The initial 25 per cent acquisition from current owner Nestle will cost approximately $11bn, with the option to buy the remaining 52 per cent stake in the company for $28bn at a later date. The aging populations of most western nations means the eye care sector looks set to continue its growth, with the treatment of glaucoma accounting for a sizeable proportion of the market. One in 10 people over the age of 80 suffer from glaucoma and consequently demand for drugs such as Alcon's Travatan (travoprost) looks set to rise. Novartis already has a small eye care portfolio and by incorporating its Lucentis (ranibizumab injection) for severe eye diseases and the Novartis owned CIBA Vision's contact lens business into Alcon's portfolio the company should have a foothold in many sections of the eye care industry. In addition to this, by utilizing Novartis' long-standing operations in Asia, the combined company should be better equipped to expand into this fast growing region than Alcon would have been previously. Nestle signaled its intent to divest its majority stake in Alcon back in Febuary when CEO Peter Brabeck said: "Alcon doesn't need Nestle and Nestle doesn't need Alcon anymore." Until Novartis exercises the option to buy Nestle's remaining 52 per cent the two companies will remain separate, with a Novartis representative on Alcon's board of directors. However, if the second transaction takes place Novartis have stated their desire to "identify the best way to realise synergies from combining their complementary eye-related businesses". This second, larger acquisition is not due to take place until 2010 to 2011, with the first part being finalised later on this year. According to analysts at Dresdner Kleinwort, Alcon revenues are growing at around 11 per cent a year, with earnings before interest and taxes (EBIT) margins at 33 per cent, well ahead of pharma industry averages (5 per cent sales growth and 25 -30 per cent margins). Alcon is also doing better than the eye care industry average (7-8 per cent sales growth and margins at around 25 per cent). "Novartis is buying into a higher growth and higher margin business," the analysts said. "The move diversifies away from mainstream pharma and is a higher return use of cash" than Novartis' current approach of buying back its own shares, they added. Novartis is not alone among pharmaceutical companies in attempting to establish themselves in the eye care sector. Earlier this year Merck & Co extended its licensing deal with SurModics to include its I-vation drug delivery system for eye diseases and two compounds for treating serious retinal diseases. Both these cases highlight pharmaceutical companies' desire to gain a share of the eye care market and the trend for smaller more targeted acquisitions and licensing deals as opposed to the mega deals seen in the past. In 1987 the 10 largest pharmaceutical company's had 12 per cent of the market, by 2002 this had risen to over 50 per cent. Since then there have been large acquisitions, such as Pfizer's buyout of Pharmacia in 2002 and Sanofi's takeover of Aventis in 2004 but these seem increasingly unlikely in the future, with smaller, more targeted deals going through. The Novartis deal epitomises this trend, with the buyer gaining expertise in a specific area as opposed to the mergers of scale which were occurring around the turn of the century.