EP Global Communications Inc fka EPGL

[The dead cat bouncer]

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April 19, 2016
Wells Fargo Securities

We attended the contact lens forum at Vision Expo on April 14 and have spoken with several consultants regarding news in the contact-lens industry.

Importantly, Johnson & Johnson (ticker: JNJ ) had announced that it will discontinue UPP (unilateral pricing policy, which sets a minimum floor price for retail sale) across its contact lenses. While it’s unclear whether competitors will follow suit, feedback from our consultants suggests that Johnson & Johnson’s action is unlikely to materially affect pricing or market share in the contact-lens market.

It remains to be seen if there will be disruptions associated with Johnson & Johnson’s UPP move that could hurt the company’s performance or help its competitors in the near term. At Vision Expo, we also confirmed that Johnson & Johnson will launch its new contact lens in July, which will be its new silicone hydrogel (SiHy) monthly. We continue to see this launch as potentially disruptive to Cooper’s ( COO ) growth acceleration effort in the second half of fiscal 2016.

Finally, on the legislative front, a new Senate bill, backed by the contact-lens industry, was introduced to update the existing Contact Lens Rule. The initial feedback from our Washington consultant is that passage of the bill is uncertain.

Johnson & Johnson is discontinuing its UPP for its contact-lens portfolio and instead will offer a new patient-rewards program and would focus on legislative efforts to defend the industry.