Introduction: I thought that after eliminating competitors, Bausch & Lomb would continue to reap the benefits, but what I was waiting for was a huge backlash from the market and the end of selling out thereafter.
Zhang Lei | Author Stone Business Review | produce
Founded in 1853 and employing more than 10,000 people, Bausch & Lomb created the first resin glasses, Ray-Ban sunglasses, captured human footprints on the moon, and used its lens to create classic movies like The Godfather.
It is better known that 120 years after its founding, it has put contact lenses on the stage of history, and Bausch & Lomb has even become synonymous with contact lenses.
The spring breeze proudly drove its competitors out of the market one by one, but what followed was endless disasters: from the industry giants to the bottom; Acquired by the disreputable Valeant Company; Becoming unrecognizable......
1
Pre-invisibility era
In 1853, John Bausch (Ph.D.), a German immigrant, opened a small eyewear store in Rochester, New York, selling ancient monocles. At that time, the future optical giant, Zeiss of Germany, had been grinding lenses in a small workshop for 6 years.
To expand his business, Bausch borrowed $60 from his good friend Henry Lomb and promised to invite him if the business grew.
In 1861, the doctor introduced ebonite-framed glasses, which became the company's first successful product. In 1865, Len became a partner, and they combined their surnames to form Bausch & Lomb.
They made the first piece of optical glass made United States and began to produce optical instruments along the road.
In 1872, Bausch & Lomb began producing microscopes. At that time, Zeiss microscopes had been sold for 25 years, and by eliminating chromatic aberration, spherical aberration, and coma aberration of objective lenses, they became a leader in microscope technology, and made technical improvements to make microscopes reach the pinnacle in the following years.
In 1880, Edward, the son of the doctor, visited the Zeiss factory in Germany and obtained authorization from Zeiss to design and manufacture Zeiss patented lenses in the United States.
With the blessing of ZEISS, Bausch & Lomb began to make a name for itself in the field of lenses. Backed by the United States booming aerospace industry and film and television industry, Bausch & Lomb's business is getting bigger and bigger.
In 1893, Bausch & Lomb began producing monoculars and binoculars. In 1902, the Baloption slide projector was introduced. In 1903, with his innovative camera shutter technology, Boshlon witnessed an important moment in human history.
During World War I, Boshlon's military goggles revolutionized battlefield vision protection. In 1926, Bausch & Lomb introduced the first pair of goggles to avoid the stimulation of bright light, and the classic "Ray-Ban" brand was born. Since then, Ray-Ban sunglasses have been designated by the U.S. military and played an important role in World War II. After the war, Bausch & Lomb designed Ray-Ban to be more fashionable, sold as a civilian commercial product, and became a fashion trend.
Bausch & Lomb cinema lenses have evolved with the rise of Hollywood. 1939's "Gone with the Wind" and the highly prestigious "The Godfather" series both used Bausch & Lomb's lens. Bausch & Lomb received an Oscar Honorable Mention in 1954 for providing widescreen cinema footage for The Godfather, and several Bausch & Lomb researchers won the 1960 Academy Award for Science and Engineering.
In the 70s of the 20th century, Bausch & Lomb, who was moving along the optical lens, encountered a big event that "I don't know whether it was a blessing or a curse".
2
Kill your opponents
In 1508, Leonardo da · drew a sketch of a contact lens. In 1887, Muller contact lenses were introduced to protect patients from exposure to diseased eyes. In 1937, contact lenses made of transparent hard resin PMMA (polymethyl methacrylate) were created, but the comfort was extremely poor.
In 1951, the Czech scientist Wichterle invented the centrifugal casting method, and in 1963, his HEMA material was patented, and contact lenses finally had soft lenses.
In 1964, Pollack, vice president of the United States Patent Development Corporation, took advantage of Moscow to handle official business, and went to Prague under the pretense of going to Prague. Seeing this contact lens, he immediately decided to buy the patent with ophthalmologist Morrison for $25,000.
Morrison returned to the United States to produce the soft contact lens exclusively, and he offered Pollack, who wanted to reclaim the patent, a whopping $250,000.
