Okay. Right. Good morning, everybody. Thanks so much for joining us. So pleased to have today, Peter Menziuso. I mean, Menziuso. I like the name like.
Pretty well.
With a name like Menziuso, you'd think I'd be better at pronouncing complicated names, but a Company Group Chairman, Johnson & Johnson Vision. Appreciate you joining us again this year.
Thank you.
It's a real pleasure to have J&J in general and Vision in particular. I thought maybe it would be a good place to start just on, you know, market trends, you know, exiting the pandemic. You know, been very strong elsewhere. I know that, sort of proximity throughput, you know, on the one hand, you know, much of much of Vision happens in the outpatient clinic, or in the, you know, doctor's office. But even that was a little constrained. If you could talk a little bit about, what the sort of bounce-back like that has been and, and how trends compare to the strength we've seen in utilization and volumes across other, you know, medical devices and healthcare areas.
Excellent. Matt, again, thank you for the invite back. We very much appreciate the opportunity to talk about Johnson & Johnson Vision, part of our MedTech segment of Johnson & Johnson. What I would start with is, sight is our most dominant sense, and it's a sense that one fears losing more than anything. 80% of what we perceive around the world or in your life is through sight. We're very, very proud as a Johnson & Johnson Vision organization to touch more than 40 million lives around the world. And as we think about that, it's interventions that are starting as early as the pediatric eye, to the developed eye, to the aging eye.
To your question of, you know, where do we see post-pandemic the market evolving, you know, we see a $15 billion category that we're playing in today, growing at 5%-7% between now and 2026. And a market to which, through our leading platform of ACUVUE and our leading platform of TECNIS, our ability to grow faster than that market growth. So lots of potential. You think about the aging population. You think about, you know, for those that are wearing contact lenses today, about 120 million people. That's about 10% of the addressable population. So we say we're just scratching the surface there. You think about cataract disease. Cataract is not about if. It's about when. And cataracts being the number one surgery performed around the world, only 10%-15% of people are getting into premium lenses.
So post-pandemic, a lot of opportunity, a lot of people to serve. We're well-positioned with our innovation to continue to grow above market. And so we're very encouraged what's in front of us.
Okay. One of the things you called out at your enterprise business review day in December was that along the lines of these penetration levels, and sort of, you know, particularly in contacts, you know, that's I was a little bit surprised to see, you know, 5% was sort of a, I guess that's a global penetration level. You know, what kind of opportunity do you see to move that higher, or is this, you know, you know, a matter of extending your leadership to contact lenses and geographically to increase, you know, penetration? But, you know, is there, is there an opportunity in, say, developed markets with new lenses and, you know, greater comfort to, to actually drive increased adoption?
Mm-hmm. So the contact lens segment of the category that we're in is about a $10 billion market, growing on a range of 5%-7%. Again, we see ourselves advancing beyond that. What's really important about contact lens penetration is really thinking about some of the barriers that are preventing folks to get into the space of contact lenses. One, it starts with comfort. For anyone who has worn contact lenses, you'll clearly understand what I mean about that. The second is thinking about just the anatomy of the eye. You know, 40% of people have an eye that is shaped like a football, an astigmatic eye. It's incredibly important from a design point of view. And then you think about, you know, people that are aging out of contact lenses. This is, when presbyopia kicks in.
The way we describe that is you're in a restaurant, low light, and that restaurant menu starts to get further and further away. People don't recognize that contact lenses, through multifocal solutions, can be an offering, so that you don't have to age out of contact lenses. We, as ACUVUE, are able to address all of those entry points or barrier points to get more into the space of the contact lens category. I'm very, very proud of our most recent innovation that we just launched, ACUVUE OASYS MAX 1-Day, which is really addressing one, comfort with its tear film stable design. It's working with the natural tear film of your eye, really focused on end-of-day comfort.
And then also, from a light filtering in the world that we live in with all of the digital constraints that are around us, our Max technology is filtering out blue-violet light 2x greater than our competition. And then I will tell you I'm an incredibly proud wearer as a consumer and a patient of the multifocal lenses. And for me, it's unbelievable the freedom that I gain back versus being bound to my spectacles. And I will tell you I can be very thoughtful about remembering to take my contact lenses out at night because I've got terrific comfort by the end of day. So we feel really good about the ability to continue to penetrate based on our innovation that we are designing specifically, really, to think about anatomy, physiology, and lifestyle of patients.
Okay. So if we take maybe, you know, just at a high level, sort of like dailies, maybe roll toric into wherever they go, and say, you know, putting aside sort of like longer-term, you know, monthly lenses or something like that, but just saying like dailies and multifocals, and sort of market growth that you described, you know, are both of those still growing above market? And so like 8.7-8, 7-9 in sort of those two specialty categories, above a mid-single digit?
