As 2017 turned into 2018, we turned our attention to the recent direction of the contact lens market. The past few years have been quite interesting, with continued trends in modalities that relate to replacement schedules, certain designs, and contact lens care. We hope you find the information provided in this 2017 Annual Report valuable as you evaluate your own contact lens practices.
OVERVIEW OF GENERAL MARKET TRENDS
A statistic that is always of great interest, particularly to those in industry and in financial sectors that focus on eye and vision care, is the size of the contact lens market. Data obtained from Robert W. Baird (Jeff Johnson, OD, CFA, managing director, senior research analyst) show that for the most part, the contact lens market remained healthy through the first three quarters of 2017, with the worldwide market growing just over 5% (after excluding the impact of recent fluctuations in foreign exchange rates)—similar to 2016.
According to Baird, on a worldwide basis, the $7.5 billion contact lens market has grown 4% to 5% every year for eight straight years, dating back to the Great Recession (when we estimated that the worldwide market grew ~3%). The ongoing transition to silicone hydrogel and daily disposable lenses across the globe, and greater volume growth in developing markets, has contributed to this growth rate.
According to Baird, the $2.7 billion U.S. contact lens market grew 3% through the first nine months of 2017, which remains healthy but is a bit softer compared to the consistent 4% to 5% growth in the domestic market over the better part of the past decade and up through mid-2016. While difficult to pinpoint exactly what has contributed to this slightly lower recent U.S. market growth, Baird believes that a move to private-label and other lower-priced alternative lenses, as well as higher rebate and promotional activity from most manufacturers (which, by accounting standards, is considered a write-off against revenue), have contributed. As the use of daily disposable lenses in the United States has continued to grow, manufacturers have begun offering bigger rebates over the last year or two trying to provide incentive for even greater conversion to daily disposables from two-week and monthly options. While that creates modest revenue headwinds across the domestic industry over the short-term, Baird believes that it should also provide longer-term benefits given better compliance rates with daily disposables. In addition, manufacturers will likely increasingly offer these heightened rebate dollars to only new patients over time.
CURRENT PRACTICE TRENDS
Contact Lens Spectrum conducts annual market research through a Practice Profile Survey that asks our readership about their practice trends and patterns both generally and as they relate specifically to contact lens practice. We have collected this data for many years, allowing us to conduct some longer-term and longitudinal analyses. The topics covered by the survey questions include characteristics of the patient base of a practice, business and financial aspects of a practice, fitting and prescribing trends, and care solution trends. This year, nearly 100 U.S. respondents completed the majority of the survey. I will draw on this survey data, as well as data from other sources, in discussing trends and observations about the contact lens field.
Practice and Business Trends Table 1 summarizes trends in the practice and business characteristics from 2009 to 2017. Our respondents were primarily optometrists (82%), followed by opticians, contact lens technicians, and ophthalmologists, respectively. Modes of practice varied, but the most common was solo private practice, followed by group private practice and independent affiliation with a retail setting. In 2017, the typical practice averaged 105 patients per week, which is unchanged from last year, with a typical patient base of approximately 36% contact lens wearers. The average number of contact lens fittings and refittings in a typical week was about 31, which is slightly higher compared to 2016.
|Patients Seen Each Week||108||116||107||127||125||117||124||105||105|
|% Contact Lens-Wearing Patients||37||36||35||34||34||34||49||33||36|
|# CL Fits/Refits Per Week||27||27||24||26||25||24||29||26||31|
|Estimated % Gross Practice Revenue from CLs||35||34||37||32||30||30||39||32||32|
|Estimated % Net Practice Revenue from CLs||29||28||26||27||25||25||27||27||27|
Correspondingly, in 2017, most respondents felt that about 32% of their gross profit and about 27% of their net profit was derived from the contact lens portion of their practices. Based on practitioner estimates, 67% of their patients purchase contact lenses from their practice, whereas 20% purchase their contact lenses online, 10% purchase their lenses through a third-party retailer independent of a practice, and 3% purchase their contact lenses from another practice setting (Figure 1).
Furthermore, 67% of practitioners believe that their overall contact lens practice will increase in 2018 (versus 63% in 2017), while 31% believe that it will stay the same (versus 37% in 2017), and 2% indicated that it will be decreasing further.
Lens Dispensing and Mode of Wear Trends As we have reported in previous years, silicone hydrogel materials make up the majority of fits and refits in 2017 (Figure 2) (Contact Lens Spectrum market data). We noted the first slowing of the silicone hydrogel category in 2011; for 2017, our data show silicone hydrogel usage at 64% (a decline from 67% in 2016), while hydrogels were reportedly used in 22% of fits in 2017 (up from 20% in 2016).
