After IPO, Bausch + Lomb turns to an industry favorite to run the company

Saunders, a longtime pharmaceutical executive, is known for leading Allergan into a much-hyped but failed $160 billion merger with Pfizer Inc. PFE, -0.91% in 2015 and then into an acquisition by AbbVie Inc. ABBV, -0.99% for $63 billion in cash and stock in 2020. In an industry known for staid chief executives, Saunders was viewed in the 2010s as a different kind of leader, one who got Botox on stage at company events and tested out a “growth pharma” strategy to pump up the pipelines of the companies he ran. He was an investor favorite.

Bausch + Lomb, which has long focused on products ranging from contact-lens solution to eye-care products for dogs to ophthalmic surgical devices, is emerging from a complicated few years.

The company was acquired by Valeant Pharmaceuticals Inc. for $4.5 billion in 2013. At that time, Valeant had a unique approach to growth: It acquired lots of companies and then cut spending on research and development to 3% of total revenue — at a time when the industry average was about 20%, according to Phrma, a lobbying group. The company would then raise the prices of therapies developed by the companies it acquired — a strategy that was great for shareholders but eventually put the company in the regulatory crosshairs, led to the ouster of CEO Michael Pearson and pushed Valeant to rebrand itself as Bausch Health Companies in 2018.

After years of stability under CEO Joseph Papa, who is now stepping down, this is an interesting moment for the eye-care company. It went public in May, though the full separation from Bausch Health Cos. BHC, +19.26% is not yet complete. (Bausch Health’s stock was also up, by about 13%, on Thursday.)

Bausch + Lomb, which Papa described as a “pure-play eye health company” in January at the J.P. Morgan Healthcare Conference, is planning to launch 15 new products this year. It’s also making the case to investors that eye health will become a bigger concern given an aging population, increased rates of myopia (which is associated with screen time) and potentially rising rates of eye disease associated with diabetes. An experimental dry-eye drug that it developed with Novaliq, a privately held German company, is now under review by the U.S. Food and Drug Administration, with a decision expected in June. 

More details about Saunders’s appointment are expected next Wednesday, when Bausch + Lomb releases its fourth-quarter earnings.  

Bausch + Lomb’s stock is up 22.2% over the past three months, while the broader S&P 500 SPX, +0.28% has gained about 5%.