INTRODUCTION:

CIBA vison, a leading manufacturer of contact lenses is sceptical about focusing on the Daily
Disposal Lens Project or the Extended Wear Lens Project. The company is presently facing
problems of organizational re-structuring and has recently been threatened by Johnson &
Johnson in the low cost high volume segment by its introduction of 7-day and 30-day
disposal lens.

SITUATION ANALYSIS:
The contact lens market presents numerous opportunities to increase market penetration by
addressing the currently occurring customer needs, fears and frustrations. However, the lack
of integration in different departments inside the organization structure is resulting to a
barrier in both growth and innovation. I suggest that, while the disposable lens market is very
important and CIBA needs to develop their processes to take a share of this market, they
should use their competency in R&D to provide differentiation to the customer and create
niche markets.

CUSTOMER ANALYSIS:
From analyzing customer needs, we find that almost 20% of customer needs are addressed by
daily disposable lenses by reducing the effort of the customer in disinfecting and reducing his
fear of infection as well as making these lenses easy to carry. By reducing the need for
disinfecting the lenses after each use and increasing the comfort of product use it can attract
more customers. However, we also see that most of the customer needs are unaddressed and
present numerous opportunities for increasing the market penetration. This can be done by
inventing better lens care products that remove the customers grievances regarding switching
from spectacles to lenses.
Analysis of Product Options
I will be analyzing two major long term projects being considered by CIBA i.e. the Extended
Wear Lens project and the Daily Disposable Lens (DDL) project based on the following
factors:
(i) Opportunity for the product in the market
(ii) The risks involved the project
(iii) The profitability potential of the project.
1. Extended Wear Lens Project
a. Market Opportunity: It is a convenience product because the user would not
have to remove the lens for several weeks, so the market of DDL is always
desirable. Although the concept of Extended Wear Lens was attractive but it
posed significant technical hurdles. The 13.9% of the respondents who think
that cleaning and disinfecting is a hassle and expensive concludes that they are
fond of this category of lenses.
 b. Project Risks: Extended Wear lens has the potential be a breakthrough project
which would require huge investments in terms of time to market and financial
investments. This project would require invention of a new material and
developing the manufacturing process from scratch for creating such a lens.
CIBA has already committed $5million for 2 years for initial research in this
project. However, the fact that this is a small portion of the total annual R&D
budget of $50 million and that this team would be working in cooperation with
CIBA Geigy & CRCER; makes the current R&D investment reasonable.
c. Profitability potential: This breakthrough product could be priced at a
premium to generate high profit margins and hence recover the huge
investments in this project and also result in sustainable earnings.

2. Daily disposable Lens Project

a. Market Opportunity: As against the Extended Wear lens, we see that market
opportunity for the Daily Disposable lens is more (20%) given its better
features and no hassle of cleaning & disinfecting. The recent trend in the
market of shifting from the conventional soft lens to the 7- day disposable lens
indicates that customers would be willing to move to the daily disposable lens
if its costs are not significantly high.
b. Project Risks: Entering the daily disposable lens market involves 2 major
risks:
i. J&J is the current leader in the 7-day disposable market, with low
manufacturing costs of 35 cents/lens due to the licensing of DSM
technology in 1980s. J&J is also continuously making process
improvements to bring a reduction in the costs of lens and is closer to
making a daily disposable lens than CIBA.
ii. Also, the daily disposable lenses will cannibalize the Lens Care
Product (LCP) market of Ciba which currently contributes to 49% of
the revenue. However, this should not stop CIBA from venturing into
the Daily disposable lens innovation since these revenues would suffer
a blow even if J&J successfully converts the market towards the daily
disposable lens.
c. Profitability potential: The price of the daily disposable lens should not be
more than the 7-day disposable lens if it has to take over this market segment.
Hence, CIBA would have to lower it costs to earn a contribution margin on
each lens. But, if this process cost reduction is achieved, the huge volumes in
the daily disposable lens market would result in huge revenue and sustained
growth in the long term.
So assuming that 7-day lens wearers will shift to daily disposable lenses and there is good
possibility of getting new customers from untapped market, CIBA Vision must pursue this
project.
Selecting location for the DDL project
The Daily Disposable Lens project should be started with an autonomous team consisting of
employees from all the departments and should be based in the United States, at the
companys Atlanta facility as from Exhibit 5, it can be seen that the total manufacturing cost
is lower in Atlanta.

RECOMMENDATIONS
1. Discontinuing operations in Grosswallstadt Plant, Germany: The German plant is
contemporarily operating at 50% of its capacity and incurring higher costs than the
Atlanta or the Indonesian plant due to high labor and material costs in Germany
eroding profit margins in Europe. We would suggest that CIBA phase out the
operations from the German plant to either of the lower cost plants.
2. Recognizing Niche Markets: CIBA Vision is already an innovation leader that
provides various differentiated products. Since CIBA has the technical expertise in
producing these variations (both R&D and manufacturing), there is a large scope of
catering to some niche markets by introducing these variations in the daily disposable
lenses. It can also charge a premium over the J&J products by introducing tinted
disposable lenses or bifocal disposables (for higher age group). This differentiation
will provide sustained competitive advantage to CIBA Vision.
3. Collaboration with Research Labs: In our view, CIBA must maintain its leadership
in innovation in the long term. While the daily disposable lens might cannibalize the
lens product market, a breakthrough in better lens care solutions would reduce the risk
for a new market like the spectacle- users who consider lenses dangerous for the eye
or are advised by the doctor against wearing lenses. Hence it is important for CIBA to
continue research in its unique product areas, which can be enabled by tying up with a
research lab dedicated to lens and lens care product research to reduce the strain on its
own R&D resources.

CONCLUSION
While CIBA should enter disposable lens segment to meet customer needs, it should maintain
its leadership in innovation.
After analyzing the two major project opportunities for their market potential, risks and future
profitability, I conclude that CIBA Vision should pursue the Daily Disposable Lens project as
it is more feasible and has a huge market potential. Further, I suggest that CIBA need to
undergo a restructuring to enable smooth operations and start the daily disposable lens project
in the Atlanta plant with a cross functional team working on this project.