Executives
Doug MacHatton – VP, Treasury and Investor and Public Relations
Kevin Buehler – President and CEO
Richard Croarkin – SVP and CFO
Sabri Markabi – SVP, Research and Development and Chief Medical Officer
Analysts
Amit Bhalla – Citigroup Inc.
Joanne Wuensch – BMO Capital Markets
Kimberly Gailun – JP Morgan
Benjamin Pass – GLG Partners LP
Frank Pinkerton – SunTrust Robinson Humphrey Capital Markets
Louise Chen – Collins Stewart LLC
David Book – Buckingham Research
Josh Jennings -Jeffries & Company, Inc.
Lei Huang – Wells Fargo
Sachin Shah – Capstone Global Markets
Presentation
Alcon, Inc. (ACL) Q3 2010 Earnings Conference Call October 21, 2010 8:30 AM ET
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the Alcon Incorporated Earnings Conference Call for the Third Quarter of 2010. (Operator instructions).
I would now turn the conference over to Doug MacHatton, Vice President, Treasury and Investor and Public Relations. Please go ahead, sir.
Doug MacHatton
Thank you and good morning, everyone. Presenting today, of course, are Kevin Buehler, President and Chief Executive Officer, and Rick Croarkin, Senior Vice President and Chief Financial Officer. Also participating in the Q&A session is Dr. Sabri Markabi, Senior Vice President Research and Development and Chief Medical Officer.
Before we begin I would like to remind you that certain statements that we will make in the presentation may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and you should not place undue reliance on these forward looking statements in this webcast. We refer you to our full disclaimer regarding these statements, which is included in our third earnings press release issued yesterday, and our 20-F filed with SEC on March 16th, 2010.
In addition this presentation may also include certain financial measures used to better understand our business, which may not be prepared in accordance with the US Generally Accepted Accounting Principles. These non-GAAP measures are reconciled at the end of this presentation or in associated SEC filings. This conference call and accompanying webcast are being broadcast simultaneously over the internet, with replays available on our website at www.alcon.com in the Investors & Media section.
And I’ll now turn the call over to our CEO, Kevin Buehler.
Kevin Buehler
Thanks, Dug, and good morning, everyone, and thank you for joining us this morning on the call. The third quarter was solid from both in operational and financial perspective.
Global sales increased 8.7% organically, which takes our full year organic growth rate to 9.9%. The strength of Q3 growth reinforces our continued ability to use our leading commercial position and global scale to drive top line growth.
Additionally, our recently completed acquisition added measurably to our sales growth in the quarter, which fully offset the negative impact of foreign currency resulting in reported sales rising 9% to $1.76 billion USD. Excluding the period charges related to the change of majority ownership and merge or proposal from Novartis, our adjusted operating income rose 8.7% and adjusted net earnings increased 8.5%.
These financial results include an increase investment level in the quarter to drive R&D product innovation and to support incremental brand growth opportunities. Research and Development spending grew almost 17% over Q3 2009 and we implemented several commercial projects that have expected high rates of return that push quarterly SG&A growth to almost 8%.
Additionally, with the closing of the LenSx acquisition, we began to recognize SG&A, R&D and other related expenses in this quarter. Although these investments reduced our leverage opportunities in the third quarter, they reinforced our commitment to delivering sustainable growth over the longer term. This is clearly evident in our year-to-date performance and the leverage we have achieved with operating income rising 15.7% and net income 16.1%, both on an adjusted basis.
As these slide shows, our performance in Q3 was a continuation of the strong performance trend set in motion in the second half of 2009. This performance is reflective of the general economic recovery and its impact on the consumption of healthcare as well as the durability of the Alcon business model.
It is important to understand the performance in the third quarter in light of the higher prior year comparison especially in the surgical procedure volume in the U.S. market.
Year-to-date, we have delivered organic growth of 9.9%. I believe our strong performance in the quarter and the full year is indicative of the value of our underlying product and geographic diversity and the balance growth opportunities this affords us.
As we move in to the final quarter of the year and into 2011, we will continue to measure our quarterly growth against prior comparable sales performance that are reflective of an improved market environment. I am confident that we are on track to achieve our full year sales and profit objective.
Rick will provide more information on our outlook and the expectations for the remainder of 2010 during his remarks.
Alcon’s global scales offers broad geographic diversification and combined with the breadth of our product portfolio provides a resilient and durable business model. Sales in the U.S. rose 9.5% in the third quarter to $803 million USD to represent 46% of global sales. This strong quarterly performance included a 160 basis point contribution from our recent acquisition of Optonol and DUREZOL as well as a positive impact from seasonal ODEC [ph] pharmaceuticals.
Growth in developed international markets was slightly dampened by the lingering impact of austerity measures throughout the European Union. While we expect this impact to continue as these markets seek to address their healthcare budgets, we are seeing continued strength in other developed regions including markets like Canada, United Kingdom and Italy.
Emerging markets remain a strong driver of our global sales with 19.2% organic growth in the third quarter.
Our pharmaceutical and consumer product lines performed well in the third quarter, which more than offsets softer growth in surgical. Pharmaceuticals sales, which rose 15 percent to $758 million USD, were lifted by the seasonal impact of a strong ODEC season, but also from solid performance in core products like DuoTrav and NEVANACs.
Additionally, newer products like the recently acquired Durasol, generic Brimonidine and the channels fill from the September launch of TobraDex ST contributed to the quarter’s strong sales growth.
Surgical sales rose 3.7% on an organic basis, which reflected a comparison to a strong Q3 2009, during the recovery period last year, and slower cataract procedure growth in the U.S. Advanced Technology IOLs continue to perform strongly with ACRYSOF IQ ReSTOR triad [ph] and the IQ Toric lenses rising 13.6% on an organic basis.
Sales in our consumer product line rose 8.8% primarily on the strength of our sustained artificial tears family, which was supported by the recent U.S. launched of Systane Balance.
Contact lens care continues to perform well, especially outside of the U.S., where [inaudible] replenish OPTI-FREE RepleniSH is driving growth. U.S. contact lens care sales grew slightly versus Q3 2009 with solid U.S. unit growth, partially offset by a promotional pricing for both the back-to-school season and response to recent competitive product launches.
To date, we have successfully defended our U.S. CLC market share in this increasingly more competitive environment. Our success in generating consistent sales growth is supported by our ability to execute against our commercial strategies to defend and to grow global market share.
