On the evening of May 6, 2022, Beijing time, the eye care company Bausch+Lomb was successfully listed on the New York Stock Exchange and the Toronto Stock Exchange, and the stock code was unified as BLCO, becoming the largest IPO in the United States this year. The recent turmoil in the US stock market, many companies considering listing are waiting for a good time, this Bolun listing is seen as a bellwether of the IPO market and has been closely watched. However, the final issue price of Boeren was $18, raising a total of $630 million, which was lower than market expectations. On the 6th, the opening price of the Dr. Lennew Stock Exchange was $18.5, up 2.78%, corresponding to the total market value of the company of $6.3 billion.
Founded in 1853, Bo Lun is well known to the general public for selling eye products such as contact lenses, lens care products, and eye care products, but the group itself is positioned as a medical company, and also sells ophthalmic drugs, eye surgical medical devices and other hospital-end products, ranking second in the world in scale after Alcon.
In terms of operation, Bo lun's operating income has remained in the range of 3 billion US dollars to 4 billion US dollars for a long time, and the profit hovers around 1 billion US dollars, and the basic orientation of the entire company is good, although there is no sustained upward growth, but it is also self-sufficient. Ophthalmology, which has a lot of consumption potential, has a slow development and a considerable income.
So, such a stable head company, why IPO?
Acquisitions, spin-offs, listings...
After the upheaval, the 169-year-old Dr. Lun finally became independent
From a small optical shop to today's multinational giant, Bo lun's growth path has been similar to that of optics.
Born in 1853, Boron is one of the longest-running companies in the United States, and the company's earliest product is monocle glasses. By 1903, he had patents for product lines such as glasses, microscopes, photographic lenses, telescopes, and even camera shutters. The first lunar satellite image was taken by a camera lens produced by Dr. Lun. In addition, before World War II, Bo Lun designed a pair of sunglasses for American pilots, which were widely used by the US military, which is Ray-Ban. After the war, the image of the American pilot with Ray-Ban sunglasses impressed people around the world and became famous, entering the fashion circle, but Ray-Ban was sold by Dr. Lun in 1999, which is a later story.
The biggest understanding of domestic users about Bo lun may be the contact lenses it launches. In 1965, He bought a patent for hydrogel contact lenses invented by two Czech scientists. In 1971, Bo lun obtained FDA approval to introduce a new type of contact lens made of Poly-HEMA, which is still the world-renowned "Soflens" contact lens.
In the 1990s, Bo lun successively acquired Precision Manufacturing Companies such as Storz Ophthalmic and Chiron Vision, and defined its business as four departments: Consumer Health, Contact Lenses, Pharmaceuticals and Surgery.
He was acquired and privatized by private equity firm Warburg Pincus in 2007 and delisted from the New York Stock Exchange. However, since then, the company's operation has not improved significantly, and a series of product quality problems have also emerged.
In 2013, Valeant (renamed Bokang in 2018), Canada's number one pharmaceutical company, bought Bodelun for $8.7 billion, making it the largest acquisition of the year. Under the agreement, about $4.5 billion was paid to a group of investors led by Warburg Pincus, with the remaining $4.2 billion being used to repay Boron's debt. After the completion of the transaction, Bokang became one of the world's largest contact lens manufacturers at that time, and Bolun retained its original name and became a subsidiary of Bokang, which was its most important and stable source of cash flow.
However, Dr. Kang's peak did not last long. In late 2015, Dr. Kang became embroiled in controversy over price increase strategies and the use of specialized pharmacies to distribute drugs, prompting a U.S. Congressional investigation that eventually led to the ouster of CEO J. Michael Pearson. This huge controversy brought Dr. Con off the altar and brought him numerous accounting problems and huge debts. Under pessimistic expectations, Wall Street dumped Bo Kang's stock, causing its stock price to fall sharply.
Dr. Kang's self-help has continued until now. In August 2020, Joseph Papa, CEO of Bokang, said in a statement: "We have divested approximately $4 billion in non-core assets, repaid more than $8 billion in debt, resolved many remaining legal issues, and we believe that now is the right time to begin the spin-off process." Dr. Lun is one of the core assets he mentioned. As soon as the spin-off was completed, Bo Lun applied to the New York Stock Exchange for listing.
