According to Reuters, Valeant VRX is considering selling its contact lens maker Paragon Vision Sciences:
Valeant Pharmaceuticals is reaching out to potential buyers for its specialty contact lens manufacturing division, Paragon Vision Sciences, amid scrutiny from the Federal Trade Commission, according to two people familiar with the matter.
A sale of Paragon, which Valeant’s Bausch & Lomb unit purchased earlier this year for an undisclosed sum, would deal a blow to the specialty pharmaceutical company’s attempt to consolidate the market for gas permeable contact lenses, a type of rigid lens popular among people with keratoconus, a thinning disorder of the cornea, among other eye diseases.
In actuality, the company may not have any other choice but to part ways with Paragon. Valeant has been the subject of an FTC antitrust investigation. The company previously disclosed that it had received a letter from the U.S. Federal Trade Commission (“FTC”) seeking more information about the Paragon acquisition.
The Situation
Valeant acquired contact lens maker Bausch and Lomb in 2013 for $8.7 billion. At the time of the deal, Bausch and Lomb reportedly manufactured about 75% of the basic components of rigid gas permeable lenses, known as “buttons.” After acquiring Paragon Vision Sciences in May for an undisclosed sum, Valeant and Bausch and Lomb controlled 80% of the market for the buttons, received a letter.
Months after the acquisition, Valeant allegedly raised prices for is buttons to customers — a strategy it has become known for. The company increased the cost of certain materials and eliminated volume discounts. In an attempt to gain more control over the supply chain, the company allegedly sought to acquire laboratories that turn the buttons into finished lenses.
Gas permeable lenses represent only about 10% of the contact lens market (3 to 4 million people); nonetheless, Valeant’s business practices were a big deal to Jan Svochak, who runs a lab that makes contact lenses in Texas. Valeant’s sharp elbows prompted Jan to discuss his concerns with the FTC:
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