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How J&J's Foresight Made Contact Lenses Pay


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HOW J&J'S FORESIGHT MADE CONTACT LENSES PAY

Bernard W. Walsh could see a lot of drawbacks when he was offered the chance to run J&J's Vistakon unit in 1987. Then serving the tiny corner of the contact-lens market for people with astigmatism, the operation garnered barely $20 million in annual sales. He would have to uproot his family from a cozy town on Philadelphia's Main Line and move to Jacksonville, Fla. Perhaps most worrying of all, Walsh would be building a brand-new company around a pricey, little-known product that Johnson & Johnson was investing millions to produce: disposable contact lenses. "There was a perception of high risk," he admits dryly.

If taking the job was a gamble, Walsh hit the jackpot. Now 49, he's in charge of one of the fastest-growing members of J&J's family of companies. Worldwide sales for Vistakon grew 50% last year, topping $225 million, mostly on the strength of its Acuvue disposable lens. Analysts say Vistakon has snared a quarter of the $650 million U.S. lens market alone, and it's No. 1 in the fast-growing disposable segment. Walsh, who came to Vistakon from a cardiovascular-equipment unit that J&J sold, is overseeing 1,800 employees, three times as many as he started with. He's in charge of fields as diverse as operations, marketing, advertising, and research and development. Walsh declines to comment on how his pay has changed, except to say he's "very happy" with it.

Vistakon is a typical J&J success story. Back in 1983, a J&J staffer in Europe got word of new Danish technology to produce disposable lenses cheaply. J&J bought the rights and began perfecting the packaging and manufacturing process. Within a few years, J&J had quietly assembled a management team and built a high-volume plant in Florida, where it started test-marketing the lens in the summer of 1987. Vistakon quickly set up distribution routes, developed consumer ads, and took the product national in June, 1988, with trial lenses free to anyone who asked. The move was crucial, since Acuvue costs about $500 a year, including doctor's visits, compared with $350 to buy and care for conventional extended-wear lenses.

SMALL AND AGILE. The speed of the rollout and the novelty of big-budget ads left giants Bausch & Lomb Inc. and Ciba-Geigy Corp. seeing stars. J&J also had a manufacturing edge with its Florida factory, which could mass-produce thousands of lenses quickly and uniformly. Unable to take competing lenses coast-to-coast for six months or more, rivals conceded Vistakon an advantage that lingers.

J&J's structure made the guerrilla warfare possible. Walsh's unit was so small that he was able to make rapid-fire decisions on fronts as diverse as production and marketing, with little interference from a bureaucratic headquarters. He could hire ad agencies at will, for instance. Yet because Vistakon was backed by capital-rich J&J, it could count on the resources needed to attack a mature market with a little-tried and costly product. Kenneth S. Abramowitz, health care analyst at Sanford C. Bernstein & Co., estimates J&J has shelled out at least $75 million on Acuvue, including buying the rights, building the plant, and absorbing operating losses. He figures the business turned profitable in 1991.

Small though his company may be, Walsh's job just keeps getting bigger. To broaden its product line, Vistakon recently unveiled a longer-wear, pricier product called Surevue. Unlike Acuvue, users cannot sleep with Surevue lenses in place. But they get twice the wear out of them, usually about two weeks, so Surevue is cheaper in the long run. As one of J&J's point men in the optical market, Walsh also must keep tabs on new technologies to make sure his products stay current.

One day, he would like to move into group management in J&J's New Jersey headquarters. That would give him oversight responsibility for a clutch of companies. But he clearly is torn about leaving the field for the home office. "A company presidency is probably the best job in the corporation," he says. "You're left alone to run your own business." That is, as long as you keep stomping the competition.Joseph Weber in New Brunswick, N.J.


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