For ten years, whether it is an acquisition, a spin-off, or today's independent listing, Bo lun has maintained a stable operation. The reason for the official split listing, Arterial Network speculates, instead of advancing and retreating with the debt-ridden Bokang, Bo Lun's separation behavior may give the company more funds and rights, and thus plan a more diversified development, and for Bokang, after the divestiture of high-quality assets, the disposal of its existing assets is easier, which will accelerate the transformation of Bokang from generic drug companies to innovative pharmaceutical companies.
More than 400 product layout ophthalmology,
Bo lun won 1 billion users
There is a brief description of the company's digital composition in the prospectus: the company has about 12,000 employees, covering about 90 countries and regions to carry out business, more than 1 billion potential customers, brand awareness of more than 70%, the existing product range of more than 400 kinds.
Dr. Lun usually classifies its products simply into three categories: vision care, ophthalmic drugs, and surgery. Vision care is a pure To C business, and medical devices used in surgery are usually sold to medical institutions, while ophthalmic drugs are divided into OTC and prescription drugs, each corresponding to different sales channels.
Financial data disclosed in The Prospectus of Boron
Vision care is the most important source of income and profit for Bo Lun. According to the 2020 operating data, the annual revenue of Bolun's vision care business was US$2.11 billion, accounting for 62% of total revenue, and profit was US$580 million, accounting for 64% of total profit.
Among them, contact lenses and their care products, OTC eye drops and eye vitamins are the main profit points of Bo lun, especially the contact lens business that contains the dual attributes of eye treatment and medical aesthetics, Bo Lun has the most extensive product portfolio in the industry, including daily throw soft contact lenses; multifocus, polyphonic and multifocal complex soft contact lenses, beauty pupils, etc. It occupies the number one position in sales in key markets such as China and several developing markets (Thailand and India).
It was followed by Boron's pharmaceutical business, which accounted for 21% of total revenue, for the postoperative treatment and treatment of a variety of eye diseases such as glaucoma, eye inflammation, hyperocular pressure, dry eye and retinal disease. The four major ophthalmic drug brands are VYZULTA, Lotemax, Prolensa and BEPREVE.
It is worth noting that the R&D and production line of Boerlen's innovative drugs is closely focused on the ophthalmology business. The marketed Latanoprostene Bunod is a prostaglandin analogue used to lower intraocular pressure in patients with open-angle glaucoma or hyperocular pressure; the well-known Besifloxacin Hydrochloride (besisfloxacin hydrochloride) is an N-1 cyclopropyl 8-chloro-fluoroquinolone antimicrobial that inhibits Gram-positive and gram-negative bacteria by inhibiting bacterial DNA rotationase and topoisomerase IV; Loteprednol Etabonate is an ophthalmic corticosteroid for the treatment of steroid-sensitive inflammation of the eyelids, bulbous conjunctiva, cornea and anterior part of the eyeball, such as allergic conjunctivitis, erythematous keratitis, selective infectious conjunctivitis, etc.
At present, Bo lun has 5 phase IV clinical varieties in research, 2 phase III clinical varieties, and 3 phase II clinical varieties in the world, covering red eye, astigmatism and other indications, and the research and development in the future period is still dominated by OTC drugs.
Surgery is currently the business segment with the lowest contribution to operating income, the least profit and greater risk. Conventional products include ophthalmic surgery-related instruments and equipment, ultrasonic emulsification devices, intraocular lenses, etc., and the VICTUS femtosecond laser commonly used in cataract surgery belongs to this business segment.
Contact lenses, Thermoma... Which one will become the core competitiveness of Bo lun in the future?
Despite the large number of production lines, the competitiveness of Bo Lun is not a barrier.
In 2020, under the sweep of the new crown epidemic, Bolun's operating income fell by 17.75% and profit fell by 9.69%. Behind this, on the one hand, the closure of offline stores caused by the new crown epidemic and the economic consumption inhibition brought about by home, on the other hand, Bo Lun did not create explosive products during this time.
Looking back at the prospectus data, in the period from 2018 to 2020, the research and development expenses of Bo lun were 221 million US dollars, 258 million US dollars and 253 million US dollars, accounting for 6.0%, 6.8% and 7.4% of the total revenue ratio, respectively, and even less product-related research and development, which were 196 million US dollars, 234 million US dollars and 236 million US dollars, accounting for 5.3%, 6.2% and 6.8% of the total revenue. For a $6.3 billion healthcare giant, such R&D investment is unlikely to ensure its continued competitiveness.
