AMO Puts a New Spin on Ophthalmic Devices

Once part of Allergan, Advanced Medical Optics was spun off when its parent company wanted to focus on pharmaceuticals. Executives of the new company believe that life as an independent medical device company gives it the freedom to operate and the focus it needs to thrive in the ophthalmic device market. In the spin-out, AMO got market-leading brands with an almost 40 year history, an ophthalmic sales force that has just about the longest continuity in the industry, and strong management with a track record more than two decades long. But with its new start, AMO also inherited a large debt load, a thin R&D pipeline, and products that serve markets with single-digit growth prospects. It's challenge:to create innovative new products in an industry where it can't hope to match, in terms of R&D spending and the cash it can spend on acquisitions, competitors three times its size. AMO's strategy is to become a specialty medical device company, serving largely ophthalmic surgeons, with a narrow focus on three segments; cataract surgery, refractive surgery, and eye care solutions. It argues that in ophthalmology, bigger isn't better, and that with a nimble corporate structure concentrating on a few hand-picked areas that build off of core strengths, its R&D and business development dollars will go far in helping it become an industry innovator.