As you see here in pharmaceuticals, our global sales and marketing organizations continued to achieve growth in excess of the market, in most of the key categories in which we compete. We are able to accomplish this based on the quality and breadth of our product portfolio as well as leveraging our prior investments in sales force expansion in Japan, the E.U. and in emerging markets to strengthen our share of voice in these markets.
With the launch of DuoTrav, the filing of PATADAY in Japan and the launch of TobraDex ST in the United States, we have an opportunity to sustain and build upon our long standing global brand performance.
As these slide shows, quarterly cataract procedure growth rate in the U.S. had been somewhat volatile since in the beginning of the global recession. In early 2009, procedure growth rates were held below historical levels as patients deferred cataract surgery in the face of an uncertain economy.
As we move into the back half of last year and into early 2010, quarterly growth rate spiked given the impact of catch-up procedures, as the patients who had deferred surgery sought treatment in greater numbers. This accelerated volume created a near-term opportunity for us driving strong IOL unit growth and higher consumption of disposables. But it also set a high threshold going forward for prior year quarterly comparison.
As a result, we expect that cataract procedure growth rates will be somewhat lower on a comparable basis for the next few quarters primarily in the U.S. market. Markets growth forecasted procedure growth of 2.6% in the third quarter for the U.S. But our internal estimate suggests Q3 was closer to 1.6%. This lowered growth rate estimate is supported by the patterns we saw in third quarter sales of our U.S. cataract business.
Looking ahead, our internal forecast for full year U.S. procedure growth is around 2.5%, which is slightly lower than market’s growth estimation and slightly below the long-term average growth rate of 3 to 3.5%. At the same time, it’s important to remember that the majority of Alcon’s cataract sales base is outside of the U.S. market.
Advanced Technology IOLs represent a significant opportunity for Alcon. Not only is this product category an important contributor to current sales and profitability, it is also poised to be a catalyst for our future. We are now moving from a period where share gains drove sales velocity into a new era, where our success will come through increasing market penetration and driving further utilization of Advanced Technology IOLs across a larger pool of surgeons.
Currently, the penetration rate of Advanced Technology IOLs sits at roughly 5 to 6% on a global basis. In the U.S., however, we have seen a continuing increase in penetration, rising from 10.8% one year ago to 13.5% in the second quarter. While this is an encouraging trend, there are still significant opportunity to address this under index utilization as all cataract patients are affected by presbyopia and about 30% of the patient population suffers from astigmatism that can be corrected with our Toric lens.
Our efforts to drive utilization are focused on education and training through our initiatives in process management as well as creating technologies that meet the needs of surgeons and their patients. With the launch of the AcrySof ReSTOR Toric IOL in the E.U., we are further expanding the opportunity for surgeons to deliver spectacle independence and improved vision for their patients. This noble technology combined the multifocality of our ReSTOR lens with the astigmatism correction of our Toric lens.
International markets remain as an integral component of Alcon’s long-term global operational and financial performance. These countries consistently deliver high rates of constant currency growth and represent an increasingly important aspect of our global sales.
In the third quarter, developed, international and emerging markets together represented 54% of the top line sales. In developed international markets, we continue to generate positive brand development and volume growth through our commercial execution. For example, the Alcon AcrySof IOL volume growth year-to-date is over 6% globally and almost 8% in international markets, which reflects positively on procedure volume and share development.
However, in these more mature markets, we are experiencing some level of pricing pressure primarily on the pharmaceutical segments in Europe due to the continuing austerity measures by selected government payers.
In addition, we see a few hotspots such as Spain and Greece with consumption challenges in the healthcare sector. These factors have partially offset the strong core growth, resulting in the 5.6% year-to-date growth for developed international markets.
As this slides illustrates, while the year-to-date growth rate in developed international markets reflect the continued challenges in their healthcare economy, emerging markets have rebounded to levels more consistent with the pre-recession environment. Emerging countries continue to be Alcon’s fastest growing geographic markets delivering 18.7% year-to-date organic growth. At more than double the rate of growth in developed international markets, emerging countries remain a significant near-term contributor and long-term opportunity for us.
Recently, I traveled to China and I was very encouraged by what I saw. We are making significant strides with our Fayco development program to train additional cataract surgeons to raise the utilization of surgery. China has one of the highest incidences of cataract-induced blindness in the world, but yet one of the lowest rates of cataract surgery. We are working to address through our Fayco training centers throughout the country, having trained more than 150 surgeons through last year and with a goal to train 200 more by the end of 2010.
With our building success in China, we are looking to take these training models and establish similar program in other emerging markets.
2010 has been an active year for Alcon in the area of project development. This summary of our key later stage R&D pipeline indicates the positive momentum in both submission file and approvals received. Since our last conference call, we have received two new approvals and expanded diopters [ph] for the AcrySof IQ Toric IOL and the WaveLight EX-500 excimer laser, both in the European Union.
We expect to launch the IQ Toric IOL with the full range of diopters during the fourth quarter in Europe.
In addition, we recently introduced the WaveLight Refractive Suite, which combines our class leading EX-500 excimer laser with our new FS-200 femtosecond laser to form the world’s fastest refractive platform.
During the quarter, we also filed the alternative preservative system version of DuoTrav in the E.U., PATADAY in Japan and a new formulation of OPTI-FREE for silicon hydrogen lenses in the U.S.
And looking ahead, we have the potential for nine additional key product approval and new submissions across each of our three product lines yet remaining in 2010.
We are seeing increasing movement and productivity in our pipeline ranging from incremental products and promising opportunities for breakthrough innovations. I want to thank the dedicated individuals in our global R&D organization for their focused efforts.
As you have seen over the last few years, Alcon has become increasingly more active in our business development initiative through increase single molecule licensing transactions, broad-based research collaboration and the acquisition of individual marketed products or even entire companies. I believe our success in this area provides Alcon with a strategic source of long-term growth that supplements those that are internally developed.
Through these efforts, we are building out our research portfolio by providing additional [inaudible] goal to run through our rigorous proof of concept filter as well as establishing new platform with transactions like the purchase of ESBATech biologics capability.
Additionally, we are adding important new marketed or pre-market technologies that will contribute to near-term growth. Most recently, our purchase of Optonol and its Ex-Press Glaucoma Drainage Device and the potent steroid DUREZOL from Sirion have provided sales momentum that has supported our year-to-date performance.
In the third quarter, these combined products delivered 70 basis points of incremental global growth and 40 basis points year-to-date. We have been able to leverage our commercial capabilities to differentiate these two products resulting in growing sales of the Ex-Press Drainage Device and an acceleration of the DUREZOL U.S. market share to 6% in the month of August versus 1.3% market share one year ago.