Further analysis of the core products in the Boeron product matrix.
In recent years, the beautiful pupils in contact lenses have good consumption attributes because of their good decorative effects, and have an ultra-high repurchase rate, which has become a fragrant feast for capital in recent years. As of February 2022, there are more than 1,800 U.S.-related companies growing in China alone.
The influx of massive enterprises has inevitably diluted Bo lun's contact lens business, but behind the challenges are also opportunities. Especially for such a subdivision track that relies on marketing, the rise of domestic e-commerce and live broadcasting with goods will make a living for more small brands, but it is also for the head enterprises to find a space for faster coverage of users.
During the prospectus vacuum period from 2021 to 2022, Bo Lun will conduct multiple live broadcasts on the Tmall platform through the official flagship store on the one hand, accelerate user coverage through channel innovation, and on the other hand, create a joint name with China National Geographic and other head IP, and place the century-old store into the fashion circle of Generation Z.
In addition, Bo lun also acted as the general agent for the Development of Thergema developed by its brother company Solta Medical, becoming the general agent in China. According to the "2021 Medical Aesthetic Device Industry White Paper" released by Yidu Data, the 5th generation of Thermage has generated a revenue of 142 million US dollars (923 million yuan) in East Asia and Southeast Asia, of which Bo Lun's contribution in China is indispensable.
In this way, the performance of Boeren in the C-end market has not been much like a medical device company, but has transformed into a medical aesthetic company. The switching of the track may be of great benefit to its development, medical beauty is at the peak of development, 20% -30% of the compound annual growth rate, Bo Lun is expected to break through the bottleneck of four billion US dollars in revenue.
Let's talk about the intraocular lens part. Together with Alcon, Johnson & Johnson, and ZEISS, Boron controls 80 percent of China's intraocular lens market, but NNPA-certified intraocular lenses include Intralaocular Lens, Akreos AO Micro Incision Lens, SofPort Intraocular Lens, SofPort Intraocular Lens, and One-Piece Hydrophobic Intraocular Lens, Intraocular Lens, Acrylic Intraocular Lenses, One-Piece Hydrophobic Intraocular Lens, Pre-assembled Acrylic Intraocular Lenses with Preloaded Injector8 varieties, but all registration certificates are " National armaments into the ", did not achieve China's "domestic production". In the Chinese market, where domestic substitution is surging, all intraocular lens products of Bo lun are facing potential policy crises.
In addition, the emergence of volume procurement has further compressed the profit margins of Bolun intraocular lens-related business. In March 2021, Bo Lun won the bid for the purchase of the amount organized by the Guangdong Provincial Drug Trading Center, and the unit price of intraocular lenses of 3,000-10,000 yuan in the past has dropped to about 1,000 yuan, with a maximum reduction of 90%. China' slow progress from Guangzhou to nationwide gatherings in China as a "key market" for Bolun will bring a huge test to the profitability of Bolun, and this part of the test has not yet been reflected in Boerkang's prospectus.
2021 Intraocular Lens Medical Consumables Alliance Regional Group Procurement Intention Selection Results Announcement Form (A Purchase Order)
In general, subject to multiple factors such as policies and markets, the current core competitiveness of Bo lun is converging on the C-end, and the proportion of related businesses is constantly increasing. At present, there is no data to support the advantages and disadvantages of the deviation of the business center of Bolun, but from the fundamentals of the medical aesthetic market, Bolun can be expected in the future.
Can Bo Lun usher in a breakthrough after the listing?
Since the actual use of the raised funds is not disclosed in the prospectus, we cannot know whether the newly raised funds of Bo lun were used by the parent company, Dr. Kang, to repay the debt, or left for their own use to solve many problems under the current structure.
Compared with Aercon, the industry's first and has a full line of ophthalmology, although the product system of Boeren is rich, there is still a large vacuum, which fails to involve highly potential medical devices such as OCT. In order to break through itself, Bokang needs funds and more autonomy to better conform to the market designation strategy and strengthen its core competitiveness.
If the post-IPO situation develops towards the latter possibility, the split-down Bo Lun can break through the limitations of the past and deal more focused on business issues. From the perspective of stock price, the market is still confident about the future of Bo lun.
As for whether we can break through the limitations and move to the next stage, everything needs time to prove.
*Cover image source: 123rf
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