Established in 1853, with over 0.01 million employees. $Bausch + Lomb Corp. (BLCO.US)$ , created the first resin eyeglasses, Ray-Ban sunglasses, captured human footprints on the moon, and used its lenses to create classic films like 'The Godfather.'

More famously, 120 years after its founding, it brought contact lenses to the forefront of history, with Bausch & Lomb even becoming synonymous with contact lenses.

As it enjoyed success, it pushed competitors out of the market one by one. However, what followed was endless disasters: from industry giant to rock bottom; acquired by the notorious Valeant Pharmaceuticals; a drastic transformation...

01 The Era Before Contact Lenses

In 1853, German immigrant John Bausch founded a tiny eyeglass products store in Rochester, New York, selling ancient monocle glasses. At the time, the future optical giant - Carl Zeiss of Germany, had been grinding lenses in a small workshop for 6 years.

To expand operations, Bausch borrowed $60 from his good friend Henry Lomb and promised to invite him to join if the business grew.

In 1861, Dr. introduced hard rubber frame eyeglasses, becoming the company's first successful product. In 1865, Lomb became a partner, and they combined their surnames to form Bausch & Lomb Corporation.

They produced the first piece of optical glass manufactured in the USA and began producing optical instruments along this path.

In 1872, Dr. began producing microscopes. At that time, Zeiss microscopes had been sold for 25 years, leading microscope technology by eliminating chromatic aberration, spherical aberration, comet aberration of the objective lens, and making technological improvements in the following years to reach the peak of microscope technology.

In 1880, Dr.'s son Edward visited the Zeiss factory in Germany, obtained authorization from Zeiss, and designed and manufactured Zeiss patented lenses in the USA.

With the support of Zeiss, Bausch & Lomb began to stand out in the field of lenses. Backed by the booming aerospace and film industries in the USA, Bausch & Lomb's business grew larger and larger.

In 1893, Bausch & Lomb started producing single and double telescopes. In 1902, they introduced the balopticon slide projector. In 1903, with innovative camera shutter technology, Bausch & Lomb witnessed important moments in human history.

During World War I, Bausch & Lomb's military goggles revolutionized battlefield vision protection. In 1926, to avoid strong light stimulation, Bausch & Lomb introduced the first pair of sunglasses, giving birth to the iconic "Ray-Ban" brand. Subsequently, Ray-Ban sunglasses were designated as military essentials by the U.S. military and played a crucial role in World War II. After the war, Bausch & Lomb designed Ray-Ban to be more fashionable, selling it as a commercial product and becoming a fashion trend.

With the rise of Hollywood, Bausch & Lomb movie lenses have been continuously developing. In 1939, "Gone with the Wind" and the highly acclaimed "The Godfather" series all used Bausch & Lomb lenses. Bausch & Lomb provided the widescreen movie lens for "The Godfather", winning the 1954 Oscar Honorary Award. Several Bausch & Lomb researchers also won the 1960 Oscar Scientific and Engineering Award.

Bausch & Lomb, advancing along the path of optical lenses, encountered a major event of unknown consequences in the 1970s.

02 Killing the opponent

In 1508, Leonardo da Vinci sketched the idea of invisible eyeglasses. In 1887, Muller introduced the first invisible eyeglasses to address the issue of exposed eyes in patients. In 1937, the transparent hard resin PMMA (poly(methyl methacrylate)) gave birth to uncomfortable invisible eyeglasses.

In 1951, Czech scientist Wichterle invented the centrifugal casting method. In 1963, his HEMA material obtained a patent, finally providing soft lens for invisible eyeglasses.

In 1964, the Deputy General Manager of an American patent development company, Polack, took advantage of a business trip to Moscow to detour to Prague. There, he saw these invisible eyeglasses and immediately decided to jointly purchase the patent for 0.025 million USD with the eye expert Morrison.

Morrison returned to the United States wanting to exclusively produce this soft invisible eyeglasses. He offered a high price of 0.25 million USD to Polack who wanted to reclaim the patent.

Polack traveled across the United States and eventually reached an agreement with Bausch & Lomb. Bausch & Lomb bought the exclusive patent rights for soft lenses for 20 years (1965-1985) in one go and promised to share the profits equally with Polack. After FDA approval, in 1971, Bausch & Lomb launched the invisible eyeglasses onto the historical stage.