This slide really captures the value of Alcon’s commercial execution capabilities. DUREZOL is an excellent example of why it’s important that our business development and initiative are focused both on long-term R&D pipeline and close to market products and technologies to drive near-term growth.
I am particularly excited about the opportunity presented by our recently closed acquisition of LenSX. Using the LenSX’s femtosecond laser and the micron level precision delivered by its OCT image-guided visualization, a surgeon can achieve a perfectly centered anterior capsule erectus of the exact required diameter and then fragment the crystalline lens before an incision is created. Then the laser can be used to make a precise incision, which eliminates the variability of these key aspects of the cataract procedure, when they’re performed manually.
This unique and innovative femtosecond technology represents a new platform of growth for our leading cataract surgical product portfolio. This technology will bring another premium service to cataract surgery delivering benefits to both surgeon and the patient while providing an incremental revenue opportunity to the cataract procedure.
We plan to introduce the LenSX laser in the near-term and expect sales contribution to build slowly through the next year. A high level of interest at the recent Academy of Ophthalmology meeting last weekend, confirmed that this technology has a very high level of surgeon interest and will gain adoption as they more fully appreciate the procedural and clinical benefits of this new technology.
Before I turn the call over to Rick, I wanted to take the moment to address the recent change of majority ownership. With the completion of the second stage of their transaction with Nestle, Novartis became Alcon’s largest shareholder with roughly 76% of our outstanding stocks.
While gaining a new strategic majority owner represents an important milestone in our history, it is important to remember that Alcon remains an independent company. We continue to operate with a separate Board of Directors, who are governed by our organizational regulations.
The opportunities to leverage this expanded relationship with Novartis will be conducted within the framework of arms link [ph] negotiation and approval of the Independent Directors Committee of Alcon’s Board of Directors as appropriate.
In looking at our new relationship with Novartis, I see two distinct areas of interaction. The first area is related to the consolidation of Alcon’s financial performance consistent with a majority ownership position. The second area is centered on value creation. Here, my focus is on creating value specifically for Alcon. With our expanded relationship, we have a potential opportunity to leverage the scale of Novartis’ position in the healthcare market.
For example, this relationship could be exploited to gain greater market access for Alcon in the case of Advanced Technology IOLs, improve reimbursement position and potential opportunities to drive incremental revenue or to reduce ongoing cost. These opportunities will require [inaudible] negotiations and will take time to review, structure and finally to implement.
I welcome Novartis as our new majority owner for all of the reasons noted earlier, which have the potential to significantly improve Alcon’s competitive position. At the same time, I look forward to a timely and amicable resolution of this owner situation and the endorsement by the Independent Director Committee.
With that, I will now hand the call over to Rick, who will walk through our Q3 financial performance in more detail.
Richard Croarkin
Thank you, Kevin, and good morning, everyone. And thank you for joining us on the call today. As Kevin mentioned, Alcon built upon the momentum in the first half of 2010 to post strong third quarter sales growth and a solid increase in adjusted net earnings.
As demonstrated by our quarterly results announced yesterday, Alcon continues to translate its broad product portfolio, commercial strength and geographic scale intro strong and consistent sales growth resulting in 9.9% year-to-date organic growth.
In the third sales grew 8.7% on an organic basis. With the headwind from foreign currency in the quarter fully offset by 70-basis point contribution from acquisitions, reported sales increased 9% to $1.76 billion.
The continued strength at the top line was attributable to the solid global performance by our pharmaceutical and consumer product lines, which offset partially by the softness in U.S. surgical that Kevin discussed earlier and also reflect the positive contributions for most geographies.
Emerging markets once again led our international sales growth with sales in these countries rising 19.2% on an organic basis. Similar to the impact of a strong allergy season on Q2 sales, the warmer than average summer in the United States lifted our ODEC [ph] category and drove exceptionally strong CIPRODEX sales in Q3, which boosted – provided a boost to our U.S. pharmaceutical sales.
Sales from our acquisition of Optonol and its Ex-Press Ophthalmic Glaucoma Device and our acquisition to the potent steroid DUREZOL contributed significantly to our growth in the quarter. Acquisitions added 70 basis points to Q3 sales growth, almost doubling their contribution versus the second quarter. This acceleration is being driven by the successful integration of DUREZOL into our anti-infective portfolio and the execution capabilities of our Alcon sales force. We expect this momentum to continue to build into the fourth quarter.
With the relative weakening of the U.S. dollar in recent months, our expectations to currency have changed regarding the balance of the year. At current levels, we expect currency to be roughly neutral in Q4, which I’ll talk more about when I review our 2010 guidance.
Gross profit in the third quarter increased 10.1% to $1.3 billion or 76.0% of sales compared to 75.3% in Q3 2009. The higher gross margin was attributable to the temporary impact of foreign exchange fluctuations of COGS [ph] and a positive contribution from pricing in the United States.
You will recall in Q2, we saw our gross margin go beyond our usual 75 to 76 gross margin percent range up to 77.4% in part driven by temporary impacts of foreign exchange on cost to goods sold. With the recent weakening of the dollar, we will likely experience a negative temporary impact of exchange on the gross margin, which would come in at around the 74% range in Q4, yielding a full year gross margin of around 76%. By the way, this pattern is similar to what we saw last year, when the dollar also weakened in the fourth quarter.
As a result of the change in majority ownership to Novartis, certain employee benefit programs were accelerated and vested in the quarter. Cost related to this and the ongoing expenses resulting from the merger proposal from Novartis totaled $133 million in Q3 and a $141 million year-to-date.
Net of taxes, these expenses reduced Q3 net earnings by $113 million or $0.37 per diluted share. These costs are not related to our fundamental performance. As we have shown them in the other operating expense line of our P&L and we have excluded them from our adjusted results.
Third quarter operating income was $495 million. Excluding the $133 million that I previously discussed our operating income rose 8.7% on an adjusted basis to $628 million or 35.7% of sales. We leveraged SG&A in the quarter as we have done all year and we continued our investment in R&D in the quarter, which grew at 16.5%.
The $26 million increase in R&D over Q3 of last year was driven by both higher internal project spending as well as the addition of ongoing expenses related to ESBATech, a number of small licensing payments and the recent LenSX acquisition.
LenSX added roughly $2 million to R&D in the quarter and a similar amount to amortization. LenSX will add significantly more to expenses in Q4, but I will provide more detail on the full year impact of the LenSX deal when I discuss our guidance.
