By Andrew Karp
Group Editor, Lenses and Technology

When Johnson & Johnson’s vision care group announced on June 8 it would sell its ophthalmic lens business to Essilor, the news caught many suppliers and eyecare professionals by surprise. It was widely assumed that the healthcare and consumer products giant, with its high-profile consumer brand name, deep pockets, extensive R&D capabilities and consumer marketing savvy would eventually capture a major share of the lucrative PAL market with its Definity lens. After all, J&J had already established itself as an optical industry force, having started its hugely successful Vistakon disposable contact lens business. With Vistakon, J&J proved it could not only create a new product - the Acuvue disposable contact lens - but with it an entire product category. Blending cutting-edge technologies with proprietary mass production techniques, Vistakon grew into a global powerhouse in less than a decade.

But cracking the spectacle lens market proved much tougher for J&J than either the company itself, its competitors or its customers anticipated. Despite favorable reviews from a growing number of eyecare professionals and consumers, J&J could not sell enough Definity lenses to offset mounting production, distribution and marketing costs. After eight years and hundreds of millions of dollars attempting to build another market leader, J&J called it quits.

Executives at J&J’s vision care unit and its subsidiary, The Spectacle Lens Group, have declined to comment on J&J’s reasons for exiting the spectacle lens field since announcing the sale to Essilor. However, J&J spokesperson Mark Monseau noted the challenges of manufacturing spectacle lenses on a “made to order” basis are quite different from producing contact lenses.

Some industry observers go a step further, saying J&J’s difficulties were largely the result of modeling its spectacle lens business too closely on its contact lens business. In fact, the company’s rollout of Definity in mid-2003 was similar to its Vistakon contact-lens launch 14 years ago, with a powerful technology message driven by a comprehensive marketing program to ECP’s and consumers.

The differences between the two businesses quickly became apparent when J&J began manufacturing the Definity progressive using a proprietary technology known as SurfaceCasting, which it acquired along with the Roanoke-based Innotech company in February, 1997 for $135 million. SurfaceCasting was first used in Innotech’s low-volume, in-office lens casting systems.

Yet J&J executives saw SurfaceCasting as a springboard for producing mass producing spectacle lenses. To produce Definity’s patented “dual add” front and back surface design, they developed a proprietary manufacturing method in which a preformed polycarbonate back surface was combined with a front surface made from high-index plastic.

However, problems soon developed. J&J pulled Definity off the market in the winter of 2000, just two months after launching the lens.

“J&J totally underestimated the complexity of spectacle lens production,” said an executive at another spectacle lens manufacturing company. “They came in with their contact lens approach. It’s much easier to standardize a contact lens product. Spectacle lens casting technology isn’t as far along as it is with contact lenses. It’s very limiting in terms of which materials you can cast. You can only cast one material--mid-index.

“Also, the whole technology wasn’t evolved enough to get consistency. They switched gears because of the limitations of the material and process.”

Jettisoning the casting approach, J&J re-engineered its entire production process. This time, J&J adopted a freeform machining process as its manufacturing platform. The process was complex and more expensive than casting. A further complication was the two-sided Definity design, one of the most difficult progressive to manufacture.

By the time J&J relaunched Definity in spring, 2003, the cost of producing and distributing Definity had escalated. The business plan for Definity didn’t look as promising as it had in 1997, when J&J acquired Innotech.

Still, J&J stuck with its original distribution strategy, bypassing wholesale laboratories in favor of selling directly to eyecare professionals. The company began a regional roll-out that gradually grew to about 20 markets, backing it with a well-funded consumer advertising campaign.

“They wanted to do it all with consumer pull, which is the most expensive way,” said another industry observer. As consumers began to respond to the advertising, Definity sales slowly grew. But as the newcomer to the PAL market, J&J had an uphill battle to establish its place in the dispensary.

Ironically, J&J’s Spectacle Lens Group did not leverage the relationships Vistakon had established with ECPs through its Vistakon business with sales or marketing programs. The company did not cross-promote Definity and Acuvue brands, preferring to build a separate identity for Definity.

Although some ECPs in the roll-out markets embraced Definity right away, many who remained loyal to other PALs were reluctant to take on another premium brand.

Seeking to broaden its market reach, J&J revised its distribution strategy to include wholesale labs. The company began offering Definity through the VSP Labs and later added two independent wholesalers, Luzerne Optical and Robertson Optical, although it continued to manufacture Definity in Roanoke. However, the wholesalers’ efforts were not enough.

Realizing it could not achieve the leadership position it sought in the PAL market, J&J ultimately decided to sell its ophthalmic lens business to Essilor rather than continue to lose money. Having failed to live up to a 1999 commitment to provide over 600 jobs over a three-year period at its Roanoke lens plant, it is obligated to refund $1.4 million, or 70 percent, of incentive money to the state of Virginia, according to the Roanoke Times.

With its acquisition of J&J’s spectacle lens business, Essilor plans to transfer Definity production out of Roanoke and into its own facilities following a transitions period. It remains to be seen how Definity will fit into Essilor’s portfolio of PALs.