In just six years, contact lenses, which lead the global eyewear product technology frontier, have brought significant industry disruption, making Bausch & Lomb almost synonymous with contact lenses.

In 1979, Pollock sued Bausch & Lomb over profit distribution issues. He received a one-time compensation of $14 million and regained the exclusive patent rights to soft lenses. Pollock was able to enjoy life through patent licensing.

With Bausch & Lomb losing its exclusivity, competitors flocked in, gradually thinning out the originally lucrative space.

Bausch & Lomb began to use its absolute advantages in capital, channels, and products to aggressively eliminate these competitors. It used economies of scale and continuously expanding low-end product lines to squeeze one competitor after another out of the market. These small companies were simply unable to withstand Bausch & Lomb's bombardment and could only sell themselves to larger companies.

In the mid-1980s, Bausch & Lomb became a darling of Wall Street, with a profit margin exceeding 200% of the market profit margin of the same period. In 1987, Bausch & Lomb entered the newly opened China and became synonymous with contact lenses in China.

Bausch & Lomb, who thought they would continue to sit back and reap the benefits, then suffered a huge backlash from the market.

02 Backlash

Unprecedented success and absolute dominance in the contact lens market made Bausch & Lomb arrogant.

Framed glasses, driven by the fear of "doomsday", began to attack the contact lens market, but Johnson & Johnson did not notice any market shrinkage in contact lenses.

It lies on the merits of contact lenses, starting blind expansion.

At the turn of the century, the market was filled with calls to "abandon old ideas, give up outdated businesses, and develop new businesses", and Johnson & Johnson also invested in the new growth area of "health products" - such as electric toothbrushes, skincare products, and hearing aids. However, the technological development of contact lenses remained stagnant.

The disappearance of competitors forced Johnson & Johnson to bear high R&D costs. While busy with diversification, it was distracted.

Unfortunately, those small companies that sold themselves to the "big players" are growing into a major problem for Johnson & Johnson.

Johnson & Johnson's underperforming Vistakon, a small company with annual revenue of $20 million, sold itself to Johnson & Johnson. With Johnson & Johnson's strong financial support, Acuvue contact lenses made their debut, becoming the largest contact lens manufacturer in the United States.

While crushing a group of small competitors, Johnson & Johnson gained several "lethal" enemies.

The dispersion of resources and management led to Johnson & Johnson's failure in the contact lens business, being surpassed by Johnson & Johnson and Allergan, ranking third. The company's stock price rose from $3 in 1973 to $56, then plummeting to $33 in 1991.

To regain the trust of Wall Street, Bausch Lomb headed for another abyss.

To complete the marketing plan, in September 1993, Bausch Lomb required dealers to purchase 4 to 6 months of inventory. By the end of the year, he asked dealers holding nearly a year's worth of inventory to buy 1-2 years of inventory, desperately shipping to increase company sales by $25 million.

In June of the following year, due to slow turnover, Bausch Lomb received less than 10% of the payments. Bausch Lomb continued to sell to large customers at prices below distributors. In the third quarter, as dealers sold very few, Bausch Lomb had to take back most of the products and collect the remaining payments at a very low discount from the dealers. As a result, its revenue decreased by 10% (to $0.449 billion) in the third quarter, and net income plummeted by 86% (to $2.2 million).

To achieve high profits, Bausch Lomb resorted to even more unethical means.

In 1994, Bausch Lomb was accused of labeling goods with different prices and names that were actually identical. It paid a heavy price for this, with compensation reaching $68 million, and with investigation expenses, this lawsuit alone resulted in losses of over a hundred million dollars.

It must drink the bitter wine it has brewed itself.

In a market where not advancing means falling behind, Bausch Lomb's performance deteriorated. In just a few years, Johnson & Johnson seized 33% of the market share by using more avant-garde, high-end contact lenses, while Bausch Lomb, with a 13% market share, fell to fourth place in the market.

But this is not the bottom for Bausch Lomb.

04 Destruction

"Investors who like to buy low in the stock market can take a look at the disastrous stock of Johnson & Johnson in early June 2006 as reported by the American Wall Street Journal."