Yeah. So I'll talk about, you know, the two points of the modalities, reusable and daily disposable. Multifocal, especially with our launch of OASYS 1-Day Max, multifocal, we have seen unprecedented share growth since we've launched. So incredibly pleased with the performance of that product and how we're gonna, and that is giving us continuous encouragement to scale around the world, both our spherical platform as well as multifocal. What's very important is when you think about patients coming into the category, 50% of people coming in are coming into a reusable segment. 50% are also coming into daily disposable. We see expedited growth on the daily disposable side that we are driving through our ACUVUE OASYS family and now with the inclusion of Max. So very important modalities that we continue to grow into.
Okay. And those are new patients who're just splitting into that two group?
New patients are crucially important for penetration as well as keeping engaged patients in contact lenses, getting them back to their eye doctor for comprehensive eye exams as well.
Okay. And those growth rates that you were talking about, are those volume growth rates? Those are revenue growth rates, so?
The 5%-7% is volume growth rates.
Okay.
I'm sorry, our value growth rates.
Value. So revenue. And then, so in there somewhere is also, I guess, mix that, you know.
From a volume point of view, 50% of patients are coming into reusable. 50% are coming in daily disposable. Value is about 60% daily disposable.
Got it. That's helpful. Okay. All right. And then, I guess, you know, competitively, you know, you are the market leader in a lot of these areas. I mean, you know, are you able to still pull out sort of growth rates in line with markets in developed markets? Are you sort of relying on, you know, geographic expansion to kind of maintain your sort of market or above-market growth rates? Maybe talk a little bit about that.
Yes. So the space of bringing innovation that's gonna be rewarded based on science and differentiation is crucial to how we grow. Above-market performance is a focus across all of our markets. We are sitting, as you know, with ACUVUE, in a number one position, and our contact lens is a very important position. As I spoke about with our launch of Max, we continue to see the ability to acquire more wearers for, you know, protect our base and continue to secure that leadership position that we have in contact lenses. In the space of intraocular lenses, 80% of procedures are in the monofocal form. We are sitting in a number one position in that space. TECNIS Eyhance is an incredibly important platform there.
But we're working, you know, it's our third consecutive year of growing market share in intraocular lenses, with this year being another one that we're gonna be proud to declare as our fourth consecutive year. And that is through the work that we're doing with our premium intraocular lenses. So very important launches, our TECNIS Odyssey, our TECNIS PureSee platforms, which are next-generation intraocular lenses in the premium segment. It's gonna be really important for our growth moving forward.
Okay. So, yeah, IOLs is something that I did wanna get to and maybe talk about. I mean, just for background, you did have a pretty significant market leadership, call it, in the I don't wanna say the absence, but sort of a diminished performance period from one of your leading competitors who then kinda came back with the new products and has kind of pulled back some of that share. So now it's a bit more of an active engagement for share in the monofocal and in the sort of AT IOL segment of the market, higher-value segment. Odyssey and PureSee, maybe talk a little bit about you know, Odyssey seems like a next-gen Synergy sort of, EDOF and multifocal hybrid or something like that.
Maybe talk about, you know, how you expect that to sell against sort of the trifocals and the other products that have launched up in the U.S. and taken some share.
Yeah. And what I would say is we, of course, welcome competition. It makes us make sure that we're really thinking about the biggest climate needs in the marketplace, and we're taking differentiated science to make impact. You know, very proud of the position that we're sitting in, monofocal with the number one market position. And then, of course, in the premium side with PC-IOLs, the launch of PC-IOL and Odyssey are incredibly important to how we're helping patients see better. And what I would say about Odyssey is Odyssey is an extended depth of vision, next-generation PC-IOL. So going from near, mid, to distance vision, we will be launching in the second year in the U.S. And feedback coming out of our limited market releases from surgeons has been incredibly positive. And, so we're really, really encouraged with the launch of Odyssey.
PureSee is moving into a new segment, a purely refractive, presbyopia-correcting IOL. And we're very excited, for someone who is potentially, you know, with some visual disturbance wanting very clear mid and distance vision. And we're bringing that out. Both platforms will be launched across the globe. And again, Odyssey is gonna be for spectacle independence, and then PureSee is gonna be more for mid and distance vision, but really driving premiumization in the marketplace as global platforms.
Okay. A couple of things on that. Odyssey, maybe, maybe if you could talk about, you know, what if, if there were sort of like competitive gaps, you know, or opportunities for competitive differentiation, you know, how does Odyssey kinda take that Synergy, symphony versus the competition, you know, battle it a notch higher?