From the mid-2000s through the mid-2010s, silicone hydrogel materials contributed significantly to U.S. contact lens market growth, as SiHy penetration in the two-week and monthly lens categories rose from the single digits to nearly 85% of all products by the early 2010s, according to data from Baird. Over the last three to five years, however, daily disposable use has accelerated and taken share from the two-week/monthly lens categories; some of this trade out from two-week/monthly SiHy lenses has been to non-SiHy daily disposables, the net effect of which has been that SiHy use across all lens modalities has seemingly plateaued over the last few years in the mid- to upper-60% range, consistent with data acquired by Contact Lens Spectrum (Table 2). While this same dynamic of trading out of two-week/monthly SiHy lenses and into daily disposable lenses that may or may not be made of SiHy materials means that SiHy penetration across the market could remain in this mid-60% range for the next few years, Baird believes that by 2020 or 2021, SiHy penetration across the entirety of the U.S. contact lens market should begin to rise again. Even before then, however, Baird believes that the general move from two-week or monthly SiHy lenses to daily disposable lenses (regardless of lens material) is still good for the market, as there still tends to be a nice step up in price associated with the move from two-week/monthly SiHy lenses to hydrogel daily disposable lenses.
|U.S. Market Share||2014||2015||2016||2017||2018E||2019E||2020E||2021E|
|Weighted Average SiHy Penetration||67.4%||67.4%||67.6%||67.2%||66.7%||66.9%||67.6%||68.7%|
|* Source: Company reports, Baird estimates|
With regard to GP lens fitting, data from Contact Lens Spectrum’s market analysis showed that 11% of fits and refits were conducted with a GP (Figure 2), which is up slightly from 2016. Our respondents indicated that they performed 6% of fits and refits with GPs in 2014. When we asked practitioners to estimate the distribution of lenses by category of lens design for lenses containing any rigid GP lens material (Figure 4), it is perhaps not surprising that corneal designs made up the bulk of fits (70% versus 76% for 2016), followed by sclerals (16% versus 13% for 2016), hybrids (8% versus 6% for 2016), and orthokeratology (6% versus 5% for 2016).
Data obtained from ABB Optical Group (an independent optical industry platform), GfK Retail and Technology (a market research service), and Glimpse Live, LLC (performance dashboards and analytics) showed a similar trend for 2017 when comparing what are considered the four major soft lens categories (spherical, toric, multifocal, and cosmetic). As noted in Table 3, data from these four sources show slight variability when looking at the soft spherical category prescribing (range 52% to 60%) and for multifocal soft lens prescribing (range 9% to 17%); the data show a little more consistency in prescribing habits with soft torics (range 25% to 28%) and soft cosmetic lenses (range 2% to 5%). When the Contact Lens Spectrum readers were asked which soft lens categories they anticipated using more of in 2017, 58% indicated daily disposables (versus 57% in 2016), followed by multifocals (34% versus 38% in 2016), torics (5% versus 2.5% in 2016), and cosmetics (3% versus 2.5% in 2016).
|SOFT LENS CATEGORY||Contact Lens Spectrum||ABB Optical Group||GfK Retail & Technology||Glimpse Live||Change from 2016|
|Data from ABB, GfK, and Glimpse are percent of sales.|
In addition to the Contact Lens Spectrum Reader Profile Survey, market insights were also gleaned from ABB Optical Group, GfK Retail and Technology, and Glimpse Live in terms of replacement schedule usage (Table 4). Interesting trends emerge when comparing among the sources—two of the four rank the daily disposable modality as the one leading in terms of prescribing by soft lens replacement schedule (range of 35% to 44% versus 35% to 42% for 2016), followed by the monthly category (range of 35% to 40%). The weekly/two-week category continues to decline (ranging up to –13%), and the daily disposable category continues to have the most growth (ranging up to 17%)—a trend that we have observed for the last few years.
|SOFT LENS CATEGORY||Contact Lens Spectrum||ABB Optical Group||GfK Retail & Technology||Glimpse Live||Change from 2016|
|Data from ABB, GfK, and Glimpse are percent of sales.|
We asked our readers about the contact lens design or modality that they felt had the greatest growth potential/anticipated use over the next year in a very broad sense; among our respondents, 74% indicated silicone hydrogel daily disposables (83% in 2016), followed by silicone hydrogel multifocals (62% versus 67% in 2016), sclerals (48% versus 41% in 2016), hydrogel daily disposables (47% versus 51% in 2016), and silicone hydrogel torics (45% versus 43% in 2016). A majority of respondents (53%) indicated that they anticipated a decrease in hydrogel one- to two-week daily wear.