On an adjusted basis, year-to-date operating income rose 15.7% to over $2 billion. This adjusted figure excludes the Novartis related cost that I mentioned before. The refinement of royalty expenses in Q1 of this year and the impact of the reduction force in 2009. This year-to-date reported sales – with year-to-date reported sales growing 12.2%, our adjusted operating income grew faster than sales and lead to a year-to-date adjusted operating margin of 37.6%.
Net earnings in the third quarter were $446 million. Adjusting for the $113 million net after tax impact of the non-recurring items and adjusted net earnings would have risen 8.5% to $559 million or a $1.84 per diluted share. Most in net earnings in the quarter is explained by the factors affecting operating income that I previously discussed.
Additionally, with the continued decline in interest rates and the transition of our investment portfolio complete, we earn about $11 million less on our investment portfolio in Q3 2010 than we did in Q3 2009. We expect Q4 investment earnings to be in line with Q3.
On a year-to-date basis, our adjusted net earnings rose 16.1% to $1.8 billion or $5.97 per diluted share. I believe the strong year-to-date performance further validates the Alcon business model and is a testament to our ability to generate leverage in our P&L overtime.
Based on our year-to-date performance and expectations for the remainder of the year, I fully expect Alcon will achieve adjusted operating and net margin improvement for the full year.
Now, let’s take a look at our expectations for the balance of the year. With our strong performance over the first three quarters, we are affirming our sales growth target of high single digits or the full year. As we noted at last quarter’s call, a significantly higher prior period comparable in the fourth quarter will result in lower organic growth that we saw in the fourth quarter, than we saw in the first nine months of the year.
As noted earlier, at current exchange rates, we expect the currency impact to be roughly neutral in the fourth quarter of this year.
As for earnings per share, our strong year-to-date performance gives us the confidence to raise and tighten the adjusted fully diluted earnings per share guidance to a range of $7.58 to $7.68 per share. This increase guidance reflects the assessment of multiple factors including the potential for continued foreign exchange volatility, increase R&D project spending versus the third quarter and potential business development activity as well as further incremental commercial project spending that we expect to implement in the balance of the year.
Additionally, with the August closing of the LenSX acquisition, we will incur SG&A, R&D and other operational expenses without corresponding revenue as an upset. We expect LenSX to add about $15 million to total cost in Q4 and roughly $20 million for the full year, which we are absorbing in our new guidance range.
Our full year earnings per share guidance excludes the healthcare form retiree medical catch-up and retiree medical tax catch-up and a change in royalty estimates, both of which were recognized in the first quarter. It also excludes all cost associated with the change of majority ownership and the merger proposal from Novartis.
As we have said previously, our guidance reflects a Q4 renewal of the U.S. Research and Experimentation tax credit with retroactive reputability. Legislation containing the renewal is currently under consideration in Washington. But in the current political environment, the timing of renewal is uncertain.
Assuming that tax credit is renewed before year end is anticipated, our Q4 and full year tax rates will be lower than in the first three quarters.
Before turning the call over for questions, I want to express my sincere thanks to Kevin, the executive team and the entire Alcon organization for making my three years at the company such a positive experience. I also enjoyed getting to know all of you on the buy and the sell side, and as you know I will be returning to Nestle later this year and this will be my last conference call.
Looking ahead, I know that with the strength of the finance organization and the capabilities of my successor Robert Karsunky. Alcon will be well-positioned to continue its long legacy of strong financial performance.
And with that, I will now hand the call back to the operator to open the line for questions.
Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from the line of Amit Bhalla with Citi. Please proceed.
Amit Bhalla – Citigroup Inc.
Hi, good morning, everyone.
Kevin Buehler
Good morning, Amit.
Amit Bhalla – Citigroup Inc.
I have two questions, one on the pharma business, one on surgical. First on the pharma business, can you expand a little bit on the commentary about pricing and tell us kind of what you’re seeing in the U.S. as well Europe. I know you mentioned some pricing pressure in Europe, so I’m hoping you can expand on that and maybe even touch a bit on the impact of healthcare reform within pharma as well.
Kevin Buehler
OK, and the second one?
Amit Bhalla – Citigroup Inc.
I was going to wait on that one, but I’ll throw it out there now. In terms of the surgical business, clearly you have some tough comps in cataract. I was wondering if you could also discuss any sort of economic impact that you’re seeing in the cataract business if you could quantify the impact of competition in IOLs. Thanks.
Kevin Buehler
OK. Well, we’ll start with your first question on the pharma side. I think what we’ve commented to is that we are seeing continued pressure in pricing, primarily on the pharmaceutical side in the E.U. market, where we’re seeing these markets challenge with how do they pay for their healthcare consumption and their placing rebate pressures back on to the pharmaceutical companies. And we’re seeing that in the traditional markets that you would expect, markets like Germany and Spain and France.
We do not see that same situation in place in the U.S. Actually, we’ve been able to in 2010 exercise price increases, but that does not mean that we’re immune from the impact from healthcare reform, which obviously we saw this year primarily with an increase in the Medicaid rebate and then additional impacts on the tax for pharmaceuticals starting in 2011. So, for the most part, the pricing pressure that we’re alluding to is primarily on the pharmaceutical side and in the E.U. markets.
If we look at the surgical side of the business and you referenced the U.S., clearly what we saw was an impact in really the fourth quarter of 2008. It’s one of the first times, where we did not see an increase in the procedural volume in the fourth quarter, which typically is the largest quarter. and so, we saw depressed procedure volumes carry over into the first quarter of 2009 and then we started to see this catch-up procedures that really happen in Q2, where we saw almost 6% procedure growth and then in Q3, where we saw 4.5% procedure growth.
And then obviously, the fourth quarter of ‘09, we saw a large increase in percent change, but it was against the depressed base of the fourth quarter of 2008. So, what we’re seeing in Q2 and Q3 of 2010 is that we’re going against those catch-up procedures and as a result, we’re not seeing procedures grow at the rate that we normally do. at the same time, you could anticipate that we’re seeing some pressure from the number of new product entrees, both in the area of monofocal for the most part and we’re seeing also our own pressure on monofocal as we move patient from the monofocal business to the premium IOL either ReSTOR or Toric. And obviously, we have competition in the Advanced Technology segments as well.
As you also probably remember is that procedure volume is also somewhat influenced by reimbursement and when in fact you anticipate DRG changes, you can move procedures for short periods of time. What we’re basically seeing here, I think, is simply quarterly dynamics that are seeing changes in procedure volume and for the most part, the impact is really not showing up in significant share deviations either across our monofocal or Advanced Technology IOLs.
