Markets & Finance

A Wary Eye on Bausch & Lomb


Bausch & Lomb (BOL) has become the latest in a string of health-care companies to have one of its products potentially linked to a medical scare. The Rochester (N.Y.)-based outfit's stock plummeted as much as 21% Apr. 11, amid a surge of downgrades by investment analysts, on the news that 109 patients in 17 states developed a rare and dangerous fungal eye infection in recent months.

Of the 30 cases investigated to date by the Food & Drug Administration, 28 wore contact lenses, and 26 of those patients used Bausch's popular ReNu products to clean and store their lenses.

However, the rapid sell-off came even as eye specialists pointed out that no evidence has yet been found that ReNu caused the infections. And 109 cases out of some 36 million contact-lens wearers in the U.S. makes the infection still rare.

PRO-ACTIVE STEP The FDA announced the discovery of the infections on Apr. 10, and Bausch & Lomb immediately and voluntarily suspended all shipments of its ReNu MoistureLoc solution. It also announced plans to set up a multi-city study of the product. "Bausch & Lomb is really to be commended for taking this pro-active step," says Dr. Kathryn A. Colby, attending surgeon at Massachusetts Eye & Ear Infirmary in Boston. "It is really too early to tell what caused this infection."

The company heard few commendations from Wall Street, however. J.P. Morgan(JPM), Banc of America Securities(BAC), Robert W. Baird & Co., and Standard & Poor's all lowered their outlooks or target prices on the company. Analysts warned that, although only MoistureLoc was suspended, the news could have a spillover effect on all the ReNu products, which brought in $45 million in U.S. sales last year. The company's shares fell as low as $45.50 on Apr. 11, a 21% drop, before regaining some strength and closing down $8.41 (around 15%) to $49.03.

The infection that is causing all this concern is extremely rare, particularly in northern climates, which is why 109 cases set off warning bells at the FDA. The same infection showed up in Hong Kong and Singapore in February, and Bausch & Lomb also suspended sales of ReNu multipurpose products to those areas. Called fungal keratitis, the disease can severely damage the cornea and even cause blindness, and eight of the cases reported in the U.S. required corneal transplants.

TRAVELING FUNGUS The ailment is caused by a fungus, fusarium, which is found in plant matter and dirt. It is usually seen only in the South, but the current outbreak is showing up in New York, New Jersey, and other northern states. Symptoms include red and irritated eyes a long time after the lens is removed, pain in the eye that progressively worsens, increased discharge, and increased sensitivity to light.

Colby says the best way for contact lens wearers to avoid eye infections is to keep their lenses scrupulously clean. Hands should always be washed before touching lenses, the storage case should be cleaned, and a multi-purpose solution should be squirted on the lens 10 seconds to 15 seconds before it is stored.

The eye surgeon's ultimate recommendation: "I really prefer disposable lenses that are thrown away at the end of each day" to avoid storage and cleaning problems. The latest headlines on fungal keratitis may convert skittish lens wearers to Colby's way of thinking.


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