Maintaining a trend for several years now, most practitioners when fitting presbyopic patients who wear contact lenses continue to indicate a strong preference for multifocal lenses (70% in 2017, compared to 76% in 2016) compared with monovision (23% in 2017, compared to 17% in 2016) and over-spectacles (6% for 2017 and 8% for 2016). Our respondents indicated that more of their presbyopic patients in practice are prescribed a multifocal (50% of contact lens-wearing presbyopes versus 44% in 2016) compared with monovision (35% of contact lens-wearing presbyopes versus 21% in 2016).
Despite being an off-label use in the United States, myopia control with contact lenses continues to gain traction among contact lens practitioners. In 2017, 44% of Contact Lens Spectrum Reader Profile Survey respondents indicated that they actively practice myopia control with contact lenses (compared with only 37% in 2016). Of those who are practicing myopia control (Figure 6), most do so with orthokeratology designs (54%), followed by soft multifocal designs (41%) and GP multifocals (5%). This differs from 2016 in which most reported using soft multifocal designs for myopia control.
Forecasting into 2018, most practitioners felt that their overall contact lens practice would increase (67%) or stay the same (31%), as opposed to decreasing (2%). In terms of specific categories, as noted previously, the majority of respondents predicted that two types of contact lenses would be increasing in terms of utilization (compared to either staying the same or decreasing): silicone hydrogel daily disposables (74% of practitioners) and silicone hydrogel multifocals (62% of practitioners). The only category in which the majority of respondents felt that their prescribing would decrease was in the hydrogel one/two-week category (53%). What is interesting (and similar to the last few years), though, is that although practitioners anticipate using silicone hydrogel materials and designs to a greater extent, this has not translated into measurable changes in the percentage that the material category is used as a whole (Figure 1 and Table 2).
CONTACT LENS WEAR AND CARE COMPLIANCE
Our survey respondents indicated that only 44% of their patients who use one- to two-week replacement lenses were compliant with the replacement schedule, whereas respondents indicated that 66% of their patients who use monthly lenses were compliant, and 79% of their patients who use daily disposable lenses were compliant (Figure 7). Practitioners indicated that in general, about 73% of the contact lens patients in their practice properly comply with replacement per instruction. These trends are similar to what we have reported in previous years.
LENS CARE TRENDS
The vast majority of our survey respondents reported using chemical care systems (67% in 2017 compared to 73% in 2016) with contact lens patients, followed by hydrogen peroxide-based systems (33% in 2017 compared to 27% in 2016), which continues the trend of increased hydrogen peroxide usage over the last several years (Figure 8). Furthermore, practitioners are recommending care systems for their contact lens patients, according to our survey—82% of respondents recommend specific brands of contact lens care systems to contact lens patients whereas 18% do not (a slight trend downward in recommending specific care solutions). Most respondents made their selected recommendation because of improved comfort (30%), followed by disinfection efficacy (24%), material/solution compatibility (20%), and then cleaning efficacy (18%), convenience (6%), and cost (2%).
YESTERDAY AND TODAY
To understand where we are at any given point in time, it is often helpful to look back at where we’ve been and what past events shaped our present. For this reason, Contact Lens Spectrum has made it a tradition in our Annual Report to review what major events occurred in the industry a decade ago.
In the January 2007 issue, the Event of the Year was the recall and removal from the market of Advanced Medical Optics’ Complete MoisturePlus due to a seven-times increased risk of developing Acanthamoeba keratitis. This event came on the heels of the recall and discontinuation of manufacturing and sales of ReNu with MoistureLoc by Bausch & Lomb, which was Contact Lens Spectrum’s Contact Lens Event of 2006. In discussing these two events, then-editor Carla J. Mack, OD, hoped that a silver lining would emerge from what was tragic for some. She said, “I believe that if these recalls hadn’t occurred, many, if not most, of our patients would have continued to ignore solution and contact lens care instructions and compliance discussions. Even with both voluntary recalls it remains a struggle to keep care and compliance at the forefront.”
Dr. Mack further stated that the two solution recalls presented an opportunity on many fronts: for practitioners to better educate patients and staff on the importance of proper lens wear and care, for industry to develop “more efficacious care products with the health of the end-user as the primary goal,” and for the U.S. Food and Drug Administration and International Organization for Standardization (ISO) to “impact new products with regard to product labeling, preservative uptake, disinfection effectiveness in real-world conditions, and silicone hydrogel lens grouping.” Dr. Mack ended with the statement, “Industry sources have implied that future recommendations may require a rub step.” We have seen positive progress in all of these areas in lens care over the last 10 years since these recalls, including multipurpose care solutions that use two disinfectants, more rigorous care solution testing, and the disappearance of no-rub solutions.