Pollack traveled throughout the United States and eventually hit it off with Bausch & Lomb. Bausch & Lomb bought out the exclusive patent of the soft mirror for 20 years (1965~1985) at one time, and promised to share the profits equally with Pollack. After the FDA review, in 1971, Bausch & Lomb put contact lenses on the stage of history.
In just six years, contact lenses, which occupy the forefront of global eyewear products, have brought huge industry shocks and made Bausch & Lomb almost synonymous with contact lenses.
In 1979, Pollack took Bausch & Lomb to court over the distribution of profits. He received a one-time compensation of $14 million and received back the exclusive patent rights to the soft mirror. Pollack can enjoy life through patent licensing.
With Bausch & Lomb taking away the exclusivity, competitors followed, and the original profiteering space was gradually diluted.
Bausch & Lomb began to rely on absolute superiority in capital, channels and products to "wipe out" these competitors. It leverages its scale and expanding low-end product line to squeeze one competitor after another out of the market. These small companies simply could not withstand the bombardment of Bausch & Lomb and had to sell themselves to larger companies.
In the mid-80s of the 20th century, Bausch & Lomb became the darling of Wall Street, with profit margins exceeding 200% of market profit margins over the same period. In 1987, Bausch & Lomb entered China, which was just opening its doors, and became synonymous with contact lenses in China.
Bausch & Lomb, who thought it would continue to reap the benefits, then suffered a huge backlash from the market.
3
Regurgitation
The unprecedented success and absolute dominance in the contact lens market have made Bausch & Lomb arrogant.
With the fear of "doomsday", eyeglasses began to attack contact lenses, but Bausch & Lomb did not notice that the contact lens market was shrinking.
It lies on the merit book of contact lenses and begins to expand blindly.
At the turn of the century, there was a lot of clamor in the market to "abandon old ideas, abandon old businesses, and develop new ones", and Bausch & Lomb also invested in new growth areas of "health products" such as electric toothbrushes, skin care products, and hearing aids. However, the technical research and development of contact lenses has stagnated.
With the disappearance of competitors, Bausch & Lomb has to bear high R&D costs, but it is busy with cross-border diversification, but it is absent-minded.
Unfortunately, the small companies that sell their way into "big factories" are growing into a big problem for Bausch & Lomb.
Bausch & Lomb's losers, Vistakon, a $20 million-a-year small company, sold Johnson & Johnson. With the strong financial support of Johnson & Johnson, Acuvue contact lenses were born, becoming the largest contact lens manufacturer in the United States in one fell swoop.
Defeating a group of small competitors, Bausch & Lomb gained several "deadly" enemies.
The fragmentation of resources and management led to the loss of Bausch & Lomb's contact lens business, which was overtaken by Johnson & Johnson and Ciba Mingshi, ranking third. The company's share price rose from $3 in 1973 to $56 and plummeted to $33 in 1991.
In an attempt to regain the trust of Wall Street, Bausch & Lomb went to another abyss.
In order to complete the marketing plan, in September 1993, Bausch & Lomb asked dealers to purchase 4 to 6 months of inventory. At the end of the year, he asked dealers who had nearly a year's worth of inventory to buy 1-2 years of inventory, and desperately shipped the goods to increase the company's sales by $25 million.
In June of the following year, Bausch & Lomb received less than 10% of the payment due to slow sales. Bausch & Lomb continued to sell to bulk customers at lower prices than distributors, and in the third quarter, Bausch & Lomb was able to recoup most of its products and collect the final payment from dealers at a very low discount, resulting in a 10% decline in revenue ($449 million) and an 86% plunge in net profit (to $2.2 million) in the third quarter.
In order to obtain high profits, Bausch & Lomb's more unethical methods have been exposed.
In 1994, Bausch & Lomb was accused of having products with different prices and names that were identical. It paid a terrible price for this, with $68 million in damages, and the cost of the investigation, which cost more than $100 million in this lawsuit alone.
It must drink the bitter wine it brews.
In a market where you don't advance or retreat, Bausch & Lomb's performance is getting worse and worse. In just a few years, Johnson & Johnson has snatched 33% of the market share with more avant-garde, high-end contact lenses, while Bausch & Lomb has retreated to fourth place in the market with a 13% market share.
