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Finding a niche with preservative-free eye drops

In the space of 23 years AFT Pharmaceuticals has gone from a home-based business to a multinational company. Its eyecare business is also experiencing remarkable growth, and more therapies are in the pipeline, including one for glaucoma.

At the age of 37 and with a $50,000 redundancy cheque, Dr Hartley Atkinson started AFT Pharmaceuticals out of the garage of his home in the Auckland suburb of Takapuna.

People told him it was a ludicrous proposition, but in 1997 – armed with a doctorate in pharmacology and experience as a medical director at Swiss drug company Roche – Atkinson began mapping out a plan for a multinational pharmaceutical firm that now counts itself among the major players across Australia and New Zealand.

Hartley Atkinson.

Fast-forward from its humble beginnings more than two decades ago, the company today has around 90 staff across its offices in Auckland, Sydney, Kuala Lumpur and Singapore and turns over more than $100 million annually.

AFT, which is listed on the ASX and NZX, supplies more than 130 licensed and proprietary products in Australasia in multiple healthcare categories, and began carving out a niche for its eyecare business eight years ago.

Its seven eyecare products – some of which are top sellers in the lucrative eye lubricants category – are distributed to Australian eyecare professionals via Melbourne-based Good Optical Services. And AFT is working to add three more products to its portfolio with therapies for eye infections, glaucoma and a prescription dry eye treatment.

Atkinson says AFT’s eyecare range is a strong and fast-growing contributor to the overall business, generating approximately $18 million in revenue and accounting for approximately 15% of total sales.

“It’s an area we like, we are the number three supplier in Australia after a couple of big specialist eyecare companies (Alcon and Allergan) so it makes a lot of sense to carry on and grow our eyecare portfolio,” he says.

Atkinson says AFT’s differentiator in eyecare is its portfolio consisting only of preservative-free products. It’s a trend the company identified in European markets and believed would catch on in Australasia once the products became available.

An added benefit of AFT’s products is their multi-dose containers, which he says are more precise, user friendly and produce less plastic waste compared with single-use eye drop dispensers.

“In 2012, we started with the Hylo-Forte and Fresh range from a German family-owned company,” Atkinson says, adding that they are both listed on the Pharmaceutical Benefits Scheme (PBS).

The Hylo-Forte and Fresh range was AFT’s first foray into eyecare and now generates around $16 million annually.

“We then knew we wanted to extend it, and we saw other angles. There was the whole heat, clean and hydrate message that come out of the DEWS II work, so we were able to license a good quality heat mask in Opti-Soothe, then we looked at the Opti-Soothe preservative-free wipes to clean the eye lids and then preservative-free eye drops to use afterwards, so we are a looking at the holistic approach to treatment of patients with dry eye.”

AFT extended its portfolio further 18 months ago with the addition of NovaTears from another German firm, Novaliq, based out of the university town of Heidelberg. The PBS-listed treatment is preservative-free, non- aqueous and intended for the evaporative form of dry eye. It is now AFT’s fastest-growing eyecare product.

The portfolio is rounded out with another PBS-listed therapy called Vita- POS, a preservative-free night time ointment for dry eye, and preservative and phosphate-free Cromo-Fresh for eye allergies. In Australia, an eyedrop dispensing aid called Compleye is also available.

Atkinson says AFT will continue forging ahead with plans to consolidate its position as dominant player in the preservative-free eyecare market. The increasing prevalence of dry eye, particularly in the warmer Australian climate, also warrants further investment.

“The market is only going to grow; the population is aging, but also too we have a younger population that’s spending more time in front of screens and that only tends to exacerbate the problem. You can call it a market, but at the end of the day, they are patients who need solutions and want to come to places like optometrists or ophthalmologists to find those solutions,” Atkinson says.

As such, the company’s marketing efforts are mainly focused at healthcare professionals like optometrists who can then stock and sell to patients.

PBS-listed NovaTears is the company’s fastest growing eyecare product.

“Optometrists, as a health professional, their time is valuable, so if they are going to spend any time recommending a product, they need to be making a reasonable dollar on it, while also doing the right thing by their patients by giving them a high-quality product. Our products maybe aren’t the cheapest on the market due to the cost of the related technology but that’s part of the point.”