TODAY AND TOMORROW
Coming back to the present, several events and trends that we observed over the last year will have an impact in the industry both now and into the future.
First and foremost, as I mention in my Editor’s Perspective on p. 11, we chose for our Contact Lens Event of 2017 “the attack on the integrity of the contact lens prescription.” This has been occurring on a number of fronts over the last few years and is based on the pervasive belief among the general public that a soft contact lens is a commodity—that any one will work for any lens wearer, similar to how a branded medication can be substituted with a generic version. But, generic medications contain the same active ingredient as their branded counterparts, and that active ingredient generally works the same way regardless of the seller or the cost. We all know that this is not the case with soft contact lenses, which are all unique in terms of their polymer characteristics, ionicity, oxygen permeability, base curves, radii, thickness, moduli, and edge profiles.
Feeding into the one-size-fits-all misperception are many online contact lens retailers that seem to place little value on the contact lens prescription. Some of these retailers do not ask for a current prescription from an eyecare provider. Some ask for lens powers only and then say that they will verify the prescription with the prescribing practitioner. With a contact lens prescription containing specific information about lens brand, material, base curve, and diameter—and with some of the retailers selling private label lenses that do not match these parameters—it is difficult to see how prescription verification can actually be occurring.
It is unfortunate that these attacks on the integrity of the contact lens prescription, which are often viewed by the public as simply a means to have greater freedom of choice for where to purchase their lenses, are putting our patients at risk of contact lens complications. Thankfully, several eyecare organizations and contact lens companies continue to advocate for contact lens wearer safety and to educate government officials about the importance of supplying contact lenses to patients as prescribed by their eyecare professionals.
Another topic on our radar for 2018 and beyond is the increasing popularity of corneal collagen cross-linking (CXL) in the United States and what effect that this will have on the industry as a whole. Cost of this procedure remains a barrier for many, but the manufacturer of the FDA-approved CXL device and solution provides reimbursement assistance services for patients and is also working with various medical insurance companies on obtaining coverage for the procedure. As this cost barrier is overcome and more patients undergo CXL at earlier stages of the disease, will that affect the prescribing of scleral lenses, for which keratoconus is a primary reason to fit them? Will it reduce or eliminate the need for penetrating keratoplasty procedures for keratoconus? It will be interesting to track CXL’s long-term impact.
I know we’ve been talking about this next topic in our annual report for the last few years, but we feel that it warrants continued discussion. We are happy to see the continued increasing trend in practitioners prescribing contact lenses for myopia control. While FDA clearance of contact lenses specifically for this indication is still several years away, practitioners are increasingly realizing that they can’t ignore the many studies that demonstrate the effectiveness of using contact lenses off-label to slow myopia progression. With the prevalence of myopia increasing worldwide and the well-known risks associated with higher levels of myopia, it is bordering on unethical to not do whatever we can to slow its progression in our young patients.
Daily disposable lens prescribing is on fire in the United States, with all of our data sources indicating that it increased in 2017. According to Contact Lens Spectrum readers, daily disposable prescribing has continued to increase every year over the last decade, from 10% of lenses prescribed in 2007 (as spherical daily disposables) to 35% of lenses prescribed by our respondents in 2017. This growth has been fueled in part by the ongoing advancements in lens designs and materials as well as expanded parameter ranges. The addition of toric and presbyopic designs opened up the modality to additional classes of patients who previously could not wear them. I’m sure that also contributing to the continued increase is that practitioners are beginning to get past their hesitation to recommend these lenses because of cost. When patients see value in the convenience and ocular health benefits that daily disposables offer, they are often willing to spend more for a more premium product. The option should at least be offered.
Another trend that we feel will have an impact going forward and on which I reported in my August Editor’s Perspective is the change in mindset regarding managing contact lens-related dry eye. Contact lens practitioners may be reaching the same tipping point that clinicians in the cataract and refractive surgery fields reached about 10 years ago. Namely, contact lens practitioners are increasingly recognizing that existing ocular surface disease needs to be diagnosed and resolved for contact lens wear to be successful and to manage symptoms of contact lens dryness. When there is an existing dry eye condition, lens-related dryness cannot be resolved by simply changing to a different lens or a different care solution. This change in mindset is still in its early stages, but we believe that it could have a significant impact on contact lens dropout as more practitioners adopt it.
Finally, a number of company mergers and acquisitions made the headlines over the course of 2017. Consolidation in the industry always presents a bit of a question mark as to how it will impact both patients and practitioners. Whether the companies are looking to expand their presence to include more areas of the market or whether their goal is to build a stronger infrastructure in certain key areas, it’s always interesting to see how the new relationships will grow and change the industry. CLS
Special thanks to Lisa Starcher for her help in writing this article.