“By joining forces today, these two international players can now accelerate their global expansion,” said Hubert Sagnières, the Essilor chairman and chief executive, in a news release about his company’s approaching merger with the manufacturer of seventy percent of the world’s frames, Luxottica.
For decades the optical industry has been consolidating into a smaller number of increasingly massive conglomerations, and the trend is only picking up pace. On January 15 two of the largest groups in the industry announced their plan to merge into a single entity, EssilorLuxottica. Earlier this week the boards voted to approve the merger.
“The merged group is estimated to have about a 15 percent market share of the $96 billion eyewear and visual health industry.” Michael Stothard and Rachel Sanderson of Financial Times. This means that a group of just twenty (the combined board and two CEOs) will be in control of fifteen percent of the entire industry; Luxottica founder Leonardo Del Vecchio holding 31% voting rights in that company.
Since its creation in 1971, Luxottica has steadily grown by purchasing companies including the vision plan Eyemed, retail outlets Lenscrafters, Sunglass Hut, Pearle Vision, Target Optical and Sears Optical. With the merger to the largest lens manufacturer in the world, EssilorLuxottica will operate every aspect of the optical industry from signing up patients to a vision plan to selling eyewear to the optometrists that they prescribe – and selling eyewear directly to your patients online.
“Luxottica’s third-quarter results had showed revenue from its online platforms grew by 18 percent, with the company stating that e-commerce had been targeted as an area for accelerated growth in 2017. The third-quarter e-commerce growth far exceeded that for overall sales, which rose by 1.4 percent at constant exchange rates.” EssilorLuxottica won’t need doctors to operate a dispensary, they’ll employ clerks in online and retail outlets to take care of that for you.
This means that every dollar you now spend on Esslior lenses, RayBan, Oakley, or any other rebranded Luxottica frames, and every patient you see on Eyemed, puts more power into the hands of the group that since it’s existence has worked to turn optometry into a corporate retail operation rather than an independent family based healthcare practice.
They are bigger and more powerful than ever before, and to be sure, they don’t have any intentions of slowing or changing any of their operations to give more control to the doctors of optometry. “The two companies were worth a combined $49.22 billion, based on their market capitalization at the end of trading on Friday, making the deal one of Europe’s largest cross-border transactions. They said they expected to save $400 million to $600 million “in the medium term.”
When the same company employs the doctors, makes the product, and sets the reimbursement rates from it’s own vision plan, doctors will be entirely cut out of the equation. Reimbursements are sure to continue to drop, prices for over-advertised lenses will soar, and doctors will be forced to sell out of independent practices and become employees at the closest Lenscrafters or Sears Optical. And while they talk about merging in order to serve undeveloped markets in Africa and Asia, they say that “More than half of revenue at the combined company would come from the United States, while Europe would account for about 22 percent and 18 percent would come from Africa, Asia and the Middle East.” Thats $200 – $400 billion that will be coming out of your pockets over the next few years.
The deal is expected to close by the end of the year and Del Vecchio said he is confident there will be no problems gaining approval from competition authorities.
Are you ready to take a stand for you, your staff and your patients? Will you find independently owned alternatives for materials? Will you help us bring more lives to the vision plan that is managed by your peers, or will you give up and become an employee?
We talk a lot about supporting independent optometry, but what exactly do we mean by that? Other plans have gotten their start saying the same thing, even being owned by a group of doctors, but that hasn’t always worked out for the best in the long run.
The difference with VCD is that we wrote into the foundational bylaws of our organization that we must at all times be owned and managed by at least 51% actively practicing and independent optometrists. Unlike other vision plans, the people that determine the reimbursements are the ones getting those reimbursements. And if you want to see changes with VCD, all you have to do is get involved with your state’s IPA board and start attending the annual IECP meeting.
VCD now has over eighty-thousand members. With a conservative estimate of $10 more per patient paid out to independent (non-retail, corporate or online stores) we put $800,000 annually into independent optometry in this country.
Every dollar that comes through us, stays within independent optometry. Every dollar that you pay to corporate labs, the profit from every Luxottica frame you buy, and the monthly payment from every Eyemed or VSP patient you see goes into building the system designed to destroy independent practice. Every dollar that we collect goes to cover our operating costs, and allows us to continue to expand the vision plan, bringing in better paying lives to put the profits back into your practice, where they belong. We have no investors, no stockholders, only stakeholders – you and the other doctors who accept the vision plan and utilize VCD Labs.
If you agree that an independent practice optician is and will always be able to provide a higher level of care for individual patients, then you understand what drives us. And you know why we won’t ever give up.
Sources:
http://www.cnbc.com/2017/01/15/luxottica-essilor-in-45-billion-euro-merger-deal-to-create-eyewear-giant-source.html
http://m.4-traders.com/ESSILOR-INTL-4641/news/Luxottica-and-Essilor-in-46-billion-euro-merger-to-create-eyewear-giant-23698097/
http://www.reuters.com/article/us-essilor-m-a-luxottica-group-idUSKBN14Z110
http://www.nytimes.com/2017/01/16/business/dealbook/luxottica-essilor-merger
http://www.reuters.com/article/us-essilor-m-a-luxottica-group-idUSKBN14Z110
http://www.essilor.com/en/medias/press-releases/essilor-delfin-create-global-integrated-player-eyewear-industry-combination-essilor-luxottica/
http://www.essilor.com/en/medias/press-releases/essilor-delfin-create-global-integrated-player-eyewear-industry-combination-essilor-luxottica/