Bausch & Lomb: Issue mishandled

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Bausch & Lomb: Issue mishandled

By Ben Dobbin

the associated press

Tucson, Arizona | Published: 05.20.2006

http://www.azstarnet.com/allheadlines/129976

advertisementROCHESTER, N.Y. — Bausch & Lomb Inc. made a big blunder

when federal regulators revealed in April that they were

investigating links between its new-formula contact lens cleaner and

a rare fungal infection known to cause blindness: It waited three

days before withdrawing ReNu with MoistureLoc from the U.S. market.

" If there was something we could go back and change, that would be

it, " company spokeswoman Meg Graham said. " There isn't a handbook

you can go to that tells you exactly what to do here. "

Five weeks later, the eye-care-product maker's campaign to shore up

the reputation of its battered lens-care business is under way —

MoistureLoc was permanently recalled Monday from markets around the

world. But the firm's management and financial analysts wonder if it

acted too defensively for too long to deflect lasting damage.

" It's a terrible mistake for a company in crisis not to respond in a

timely way, " said stein of stein Associates, a

public relations agency in New York whose crisis-management clients

have included Christie's International PLC and Tire & Rubber

Co.

" Americans and the world have short memories about stuff like this —

provided it isn't mishandled, " echoed Roth, chief marketing

officer for Landor Associates, a brand-consulting firm based in San

Francisco. " If they don't protect the credibility of the Bausch &

Lomb brand overall so that it is unassailable — as Tylenol became

unassailable — they will never recover. "

& 's aggressive and very open response to a fatal

1982 tampering scare in Chicago — it promptly pulled 22 million

bottles of Tylenol pain-reliever tablets from stores nationwide and

introduced tamper-proof packaging — is considered a classic case

study in how best to handle a product-liability crisis.

Bausch & Lomb's ordeal, while less horrifying, sent ripples of

anxiety and confusion through the nation's 30 million lens wearers.

The worries were magnified by the firm's hesitation in removing

MoistureLoc from store shelves.

While it voluntarily suspended U.S. shipments on April 10 when the

Centers for Disease Control and Prevention revealed an unusual

incidence of the fungal infections in Americans using MoistureLoc,

it didn't withdraw the product from sale until April 13 — by which

time retailers, led by Wal-Mart Stores Inc., already were doing so.

After a month of exhaustive testing, the company issued a worldwide

recall Monday, acknowledging for the first time that its $100

million-a-year solution appeared to be the " root cause " behind an

unusual spike in Fusarium keratitis infections in U.S. and Asian

markets supplied from its factory in Greenville, S.C.

The CDC on Friday echoed the company's assertions that the eye

infections appeared to be linked solely to its new-formula contact

lens cleaner.

At last count, the CDC said about two-thirds of 122 confirmed cases

of the infection in the United States involved lens wearers who

reported using MoistureLoc — and their medical outcomes are often

unnerving.

Without prompt diagnosis and treatment — typically, eyedrops must be

administered for up to three months — the fungus can scar the cornea

and cause blindness. Scores of victims have undergone corneal

transplants to restore their vision, and a flurry of lawsuits could

wind up costing the company anywhere from $500 million to $1 billion

in damages, analyst Maris of Banc of America Securities

estimated.

The outbreak first surfaced in Asia, leading to a halt in sales in

Singapore and Hong Kong on Feb. 18 that Bausch & Lomb did not

disclose in the United States until after cornea specialists began

noticing a jump in infections here in March.

The incremental steps in dealing with the outbreaks have rebounded

badly. In the last two months, the company's stock has plunged 30

percent, and its No. 1 spot in the domestic lens-care market has

come under assault from rivals led by Alcon Inc.

Lens care has generated more than $500 million, or 23 percent, of

Bausch & Lomb's sales and an even bigger slice of profits. More

worrisome could be the long-term effect on its older, more widely

used ReNu with MultiPlus solution, said Cooley, an analyst

with FTN Midwest Securities in Cleveland.

" I don't think consumer concern will be relegated solely to the

MoistureLoc brand, which obviously is now defunct, " he said.

Other investors, however, think that assertions by Chief Executive

Zarrella that the contamination problem is restricted to

MoistureLoc's unique makeup could haul the 153-year-old company out

of the doldrums.

Tests showed that polymers in MoistureLoc can create a film on

lenses that shields the fungus from the solution's sterilizing

agents.

" Bausch & Lomb's top priority is the safety of our customers, "

Zarrella said Monday in launching a television and newspaper

advertising blitz aimed at stepping up marketing of the MultiPlus

brand.

The stock has rebounded 10 percent this week, reflecting investors'

hopes that the medical mystery has been solved, and efforts can

begin in earnest to put the problem to rest.

" It's the first step into the recovery stage, trying to salvage the

brand and minimize the damage to their other product lines, " said

analyst Steve Hamill of Piper Jaffray.