But that's not Bausch & Lomb's bottom.
4
destroy
"Stock market investors who like to buy dips can take a look at Bausch & Lomb's miserable stocks." These were the opening words of United States Wall Street Journal's coverage of the Bausch & Lomb product crisis in early June 2006.
Bausch & Lomb still relied on his strength to send himself to the guillotine.
In 1999, the new management decided to pull back from the precipice, eliminating non-core businesses and identifying the company as the "eyes of the world". This year, Ray-Ban was sold as an outcast by Bausch & Lomb on the grounds that the profit was too small to make money.
The core business should be a continuum of products, production capacity, customers, sales channels, and geographical distribution, and Ray-Ban excels in these areas, regardless of the size of the profit. The new management only uses "profits" as a yardstick to decide whether the business stays or not, and it is clear that they care about the reaction of Wall Street.
Under the logic of making money, Bausch & Lomb's "removal of non-core business" is tantamount to self-defeating martial arts, and it is destined to fail to regain its former glory.
In 2004, Bausch & Lomb's net profit was $159.6 million and sales were $2.2 billion. In 2005, Bausch & Lomb's revenue was only $2 billion, and 53% of it came from contact lenses and contact lens care products.
In May 2006, Bausch & Lomb unexpectedly but logically suffered a catastrophe.
Some consumers in Asia and the United States who use the company's contact lens solutions have developed a rare eye infection. It can cause blurred vision and, if left untreated, can lead to blindness. This is almost the biggest brand crisis United States 1982 since toxic Tylenol.
In 2006, Bausch & Lomb spent $25 million in recalls and $19 million in discounts to complete the recall of problematic products, resulting in a 22 percent decline in profit in fiscal 2006. Infuriatingly, Bausch & Lomb has not made any compensation in the Chinese market.
In order to recover the decline, Bausch & Lomb had to increase marketing costs, which made Bausch & Lomb's capital chain too tight.
But poor crisis PR can only make Bausch & Lomb worse. Consumers who lost faith in Bausch & Lomb eventually abandoned the century-old company, and investors turned away from Bausch & Lomb stock. Due to poor management and high debt, Bausch & Lomb was acquired by private equity firm Warburg Pincus in 2007.
Contact lenses, the brilliant business that started Bausch & Lomb, have finally brought it to the end of the road.
5
Say goodbye to history
After four years of hard work, Bausch & Lomb has ushered in a new manager. It sold its 158-year-old headquarters building, laid off a large number of employees, streamlined its organization, and finally started producing contact lenses and launching new care solutions to keep up with the market.
But these still can't pay off the historical debt that Bausch & Lomb owes.
In 2013, Valeant, a well-known Canada pharmaceutical company, decided to buy Bausch & Lomb for $8.57 billion ($4.2 billion of which was earmarked to pay off debt). Warburg Pincus happily took the windfall and sold the hot potato.
Valeant, a company run by McKinsey & Company's financial masters, is at the climax of "growing into the world's top five pharmaceutical companies in six years", and the acquisition sent its stock soaring for several months. Why did this company, which relies on the acquisition of pharmaceutical companies and scarce drugs in their hands, and then increase the price dozens of times to make huge profits, look at Bausch & Lomb?
Contact lenses obviously don't have the power to go crazy in price for rare drugs, but Valeant's acquisition of Bausch & Lomb has proven to be very vicious.
In 2016, when Valeant suffered a crisis and its stock price plummeted by 97%, Bausch & Lomb was one of its important financial supports. Bausch & Lomb didn't rely on the eyewear business to be a lifesaver for Valeant. What makes it make a lot of money is the hot medical aesthetic project - Thermage.
You can also see when you open Thermage's official WeChat account in China, "Thermage Beauty", and the main body of the account is "Bausch & Lomb (Shanghai) Trading Co., Ltd." In 2014, Valeant acquired Solta Corporation and began to use Bausch & Lomb's channels to promote the acquired Thermage.
This project, which often costs tens of thousands of yuan and still has hidden dangers in terms of safety, has become a fashion trend in the medical aesthetic industry, just like Bausch & Lomb's contact lenses back then.
All of this seems to be the end of a history at Bausch & Lomb.