Yeah. So Odyssey and PureSee are next-generation intraocular lenses building on our TECNIS platform. Odyssey, as I was saying, is, again, for that person that wants to be spectacle-free and have full range of vision; it is a phenomenal solution. You know, so again, terrific feedback that we're getting in studies now and very encouraged as we launch in the second half. You know, PureSee, again, is gonna be for someone that is gonna want very crisp mid and distance vision, potentially some light sensitivity. But again, these are next-generation intraocular lenses that will be building on our premium portfolio.
Okay. Yeah. And I guess in just to be, I don't wanna emphasize this too much, but sometimes as analysts, it's hard for us to slot in like where how do these line up exactly. But, you know, to be clear, PureSee is described as purely refractive, which means not multifocal, right? And then so with some benefit, they have a branded IntelliLight feature.
But full vision without any kind of disruption.
Yep. And better on things like halos. So that would be kind of the drawback from some of these multifocal lenses. Does this speak for my hands? I mean, obviously, you don't line up a product to take from your existing product, but, you know, how does it complement my hands?
What's most important is that we have a full range of solutions for patients. And in that conversation, that critical conversation of a surgeon and a patient where lifestyle, outcomes, expectations, anatomy, physiology are discussed, having a breadth of solutions is incredibly important. So that role of monofocal lenses that we are, you know, right now with TECNIS Eyhance and that, you know, dominant share that we have, that's gonna be a crucial platform as we continue to have a breadth of offerings across surgical choices of patients and doctors. But again, the growth that we're really leaning into is that premium side.
Yep.
So how do we drive premiumization that we've seen very nicely in Asia and in Europe into places like the U.S.? That is gonna be a geographic focus that we have as we launch both brands across the world.
Okay. Helpful. Maybe changing gear, just touched into, you know, an area where the company had invested for a while, I think, and kinda built up a business around Meibomian gland dysfunction. And maybe talk a little bit about LipiFlow. How big is that business now? How important is it to your commercial strategy dealing with, you know, with clinics and, and doctors?
So as a Johnson & Johnson Vision as a business of Johnson & Johnson focused on vision, we're really thinking about three strongholds as our primary areas of focus: the pediatric eye, the developed eye, and the mature eye. An area in pediatric eye that's incredibly important is myopia. You know, as we think about the developed eye, we're working in an advanced DotBrooks platform that we're doing inside contact lenses. And we think about the mature eye. This is where presbyopia and cataract disease comes in. When you ask about, you know, the space of dry eye, dry eye is a very important segment. And the work that we're doing in gland dysfunction, that's a very small segment of the dry eye space. And, you know, LipiFlow is an in-office leading solution in that segment.
I will tell you, we're really keeping our priority focus on how are we building a standard of care in myopia? How are we continuing to advance, you know, comfort and visual acuity inside contact lenses with Max? And then how are we transforming intraocular lenses, especially on the premium side with TECNIS PureSee and Odyssey? That's where our focus is really leaning.
Okay. So taking those in order, I think over the last couple of years, you've touched on myopia and your sort of plan to tackle that as an opportunity. One of your competitors has been a little more out in front, and launched a product overseas in the US. Maybe, you know, when will we see sort of a bigger splash here, announcement from you?
You know, so as a company that's backed and really focused on insight and need, when you think about myopia, statistics that really motivate all of us motivate us in the space is 50% of the world's population living with myopia by 2050. This says to you, as a healthcare company backed by J&J with a focus on eye health, we must play a role there. I was recently in China doing some immersions in the space of myopia. At the end of last year, 95% of teenagers in China are living with myopia. And, you know, this for us is, we need to create a standard of care. And yes, we have our Abiliti platform. This is both soft and hard lenses that are focused on the progression of myopia.
but we're also looking at working with healthcare professionals. How is it that we can help them better identify patients that are either predisposed or through lifestyle, you know, screening for myopia? How do we work with healthcare professionals? That's an arm of focus that we have. We're also thinking about the portfolio. So yes, we've got soft and hard lenses, but what's the comprehensive portfolio that's really gonna be necessary to slow the progression of myopia management? And then last is, what is the business model that needs to be developed? Because this is not a singular moment where you're buying an annual supply of contact lenses or, you know, you're having an acute surgery for cataract disease. This is a disease that will, you know, you manage for 18 years till the eye really matures. And we're also working through business models.
So what I would say is, you know, we're entering into myopia through our Abiliti platform. We're very much grounded in the statistics of need, the epidemic that myopia is around the world. And then we're thinking about how we can create a standard of care where you would expect J&J to be really advancing with the healthcare community, the management of myopia. So a very important area for us.