Richard Croarkin
Hey, Kevin, how much – this is Rick. Just to build a little bit on some of the messages Kevin was communicating. In the European pricing, things are pretty much in line with what we talked about in our Q2 call.
So, we have pricing pressures that we expect every year and the pricing that we’ve had this year as a result of austerity is only about 15 million more than we would normally have expected. And to sort of put a framework around that, in the third quarter across all of our geographies and all of our business segments, we had less than a 1% price decline internationally. So, it would seem that while there is pressure there, it’s being managed.
Amit Bhalla – Citigroup Inc.
Okay, great. Just one clarification, you said in the U.S, you have been able to take some price increases. Can you just give the quantification of that and was there price increases in the third quarter?
Richard Croarkin
Yes.
Kevin Buehler
Right.
Richard Croarkin
Yes. We had in the third quarter, across in the U.S., across all of our business segments around 3.8%. So, we’re netting even with the healthcare reform price increasing.
Amit Bhalla – Citigroup Inc.
Okay, great. Thank you.
Kevin Buehler
Thanks.
Operator
Your next question comes from the line of Joanne Wuensch with BMO Capital Market. Please proceed.
Joanne Wuensch – BMO Capital Markets
Thank you very much for taking the question. You talked about a lower tax rate in fourth quarter, anyway to quantify that for modeling purposes?
Richard Croarkin
Good morning, Joanne. The way I would think about it is, you know our year-to-date tax rate, I think if you adjusted for the R&D tax credit, which is about 70 basis points that is a reasonable proxy for what you should expect to full year tax rate to be.
Joanne Wuensch – BMO Capital Markets
Okay. And you talked about Lenscare, I know, a competitor of yours has launched a new product. You sound like you were holding your share in that space, is that true? And then, are we seeing any type of consumer pricing pressure or rebate pressure on that business?
Kevin Buehler
Joanne, I think we’re very pleased with where we find ourselves coming out of the back-to-school time period. We, obviously, anticipated both the [inaudible] and AMO product introductions, and what we were able to do is obviously continue to focus on demand creation at primarily the doctor level. But at the same time, we took advantage of the back-to-school time period and went ahead and put special pack promotions into the marketplace, which on a short-term basis had some impact in terms of our price.
But at the same time, it allowed us to maintain and keep our consumers outside of the market. And when you look at what the share impact is in terms of our promotional activity and back-to-school and our ability to hold share, we’re quite pleased with those promotional programs at this stage.
Joanne Wuensch – BMO Capital Markets
Sounds great. Thank you very much.
Kevin Buehler
Thank you.
Operator
Your next question comes from the line of Mike Weinstein with JP Morgan. Please proceed.
Kimberly Gailun – JP Morgan
Good morning, everybody. It’s Kim here.
Kevin Buehler
Hi, Kim.
Kimberly Gailun – JP Morgan
Hi, there. Let see, just thought we could start on TRAVATAN and I’m sorry if I missed this on the call. But wondering if you could just talk about the progress with the kind of discontinuation of TRAVATAN in favor of TRAVATAN Z, how that’s going with switching customers over and then, you know any impact that might have had on the quarter with some of the inventory were down associated with that switch.
Kevin Buehler
Sure. As you know the TRAVATAN Z has been in the market for a number of years in the U.S. and basically, we were able to highlight what we believe are the advantages to the alternative preservative approach. And TRAVATAN Z has been generally well-accepted by the physicians in the U.S. to a point that when we saw the conversion rate achieve certain milestones, we were in a position to focus 100% of the distribution on the TRAVATAN Z formulation.
So, it’s true that we saw some level of impact in the third quarter as the wholesaler channel was working through inventory levels of the TRAVATAN and while we were not shipping additional TRAVATAN. But for the most part, when you look at our business in terms of sales in September as well as the market share, we actually did not see an impact at all for making that switch, which I think just simply confirmed that the doctors are very satisfied with TRAVATAN Z.
Kimberly Gailun – JP Morgan
Okay, great. And then maybe one for Rick is on the kind of the below the operating line, on the non-operating expense line. I wanted to make sure I understood correctly your comments there. That was – that line was flat in the quarter, so no impact to the P&L. And was your comment at that should be roughly a non-entity going forward as well?
Richard Croarkin
So, Kim, good morning. What I was saying is that the interest income, interest expense and other net that we saw in Q3, that same order magnitude of profits is what we should expect in Q4.
Kimberly Gailun – JP Morgan
Okay, so the net of all those categories, and what about on just that other net line? So, that was – so, it’s usually not a flat number in the quarter like it was here and I think that has to do with some of the changes you’ve made in your investment portfolio. So, just if any help you could give us on modeling that line would be great.
Richard Croarkin
Right. I would not expect much on that line.
Kimberly Gailun – JP Morgan
Okay, great.
Richard Croarkin
[Inaudible].
Kimberly Gailun – JP Morgan
Thanks, Rick and good luck with everything.
Richard Croarkin
Thank you very much.
Kimberly Gailun – JP Morgan
Sure.
Operator
Your next question comes from the line of Benjamin Pass with GLG Partners. Please proceed.
Benjamin Pass – GLG Partners LP
Hey, Kevin, congratulations on another profoundly solid quarter.
Kevin Buehler
Thank you.
Benjamin Pass – GLG Partners LP
It’s been approximately two months since Novartis close the purchase of Nestlé’s 52% stake. Can you help quantify the progress that’s been made in achieving the synergies between Novartis and Alcon that were target? Thank you.
Kevin Buehler
Sure, Benjamin. I think, first of all, it’s consistent with the comment that I made in my prepared word that we do believe that there is a strategic advantage to having a leader in healthcare as a strategic parent. And I identified some of those areas that we believe are opportunities for synergy or opportunity to make Alcon stronger in the market and they range from – obviously, there’s a potential with [inaudible] with a potential DME indication that is expected in Europe. There’s obviously opportunities as it relates to purchasing synergies or potentially leveraging the research capability available at Novartis.
I think it’s also fair to say that the numbers that have been put out are not Alcon numbers, so I will not comment in terms of the dollar amount of potential synergies at the 77%. But I think it’s also important to recognize that in order for these transactions to happen, you really have to go through an arm’s length negotiation. It’s not simply a step, where we do this relatively easily or relatively quickly. And I would say right now, the process is that we are exploring these opportunities and we are having discussions, but obviously we have developed through the process and at that point, then we will see what the synergy opportunities really end up being.
