Crisis Management at Bausch & Lomb (B): The 'ReNu with Moistureloc' Debacle

            
 
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Case Details:

Case Code : MKTG171
Case Length : 19 Pages
Period : 2005-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Bausch & Lomb
Industry : Eye Care
Countries : Europe, USA, Asia

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"The decision [to recall ReNu with MoistureLoc globally] was inevitable amid continued reports of Fusarium fungus infections that are highly correlated with MoistureLoc use, but we think the company's failure to be more proactive in recalling the product has created substantial potential liabilities."1

- Robert Gold, Standard & Poor's2 Equity Research analyst, in May 2006.

"If there was something we could go back and change, that would be it [recall ReNu with MoistureLoc when links between the lens cleaner and the fungus was first suggested]. There isn't a handbook you can go to that tells you exactly what to do here."3

- Meg Graham, Spokesperson, Bausch & Lomb, Inc., in May 2006.

"Americans and the world have short memories about stuff like this provided it isn't mishandled. If they don't protect the credibility of the Bausch & Lomb brand overall so that it is unassailable as Tylenol became unassailable they will never recover."4, 5

- Hayes Roth, chief marketing officer, Landor Associates6, in May 2006.

Collateral Damage!

On March 6, 2007, Bausch & Lomb, Inc. (B&L), a leading eye care company, announced its preliminary unaudited financials, where in it expected to report consolidated net sales of US$2.293 billion for 2006, a decrease of 3 percent when compared to 2005. The figures were much lower than the company's projections and Wall Street estimates.

Analysts opined that the major controversy surrounding one of its contact lens care7 brands, ReNu with MoistureLoc Multipurpose solution (MoistureLoc), and its subsequent worldwide recall, had impacted the company's performance. In addition to impacting the worldwide sales of MoistureLoc, the collateral damage to the B&L brand was significant.

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B&L's lens care and contact lens business had reduced by 21 percent and 3 percent respectively. Moreover, some analysts noted that the numerous product liability lawsuits filed against the company could result in damages of over US$1 billion.

An apparent link between MoistureLoc and a potentially blinding fungal infection of the eye, Fusarium keratitis8 (keratitis), first surfaced in Asia in 2005. Such cases began to be observed in the US too, which attracted the attention of the US Centers for Disease Control and Prevention9 (CDC) and the US Food and Drug Administration10 (FDA).

It was found that a disproportionate number of people who had contacted the eye infection were using MoistureLoc. On April 10, 2006, following an FDA alert on the product, B&L temporarily suspended the US shipments of MoistureLoc.

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1] Kate DuBose Tomassi, "Bausch Lens Solution Fiasco Seen Impairing Overall Brand," www.forbes.com, May 15, 2006.

2] Standard & Poor's publishes financial research and analysis on stocks and bonds.

3] "Bausch & Lomb Reeling from Lens Solution Eye Fungus Link," www.foxnews.com, May 19, 2006.

4] Tylenol (paracetamol) is a popular brand of pain reliever and fever reducer in the US, sold by Johnson & Johnson. On September 29, 1982, the Tylenol scare began when the first of seven individuals died in metropolitan Chicago, Illinois, after ingesting Extra Strength Tylenol. Investigations revealed that it had been laced with a deadly poison, cyanide. While the crime was never solved, the prompt response helped Johnson & Johnson overcome the tampering scare with its Tylenol brand. It quickly recalled Tylenol and launched a PR campaign. The company became a champion of safety, leading the charge for tamper-resistant packaging. As of end 2005, Tylenol remained a top seller, controlling about 35% of the pain killer market in North America.

5] Ben Dobbin, "Bausch & Lomb Hit Hard by Eye Infection," www.abcnews.go.com, May 19, 2006.

6] Landor Associates, based in San Francisco, USA, is a brand consulting firm.

7] A contact lens is a corrective, cosmetic, or therapeutic lens usually placed on the cornea of the eye. The lens care products consist of various solutions designed to clean, sterilize, and store contact lenses.

8] Keratitis is an infection of the eyes caused by a fungus. It can scar the corneas, and has the potential to lead to blindness. Symptoms can include blurry vision, pain or redness, increased sensitivity to light, and excessive discharge from the eye.

9] The Centers for Disease Control and Prevention (CDC) in Atlanta, Georgia, USA, is recognized as the leading United States agency for protecting public health and the safety of people. The CDC provides credible information to enhance health decisions and promotes health through strong partnerships with state health departments and other organizations.

10] The Food and Drug Administration (FDA) is a government agency in the US responsible for regulating food, dietary supplements, drugs, cosmetics, medical devices, biologics, and blood products.

 

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