Opting for preservative-free

When deciding which products to licence in an increasingly saturated eye therapeutics market, Atkinson says there is strong scientific evidence to support AFT’s preservative-free direction.

Before establishing its eyecare portfolio, the company looked to Europe for trends that were yet to take hold in Australia.

“Over there, there has been a real trend for the past 10 years with preservative-free and multi-dose containers. It was quite an eye opener for us and that’s what motivated us to make it our mantra,” he says.

“There is good data that shows that preservatives – which tend to be benzalkonium chloride which is a bit like a very weak soapy dishwater – tend to irritate the eye, so it just doesn’t make good sense to have something like that to treat issues like dry eye.”

Atkinson believes the latest IRi pharmacy sales data demonstrates Australian patients are increasingly seeing the value in preservative-free eye solutions as well.

In the eye lubricants category across all brands and products, including prescription, AFT’s Hylo-Forte was ranked first in terms of sales dollars. It generated $13 million for the company, representing a 36% annual increase in the year to August.

Hylo-Fresh ranked seventh with sales of $3.6 million, an increase of 30%, while sales for relative market newcomer NovaTears topped $1.7 million – a remarkable 105% increase year-on-year.

“If we look at when NovaTears launched on the PBS, it’s actually further ahead of Hylo-Forte at that point, so that’s going very well,” Atkinson says, adding that NovaTears +O-Mega3 was also launched last month.

NovaTears +O-Mega3 is AFT’s latest addition to its eyecare portfolio.

The overall eye lubricants category grew 8% in Australia during the past year, which AFT believes it played a major role in driving with $20 million in sales, a 39% increase on the same time last year.

Further, while all of AFT’s products showed significant growth, there was only one other preservative-free product from another company that grew, which itself saw its sales increase 37%.

In the coming year, Atkinson expects even greater purchase from its eyecare business with the introduction of three new licenced products, with the most notable of these being Vizo-PF Bimatoprost, AFT’s first foray into glaucoma.

The Pharmaceutical Benefits Advisory Committee recommended the therapy for listing on the PBS at its July meeting. It comes in a preservative-free multi-dose bottle and is indicated for the reduction of elevated intraocular pressure, or open angle glaucoma, as first-line therapy or monotherapy or as adjunctive therapy to topical beta-blockers.

Atkinson says another product on the horizon is Chloramphenicol, which is a staple treatment for bacterial eye infections. It too will be preservative-free.

The other is a prescription dry eye treatment which is still under development, however regulatory filing in Australia is planned soon.

Precision drop technology 

Good Optical Services owner, Mr Rick Good, says when AFT first introduced its products to Australia it represented a breakthrough in the eye lubricants market.

Aside from the preservative-free benefits, he says the multidose pump containers are engineered to deliver 0.03ml to the eye, which is the exact amount the eye can hold. This is opposed to unit does products which can dispense anywhere up to 0.4ml.

“A lot of people say ‘wow $34 for a bottle of tears’, except you get 300 drops out of a 10ml bottle, and there’s no wastage. We’ve tested it and it’s not 298 or 301, its exactly 300, we’re rewarded with German engineering and exactness here,” he says.

“It actually leads to savings of about 50% to the average person. If you look at the millilitres, one bottle of Hylo is equal to about four boxes of the unit dose products because there’s just so much wastage. Most people are putting more of the tear on a tissue because it’s falling out of their eye due to the drops being so big.”

He says these economic savings were also viewed favourably by the PBAC around six years ago, which led to a swift introduction of AFT products on the PBS.

Good Optical Services distributes AFT’s eye drop range Australia-wide to optometrists (corporate and independent), opticians, ophthalmologists and the universities. Good says the product range has had exponential sales growth, largely due to their efficiency and efficacy.

“And the unique thing from an optometry point of view is the synergy between Hylo-Forte and NovaTears. Hylo is an aqueous base so if you’re having trouble making tears it builds up your tear base, and then NovaTears, because it acts like a lipid layer substitute, it creates a seal so there is no leakage,” he says.

Overall, he believes AFT’s ‘preservative-free’ position on ophthalmic products was a positive and clever marketing idea.

“We are very happy to partner with AFT to supply efficient, economical, and effective products to the Australian optical industry,” Good adds.