Benjamin Pass – GLG Partners LP
Understood. Thank you for taking the question. Again, congratulations.
Kevin Buehler
Thank you.
Operator
Your next question comes from the line of Frank Pinkerton with SunTrust. Please proceed.
Frank Pinkerton – SunTrust Robinson Humphrey Capital Markets
Hi, great. Thanks for taking the question. And Rick, it’s been good to work with you the last three years, so best of luck. But let me start with a question for you, can you just take that $133 million charge in the quarter and break out any portion of that specifically, did any portion of that go to the IDC and is any portion of that cash versus non-cash charge?
Richard Croarkin
Right. Well, thank you, Frank and good morning. There’s two big numbers in the $133 million. About a hundred of it is related to vesting and accelerated benefits related to our retiree – Non-qualified Retiree programs. So, that is a non-cash item for the current period. That’s the biggest one.
About $10 million of is related to accelerated vesting of long-term incentive, stock appreciation rights RSUs, those kind of things. And again, that’s not a cash item; there are other items that make up the remainder to get to the 133, which includes support for legal support and other professional services supporting the Independent Directors Committee.
Frank Pinkerton – SunTrust Robinson Humphrey Capital Markets
Okay, great. And then switching over, kind of broader questions on the business, can you speak to any preparation for the Xalatan generic. I know that you’ve had the TRAVATAN a and TRAVATAN Z switch, but when I look at the pipeline slides and think about what’s out there. What’s the plan longer term as potentially the – on the larger products and the prostaglandin market goes generic and what’s the next generation glaucoma plan for Alcon?
Kevin Buehler
Frank, I’ll take maybe the first part and then I can ask Dr. Markabi to address the second part, which is obviously pipeline-related. Our position has been that we were going to try to address the Xalatan patent expiration through differentiation of our TRAVATAN and DuoTrav product line. And obviously, in the U.S., that’s focus around TRAVATAN Z and by the fact that we have consolidated the distribution against TRAVATAN Z, we’re in a good position to differentiate versus a generic Xalatan that would not have that same feature, and it would our hope that we could use that differentiation to compete on formularies.
When I think about outside of the U.S., we obviously have TRAVATAN Z only in Japan and we most recently will have DuoTrav as well without the BAK. And at the same time, we’re noting product submissions and approvals in Europe, where we would have a differentiated formulation as well that would allow us to again differentiate to the doctor in order to continue to get brand usage.
Obviously, when you think about you know what’s beyond the prostaglandin; we really need to think about the opportunities around new products.
And maybe, I’ll hand it off to Dr. Markabi.
Sabri Markabi
Yes, thank you. Thank you, Frank, for the question. We have four strategies to come up with new products in glaucoma that could support the [inaudible] needs in that area.
The first one is numerous kinds of actions, obviously, and these newer kinds of actions should deliver better benefit risk than prostaglandin as we fix that bar. And we have a number of projects actually that are already approaching the clinical stage, but they are still early right in that area, but that’s an area we’re focusing on.
The second strategy is creating a new formulation and Kevin alluded to that. So far, this year, we actually submitted two new products outside the United States, a new formulation for TRAVATAN and a new formulation for DuoTrav. And we are continuing to look at possibilities in that area that would improve the durability of these formulations in glaucoma.
The third strategy is actually looking for a new combination. We believe combinations can deliver a very good benefit risk for patients and we systematically went through an effort to identify combination of agent that would deliver, in particular, very high efficacy and we identified that we are proceeding with in the clinical department currently.
And the fourth and the last strategy is new delivery technology. The glaucoma is delivered through eye drops. But we know that creates tissues for corneal health, so we’re looking at alternative ways of delivering the medications and we have two programs in that regard so far.
Kevin Buehler
Right. I think the other point is, obviously, in the U.S., if you don’t really have the optionality between single entity and combination prostaglandins. But for all of the business outside of the U.S., we really want to differentiate around the prostaglandin combination or DuoTrav and obviously, I think that will also lessen to some extent the direct impact from Xalatan.
Frank Pinkerton – SunTrust Robinson Humphrey Capital Markets
Okay, great. And then just to – I guess to follow that up. You’ve made a recent acquisition on the surgical side and your entire comments there were on the pharmaceutical side. As glaucoma disease that ultimately maybe, especially severe, better treated through the surgical side? I mean is there any way to potentially move part of the population from pharmaceutical to surgery? Thank you.
Kevin Buehler
Sure.
Sabri Markabi
Yes. We believe that there are ways to improve efficacy for patients through surgical interventions. So, the acquisition we’ve made is of a device that actually use of the [inaudible] advance stage of glaucoma, all right. And the reason for that these devices are very effective, but it requires surgery that has some invasiveness to it. So that’s why they are used in advance disease, but they are quite effective.
We are looking at actually introducing devices that could be use earlier in the disease as an alternative to adding medication, as an alternative to polytherapy. But this requires a lot of research in the device area to achieve designs that actually will be non-invasive and do not require heavy surgery. And we actually have in-house program about that and we’re very encourage about the progress.
Frank Pinkerton – SunTrust Robinson Humphrey Capital Markets
Thanks. I’ll get back in queue.
Kevin Buehler
Thanks, Frank.
Operator
Your next question comes from the line of Louise Chen with Collins Stewart. Please proceed.
Louise Chen – Collins Stewart LLC
Hi. Thanks for taking the questions, just a few questions here. First of all, can you elaborate more of what you think the R&D and SG&A progression will be for the fourth quarter relative to the other quarters of the year?
Kevin Buehler
Okay. Rick, go ahead.
Richard Croarkin
Yes. Good morning, Louise. Regarding SG&A, I would say that we’re expecting that to be at a higher level in the fourth quarter than we saw in the third quarter for a couple of reasons. One is we’ve got launch cost associated with LenSX. We also have taken advantage of the strong profit performance we’ve had during the year to implement a number of targeted incremental programs.
We’d talked about those in our last call and not many of those actually got implemented in the third quarter, but they will be showing up in the fourth quarter. So, I would say SG&A will be higher than in the fourth, then the third quarter for those reasons.
R&D, similarly, will be higher in the fourth quarter than the third quarter. LenSX will play a role in that and there’s also always the possibility of additional business development activities, which could add to that.
Louise Chen – Collins Stewart LLC
Okay. And the second question I had was just on the LenSX lasers. Can you talk more about the potential market opportunity for that product?