Johnson & Johnson eventually sent themselves to the guillotine with their strength.

In 1999, the new management decided to stop in time, cancel non-core businesses, and position the company as "the world's eyes". In that year, RayBan was sold off by Johnson & Johnson as an abandoned child, the reason being - too little profit, not making money.

Core business should have been a unified entity of products, production capacity, customers, sales channels, and geographical distribution. Despite the small profits, RayBan was excellent in these aspects. The new management only used "profit" as a yardstick to decide on the retention of the business, clearly caring about Wall Street's reaction.

Under the logic of making money, Johnson & Johnson's "elimination of non-core business" was tantamount to self-defeating martial arts, destined not to regain its past glory.

In 2004, Johnson & Johnson's net income was $0.1596 billion, with sales of $2.2 billion. In 2005, Johnson & Johnson's revenue was only $2 billion, with 53% coming from contact lenses and contact lens care products.

In May 2006, Johnson & Johnson unexpectedly and yet inevitably encountered a catastrophe.

Consumers in Asia and the USA who have used the company's contact lens solution have contracted a rare eye infection. It can lead to blurred vision, and if not treated promptly, can result in blindness. This is almost the biggest brand crisis since the toxic Tylenol incident in the USA in 1982.

In 2006, Bausch & Lomb spent $25 million on recall fees and $19 million on discounts to complete the recall of problematic products, leading to a 22% decline in the company's profit for the 2006 fiscal year. Infuriatingly, Bausch & Lomb did not offer compensation in the Chinese market.

To reverse the decline, Bausch & Lomb had to increase marketing costs, which strained the company's finances. This put excessive pressure on Bausch & Lomb's financial situation.

However, the poor crisis management only made things worse for Bausch & Lomb. Consumers who lost confidence in Bausch & Lomb ultimately abandoned this century-old company, and investors stayed away from Bausch & Lomb's stocks. Due to poor management and high debts, in 2007, Bausch & Lomb was acquired by the private equity firm Warburg Pincus.

The contact lens business, which once ushered in Bausch & Lomb's glory, ultimately led it to a dead end.

05 Bidding Farewell to History

After enduring four years of hardship, Bausch & Lomb welcomed new management. It sold its 158-year-old headquarters building, conducted massive layoffs, streamlined its institutions, and finally caught up with the market by producing colored contact lenses and introducing new solutions.

However, these efforts were still unable to repay Bausch & Lomb's historical debts.

In 2013, the well-known Canadian pharmaceutical company Valeant, which was on the cutting edge, decided to acquire Bausch & Lomb for a high stock price of 8.57 billion USD (of which 4.2 billion USD was specifically used to repay debt). The Huaping private equity firm eagerly took over this unexpected windfall and quickly got rid of this hot potato.

As a company skilled in financial manipulation like a McKinsey, Valeant was in the peak stage of its goal to 'become one of the top five pharmaceutical companies in the world within 6 years'. This acquisition resulted in a sharp rise in its stocks for several months. Why did this company, which relies on acquiring pharmaceutical companies and their scarce drugs to then raise prices tens of times and make huge profits, set its sights on Bausch & Lomb?

Contact lenses obviously do not have the crazy price increase ability of rare drugs, but in fact, Valeant's acquisition of Bausch & Lomb was very cunning.

In 2016, when Valeant faced a crisis and its stock price plummeted by 97%, Bausch & Lomb was one of its important financial supports. Bausch & Lomb did not become Valeant's lifesaver based on its eyewear business. What made it extremely profitable was the currently popular medical aesthetics project - Thermage.

By visiting the official WeChat account 'Thermage Beauty' for Thermage in China, it is clear that the account is owned by 'Bausch & Lomb (Shanghai) Trading Co., Ltd.'. In 2014, Valeant acquired Solta Company and began leveraging Bausch & Lomb's channels to promote the acquired Thermage.

This project, which costs tens of thousands of RMB and still has safety hazards, has become a fashion trend in the medical aesthetics industry, similar to Bausch & Lomb's contact lenses years ago.

All of this seems to also signify the end of a chapter in Bausch & Lomb's history.

Editor/Somer