Bausch & Lomb Shares Tumble

Shares of Bausch & Lomb Inc. on Tuesday plunged nearly 15% on news that the contact lens maker had stopped shipping a cleansing solution linked to a rare fungal infection that can cause blindness.

Bausch & Lomb suspended deliveries of ReNu with MoistureLoc, its fastest-growing product for cleaning contact lenses, after the U.S. Centers for Disease Control and Prevention said it was reviewing 109 cases of suspected fungal keratitis. Wal-Mart Stores Inc., Walgreen Co. and Rite Aid Corp. have stopped selling the product.

Of 30 cases reviewed, 26 involved wearers of soft contact lenses who were using Bausch & Lomb’s ReNu products, the Rochester, N.Y.-based company said. ReNu with MoistureLoc accounted for $45 million in 2005 sales, and other products in the ReNu line may also be tarnished, said Michael Weinstein, a J.P. Morgan analyst in New York, in a note to clients.

“Halting lens-care sales in the U.S. represents a worst-case scenario of sorts, reminiscent of Johnson & Johnson’s 1982 Tylenol scare,” Weinstein said. He called the solution Bausch & Lomb’s “flagship product within the company’s most profitable segment.”

Johnson & Johnson recalled 31 million bottles of Extra-Strength Tylenol in 1982 after seven people died from poisoning by cyanide introduced into pill bottles on store shelves. The company subsequently packaged the pills in tamper-resistant containers. The incident became the textbook case for product-crisis management after the medicine quickly recouped lost sales, partly because of the safety steps.

Alcon Inc., the largest eye-care company with 2005 sales of $4.4 billion, said it and Bausch & Lomb each accounted for about 26% of the U.S. market for contact lens solution.

Bausch & Lomb, a 153-year-old maker of optical products, gets 23% of its sales from lens-care products and 30% from contact lenses, according to its 2004 annual report. The company had 2004 sales of $2.2 billion.

Its shares fell $8.41 to $49.03. The decline was its biggest since a 36% plunge Aug. 24, 2000, when the company reduced its earnings forecast and fired its chief executive. Analysts at First Albany Cos., Robert W. Baird & Co., Piper Jaffray & Co. and JPMorgan Chase & Co. issued downgrades.

Shares of rival producers Alcon and Advanced Medical Optics Inc. jumped. Alcon, based in Hunenberg, Switzerland, rose $2.80, or 3%, to $104.02.

Santa Ana-based Advanced Medical Optics, maker of the Complete and UltraCare lines of contact lens solutions, gained $3.01, or 7%, to $48.48.