Kevin Buehler
Louise, we’re obviously continuing to move towards introduction. We have not obviously announced pricing or any of the other aspects around the introduction. But if you think about it conceptually, you know we believe that there is linkage directly to the Advanced Technology IOLs because the clinical benefit of having a perfectly sized and center capsule erectus works perfectly with Advanced Technology IOLs.
Obviously, the capabilities of a LenSX machine to improve the cataract procedure over the manual components that I talked about earlier, but also to start to think about the incremental improvements in terms of just accuracy and placement of this incisions allows us to take advantage of things like the reimbursement associated with LRIs today. It allows us to attach it to the premium IOL procedure and have patient participation.
So, conceptually, what we’ve said is this is an incremental revenue platform attached to our cataract business and it obviously represents an opportunity for us to stay premium.
Louise Chen – Collins Stewart LLC
Okay. And then just the last question is, can you talk more about the – what you expect for peak market shares of the Advanced Technology IOLs in the U.S. and outside the U.S. I know you’ve given some figures and where you are today, but where do you want to be over the next couple of years?
Kevin Buehler
Well, clearly, the market share which has really been the face that we’ve been in because the pool has been relatively small and relatively without a lot of depth. We are north of 50%, so we are getting the majority of the market share in the premium IOL segment today as the challenges around multifocal versus accommodative lenses plays out in the marketplace.
But really where we need to go is to expand the pool outside of the existing doctors and we need to increase the penetration of patients, who are being offered premium IOLs whether it be ReSTOR for obviously the near and distant vision correction or Toric. And when you think about the accuracy and the ability to address the astigmatism with the Toric lens, we continue to be very encouraged with the growth rate because obviously there’s a high percentage.
We said 30 percent of those cataract patients have astigmatism. So, this is something that our lens can correct, and at the same time we need to continue to offer more premium IOL all of the patients. And then with the introduction of ReSTOR or Toric outside of the U.S., obviously, it gives us the ability to address both conditions.
So, we’re going to continue to focus on market share, but at the same time, we really need to put an emphasis on market penetration and that’s going to happen through training and development and through the introduction of new technology like we did with the ReSTOR or Toric.
Louise Chen – Collins Stewart LLC
Thank you very much.
Kevin Buehler
Thanks.
Richard Croarkin
Louise, this is Rick. I just want to add one additional comment on your question on our cost in the fourth quarter. Clearly, for exchange rates had strengthened relative to the dollar fourth quarter versus the third quarter. We have now about 50 percent of our SG&A is none U.S. base, so you should expect in the distance to the fact as that I’ve mentioned earlier there would be a foreign exchange impact increasing SG&A in the fourth quarter.
Louise Chen – Collins Stewart LLC
Thanks.
Kevin Buehler
Thank you.
Richard Croarkin
Yes.
Operator
Your next question comes from the line of David Book [ph] with Buckingham Research. Please proceed.
David Book – Buckingham Research
Yes, thanks for taking the questions. Just a couple of quick follow ups on the TRAVATAN’s switch in the U.S., can you just confirm whether or not you pulled the NDA or just stop shipping and for 2011, what type of impact do you see from a potential generic launch of TRAVATAN itself.
Separately, as TobraDex ST, can you give us some sense of the launch quantity? And just one broader one for Kevin, you talked a little bit about, you know, the hope for an amicable solution to the ownership situation. Can you give maybe some sense to whether there had been any efforts on that front or whether it’s still really just the public statement since the posturing has been going on? Thanks.
Kevin Buehler
Yes, David, thank you. I think I’ll take the last one first because it’s relatively straightforward. Again, I don’t think it’s our position to be commenting on what the actual activities, if there were any, between the individual parties. So, I think that’s just basically just something you’re going to have rely on the public comment. When I go to your first question in terms of TRAVATAN, I do not believe that we pulled the NDA. I believe that we simply consolidated our shipments to the TRAVATAN Z formulation in the U.S.
And then to your second question, again?
David Book – Buckingham Research
The TobraDex ST, some level of the shipments that you saw in the launch quantities and what’s the expectation for the ramp of that product.
Kevin Buehler
Right. And again, what we’ve always said about TobraDex ST is that it was an opportunistic opportunity that we were going to explore. And when you look at the indication for that product that we’re targeting, steroid responsive, inflammatory conditions, where there is a risk of infection, obviously has a relatively narrow definition in terms of the on label claim.
So, I think you should think about it in that same context that it was relatively limited in terms of the niche opportunity and we’ll see how the product performs in the market.
David Book – Buckingham Research
Okay, thanks very much.
Kevin Buehler
Thanks.
Operator
Your next question comes from the line of Matt Miksic with Piper Jaffray. Please proceed.
Kevin Buehler
Operator, maybe the next call. Operator?
Operator
Your next question comes from the line of Josh Jennings with Jeffries & Company. Please proceed.
Josh Jennings –Jeffries & Company, Inc.
Hi, good morning. Thanks.
Kevin Buehler
Good morning.
Josh Jennings –Jeffries & Company, Inc.
Just firstly if we just talk about with the merger proposal being on the table for a while here. Just talk about levels of employee retention, specifically with the senior management level, where you stand there over the last six months. And then, secondarily, looking at healthcare reform impact this year at $20 million, can you give us an idea of your expectations for that impact in 2011. Is that a two X, three X, four X number? And then also on the European Austerity measure side, what you’re expecting in terms of incremental impact going forward in 2011. Thanks a lot.
Kevin Buehler
Sure. Josh, in terms of the retention, one of the benefits of the structure that we’ve had with this being a relatively prolonged process starting with the first; more or less 25% that started in April 2008. The Board and management has had the opportunity to look at retention tools that we normally would use for both performance recognition as well as retention and I’m speaking to the long-term incentive.
So, we have had a retention program through our long-term incentive structure over the 2009 and 2010 awards. At the same time, we continue to review all programs that we think would be helpful towards retaining our high quality people and we have implemented a program in the second half of 2010 in that area, and obviously, we will continue to look at this because we believe that our people are a core strategic asset and we want to maintain that as we go forward.
Richard Croarkin
Josh, this is Rick. I’ll pick up the next two questions. Regarding healthcare reform, we’ve said in the past that in commenting on the two impacts that start next year, the 50% discount on the donor hole [ph]. We said that based on 2009 sales that would have been less than a $10 million impact. We also have said regarding the pharmacy that starts next year that that would be, based on 2009 sales, less than a $10 million impact on us.
