Government widens sale of contact lens cleaners: Gail Counsell focuses on an MMC report that criticises Boots' 'substantial margins'

Click to follow
The Independent Online
CONTACT LENS cleaning solutions are set to fall in price following a decision by the Government to open up the market to ordinary retailers.

At present the solutions, on which Britain's 2 million contact lens wearers spend about pounds 90m a year, may be sold only by chemists, who have around 40 per cent of the market, or by opticians.

The relaxation has been prompted by a highly critical Monopolies and Mergers Commission report, published yesterday, which concluded that the current regulatory system had led to overcharging by the retailer Boots and the manufacturer Allergan.

The commission found that at the retail level the market was dominated by Boots, whose market share of 36 per cent made it a scale monopolist.

'Boots buys contact lens solutions at the lowest prices of any retailer but sells all branded solutions at the recommended retail price and gives only a small reduction, averaging 6 per cent, on its own-label solutions,' it observed.

'As a result it enjoys substantial margins. We conclude that Boots' pricing policy for contact lens solutions is contrary to the public interest.'

The Department of Health is to release details of the new retailing arrangements on 2 June, although it is unclear whether these will take effect immediately.

Superdrug, the cut-price, non- pharmacy store chain, said it would start selling cleaning solutions through all its 680 branches as soon as possible.

Geoff Brady, deputy managing director, said that in the two stores where the company had pharmacy licences it had been selling branded solutions at a 10 per cent discount. He hoped greater price savings would be possible, given the Government's desire to see suppliers bring down their prices and the possibility of economies of scale in purchasing.

'The current situation, where we can sell paracetamol and aspirin, which can kill people, but not saline solution has been crazy.'

But Boots said it was 'disappointed and surprised that the MMC has concluded that price is of prime, indeed sole, importance in this complex market'.

It was one of the product categories where advice was most often sought, it added.

The MMC report also concluded that the current product licensing system had restricted competition among the manufacturers of solutions.

It said the US drug group Allergan, with a 38 per cent market share, had exploited its monopoly position and was against the public interest.

In future the manufacture of contact lens cleaning solutions will be covered by a European Community directive, which is expected to increase competition by making it easier for new products to be marketed throughout the EC.

The directive is not due to be fully implemented until 1998. However, the Department of Health intends to take it into account in making decisions on product licences as soon as possible.

View from City Road, page 33

Comments