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From the article at www.slackinc.com, "Additionally, many analysts believe that, technologically, VisX lasers are more advanced than Summit lasers. If Summit is to remain competitive in the laser vision correction center business, the company will need to purchase the best equipment available. That equipment could bear VisX's nameplate."
Exactly my point, when astigmatism is approved the 200 Summit laser owners will be at a disadvantage to Visx STAR owners in that they can't perform astigmatic corrections.
As for Summit's machine being cheaper than Visx's, well it didn't use to be cheaper until they couldn't sell any. Visx's machine costs $525,000. They do offer through independent companies various leasing plans which greatly reduce the risk. One only charges based on a per use basis, and the only risk is that if it is underutilized they will take the machine back.
As for the market becoming saturated with machines, I don't think it will happen in the next year. In my talks with Visx PR, it seemed that for the forseeable future the machine sales were around their manageable max capacity of 30/quarter. The anticipated overall market in the U.S. for lasers is around 600 to 800 (currently there are about 250 to 300). There are about 15,000 to 20,000 opthamologists in the U.S. and if 4% are to own an excimer laser in the near future than the market is no where near saturated!!! Look at the article which suggests 1 to 2 million procedures by the year 2000. Well, each machine would have a hard time doing more than 1500 to 2000 procedures in a year, so these numbers suggest 1000+ machines will be in-place.
Well, since Summit isn't selling their laser even with the discount in price and the 2 year lease with rights to return the laser without penalty, then Visx should have a very healthy market for selling their laser. It appears that at the current pace of about 120 machines/year Visx pulls in $60M in rev/year and a profit of around $1/sh/yr from the machine sales. The real profits are to be made in the number of procedures. If 1M/year is reached Visx will get $140M (- 2 to 3 % PPP loading). The $140M will be almost all profit and will result in very large $'s/sh. Summit will also reap the rewards of the PPP. For the most part, Summit is not considered a threat anymore by Visx in terms of machine sales. Visx fears more the future competition from companies like Nidek (however, I don't see how their machine can get approval by 1998 since I don't believe they have started phase III which takes 3 years.)
Thanks for pointing out the article. I check that site fairly often but hadn't picked up on that article yet. |
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