So, I would also just add that we forgot a $20 million this year due to the increase in Medicaid [inaudible] rates and other aspects of it. And there will be – it will be somewhat larger next year just because it will be an annualize effect versus some of those rebates didn’t take place until March of this year.
And then regarding the European Austerity program impacts on 2011, when we’re doing our internal planning, we’re assuming that there’s basically the same level of impacts next year as this year.
Kevin Buehler
Next question.
Operator
Your next question comes from the line of Lei Huang with Wells Fargo. Please proceed.
Lei Huang – Wells Fargo
Hi, it’s Lei calling for Larry Biegelsen. Just a couple of questions on the growth margin guidance for the fourth quarter, you talked all 74%. Is that just currency related or is there something else there that’s pushing it down a little bit?
Richard Croarkin
Good morning, Lei. We’re talking ranges, so that’s – I said around 74% and I would say that’s basically all currency related. And if you’ll recall, if you look at the fourth quarter of 2009, we had the exact same impact. It is a temporary impact, but it does impact us when there’s non-U.S. currencies appreciate significantly over a very fast period of time.
Lei Huang – Wells Fargo
So, for modeling purpose, beyond fourth quarter, we can kind of look back to your typical range?
Richard Croarkin
Exactly.
Lei Huang – Wells Fargo
Okay. Then as far as the earlier comments about cataract surgery and there being some catch-up period the last year. Is that something we can expect to see again, maybe not the fourth quarter, but sometime next year?
Kevin Buehler
Yes, I think, Lei, we’re going to want to take a look at this and obviously, the fourth quarter is an important component to what we think about in terms of 2011. But when I look at the historical trend in 2009 and I see the catch-up provisions really happening Q2 and Q3, which are the periods that we’ve had to compete against. It would like the fourth quarter of 2009, while it had a relatively high procedure growth rate, it was really against the very low comp in 2008.
So, what we’re looking for is a little more normalized approach in the Q4 time period. It may take a little bit longer, one quarter here. But we do not see this as a sustainable driver in the cataract business long-term.
Lei Huang – Wells Fargo
I’m sorry, what was not the sustainable?
Kevin Buehler
What we don’t see this pressure as …
Lei Huang – Wells Fargo
I see.
Kevin Buehler
A sustainable factor going forward.
Lei Huang – Wells Fargo
Got it. And then just lastly, the NVC-422 product, the proof of concept study that was completed, should we just assume that project is done with? Even though you are analyzing all the data still?
Sabri Markabi
Yes. Hello, Lei. This is Sabri. No, we should not assume that.
Lei Huang – Wells Fargo
Okay.
Sabri Markabi
We’re working with our partner in NovaBay to have a full analysis of the data as they declared in their press release.
Lei Huang – Wells Fargo
Okay, I’m sorry. Thank you.
Kevin Buehler
Thank you.
Operator
Your next question comes from the line of Sachin Shah with Capstone Global Markets. Please proceed.
Sachin Shah – Capstone Global Markets
Hi, good morning. I’m not sure if you mentioned the outlook for 2011. Just wanted to get an update on where you kind of see the business going forward.
Kevin Buehler
Good morning. I think what I would – the way I would talk about the long-term outlook is as we have in the past, which is to say we’re aiming for long-term mid to high single digit organic growth and sustainable margin leverage year-over-year. I think it’s pretty mature to get into 2011 beyond that at this point.
Sachin Shah – Capstone Global Markets
Okay. Now, I just want to understand as far as kind of Novartis offer exchange ratio. I mean it seems that Novartis has – price has rallied over the past several months making their [ph] quite offer much higher than it was and I think that was a comment earlier made by the CEO this year.
So, is the premise less about Alcon valuation and more about if they believe that Novartis valuation is undervalued? And they’re trying to see if the market realizes their value, which is implying a higher valuation on Alcon?
Kevin Buehler
Yes, I think your question is probably one that would be better positioned to Novartis. It’s really very difficult for us from this view to comment. So, I think I’ll leave it at that.
Sachin Shah – Capstone Global Markets
Okay. Just one other question, I want to find out if the special committee reaches an agreement with Novartis today. How long will it take or would it take to complete the transaction?
Kevin Buehler
I think my understanding of the process is that clearly, this would require the approval of both Boards after the Independent Directors Committee has approved it. At the same time, it would require the approval of the shareholders through an extra special meeting with shareholders and you’re talking about more or less a couple of months would be my rough estimate.
Sachin Shah – Capstone Global Markets
Okay, great. Thank you very much. Have a good day.
Kevin Buehler
Thank you.
Doug MacHatton
Operator, we have time for one more question.
Operator
Your next question comes from the line of Frank Pinkerton with SunTrust. Please proceed.
Kevin Buehler
Frank?
Frank Pinkerton – SunTrust Robinson Humphrey Capital Markets
Hey, thanks for letting me ask a follow-up. I just wanted to ask about the Falcon generic business. I know you’ve had a pretty good share on one of the formulations of Xalatan and you filed a couple against some other generics.
So, can you just remind us, is that becoming a bigger portion of the business? What’s the role of that business, maybe internationally or supplying drug to some countries maybe with less stringent I.P., you know kind of protection area? And are there any large products we should think about their coming in the next couple quarters and I’ll leave it at that. Thank you.
Kevin Buehler
Okay, Frank. Thanks. You had to wait a long time. You have; clearly, you know Falcon is an important segment for us because it really serves us the ability to extend the lifecycle on our products. And so, I would point you to how you think about TobraDex losing patent expiration and then our ability to introduce a generic.
I think you’re right in looking at the fact that this has been primarily a U.S. business and we really have not taken it outside of the U.S. Another driver for us has been the introduction of Brimonidine, which has certainly allowed to capture incremental sales and value from the Falcon Group. We’ve often thought about leveraging the Falcon capabilities and looking at, for example, once a day [inaudible] in selected markets such as emerging markets and capturing incremental value through that approach.
Obviously, we will continue to look at those opportunities in our strategic plan. But for the most part, we’re looking at a U.S. opportunity.
And with that, operator, I’ll have my closing comments.
Rick, I’d also like to thank you for more than three years of service to Alcon. You were about a valuable member to the executive leadership team and I appreciate your contribution, especially in the areas of cost alignment and our increased business development activities. I wish you the best in your new opportunity back at Nestle.
And with that, I will wrap up the call. Thank you, everyone, and we’ll see you next time.
Operator
Ladies and gentlemen, this concludes the presentation. You may now disconnect. Thank you and have a great day.
END
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!