced technology IOLs (ATIOLs) because we think there is more to be done there. Visual disturbances are still a riddle for some patients with multifocal lenses, and I think we have a couple of new products in our pipeline that will address that as well as negative dysphotopsia over the long term. There are a series of IOL technologies coming within the next 5 years that we feel good about. I would say we are well positioned in terms of competitive attributes. I would venture to say I don't think there's anything we haven't thought about or seen that we're not in- volved in with these projects. The ATIOL space, because it is a big part of our business, will continue to be a driver. Also remember it's a market with a lot of growth opportunity sitting at only 12% or 13% pene- tration of total IOLs, and that's just not right. That can't be the way the world works in the long run, so we see that as a big growth opportunity not just for us but for the surgeons. If we can get good technology in their hands that is easier to use and delivers more predictable outcomes, I think they're going to feel good about putting them in the eye and charging patients for them, and everyone wins. We're intrigued by the large dry eye market. We have a big market that we don't play very much in, but we have a lot of eye drops that we have repatriated from the Novartis shop. We're excited about Systane Complete, which has launched in Mr. Endicott: In the very near term—the next 2 to 3 years—we have so much to do in the device space it would be unlikely we will re-enter the pharmaceutical space. Our priorities right now are to de- velop the Surgical product line and build out our Vision Care business, which we think have fabulous opportunities—high growth, large markets where most of our attention will stay. You never want to say nev- er, but our priorities right now are to focus on devices. Mr. Speares: Do you plan to con- tinue a similar level of internal research and development spending, or will Alcon be more aggressive in the mergers and acquisitions space to fuel growth? As you begin the process of telling your growth story to the investment community, what are the categories Alcon sees as growth drivers over the coming 5 years? Mr. Endicott: What should excite people in the surgical community is that as a focused player in this area and with our concentration on the surgeon, we'll continue to invest at a substantial level. Today we invest more than our next two to three competitors combined, and we will continue to do that. If anything, it will get better. In the last 24 months or so, we have been approaching our pipeline with an agnostic view as to how technology reaches us. Because of the leadership position we hold, we are lucky in that we get to review pretty much every evolving tech- nology out there, be it from a VC backed startup, university setting development, or individual surgeon idea, so we are more than happy to bring in ideas from the outside to augment what we do. There are some things we do internally better than anyone else in the world, but we recognize there are numerous university settings or VC/startup technologies that are doing world class work that are interesting to us, and we stay close to them. We have more than 100 internal research and development projects we're working on today. As for the growth drivers, some of the areas won't surprise you, but Following the June 29 announcement that Novartis intends to spinoff Alcon, Steve Speares spoke with David Endicott about the next chapter for his company Steve Speares: How would you describe the impact or benefit Alcon customers will see following this decision [to spinoff Alcon from Novartis]? David Endicott: For most surgeons who have been in practice for awhile, they have known Alcon, and most have noticed some change in how Alcon interfaced with them the past few years. Pharmaceutical businesses are very different from device businesses in several aspects, particularly in the responsiveness to customer needs. I think a lot of surgeons would tell you in the past couple of years we have made a strong effort to move back toward that old Alcon they know. This is a new chapter in the revitalization of Alcon, and what we're trying to do is recapture some of that old Alcon DNA and let it re-express itself in a modern way. I think the piece that will always be there is our closeness with the surgeons and clinicians who use our products and our re- sponsiveness to them. Independence will enhance that and give us the autonomy to develop our own pro- cesses, focus on our strategy, invest in the things that matter to us, and increase our energy on the device business. Mr. Speares: Moving forward, will Alcon remain a device only firm, or will you look to re-enter the thera- peutic space? EyeWorld interview with Alcon CEO David Endicott continued on page 10 David Endicott " This is a new chapter in the revitalization of Alcon, and what we're trying to do is recapture some of that old Alcon DNA and let it re-express itself in a modern way. " —David Endicott

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