Okay. Still important. No, no big announcements to speak of this year, but, you know, we should expect you to.
This year is a continued focused year on building out the standard of care.
Got it. Okay. And you mentioned China. You've got sort of like a, you know, above-average position in China as well. Maybe talk about, you know, some of the trends you've seen there other than the one you mentioned, and sort of how you're sort of leveraging that, you know, because that seems to be I don't wanna say the epicenter, but when folks talk about young persons' myopia, the conversation always seems to lead to China.
Yeah. So China is an incredibly important market for us if we think about our one mission to, you know, create a world where people, again, can thrive through vision. And we say we make vision possible in the work that we do. The 40 million people that we have touched, the market of China, China is incredibly important, whether it's the work we're doing on contact lenses or the work that we're doing in myopia. We're also sitting in a number one position with intraocular lenses inside China. So what I would say is, there's a very focused effort by not only vision but also our med tech segment to really think about how we are advancing healthcare in China.
Okay. So leveraging that, but nothing more specific than that at the moment. But yeah, I think a lot of folks are really.
We're gonna continue to bring our Max and TECNIS PureSee and Odyssey across the world, including China.
Okay. So, maybe shifting gears a little bit to, you know, margins and profitability. I know you don't talk a ton about this, you know, division specifically, so I won't ask the obvious questions that you that you're disposed to talk about. But maybe in terms of, you know, dynamics, you know, one of the things we think we know about the daily market where you're, you're a leader in contact lenses is that it does require a tremendous amount of capacity to deliver and to grow. And, you know, that there is sort of a margin difference between reusable, between premium, and between daily.
So maybe talk about some of the internal efforts or optimization efforts or platform choices that you're making, facility, you know, rationalization choices that you're making as you look to, I'm assuming, continue to drive favorable margins out of a, a business that, you know, great growth, great market positions, but with some, you know, I think, challenging, you know, manufacturing fixed asset and, and margin mix across the business.
And as you said, I won't be able to be in a place to really comment specifically on.
Of course.
Financial health of Vision versus Johnson & Johnson. But what I can say to you is our financial outcome is actually incredibly competitive versus our composite. We're continuously looking at volume as a growth driver. This is with patient acquisition but also price. We still see price as an important driver of growth as we move forward. We're working exceptionally close with our supply chain organization in an end-to-end business unit mindset where supply challenges that we have previously had are behind us. We are now able to meet service levels and trajectories of demand that we've looked forward, but we're also very thoughtful around continuing to optimize our cost structure inside supply chain. We think about the elements of P&L. We're making investments.
We're very, very thoughtful about where we're investing a dollar to maximize growth and also maximize value back to R&D to innovate in kind of solutions that we've talked about. And what I will tell you is I feel very confident about as we look at that market growing 5%-7%, ourselves being positioned to grow above market, that we're now translating that into what are the capital needs to make sure that we meet that and really prepare ourselves from a supply point of view to have all of the volume necessary to meet the underlying demand. So we're in a very good financial position, very well positioned versus our competition. And then we, of course, you know, are backed by Johnson & Johnson, which is a great enabler as well.
Sure. Okay, so we've got a little less than a minute, maybe just to, to finish on, you know, division activity around, you know, you know, white space, potential M&A opportunities, strategic investment. You've made some smallish investments, as we've talked about LipiFlow a couple of years ago, but I think the one keeps coming up is, you know, MIGS and glaucoma, you know, your interest organically, you know, strategically, and maybe the level of activity we can expect from this.
So, as we've talked about this mindset from early needs all the way to late needs, even the collaborations that we're partnering with on our pharmaceutical company in the space of rare disease, I'm very encouraged by our internal marketing portfolio, building on our core contact lenses, building on our core in the surgical vision business, how we're creating a new standard of care for myopia, but we're looking at unmet needs. As we think about unmet needs, we have built a business development strategy that will complement our internal R&D portfolio to continue to advance our leadership in the space of vision. So we are very much open to a collaborative approach where BD comes in, which can be early seed investments. It could be collaborations. It could be acquisitions.
And this is kind of the spectrum of focus that we have in this space.
Okay. But you have a call point, obviously, in surgery, so she would be thinking more along the lines of a combination of tucking technology in your internal efforts as opposed to platform acquisition for something like a new area like glaucoma.
I think it can be, again, where unmet need is required, science is gonna be rewarded, and we can, you know, bring a creative value quickly to the P&L. These are spaces that we're gonna see very, very open.
Well, thanks.
Yeah. Thank you again for the time. I really appreciate it.
Yeah.
Thank you, of course.