SAN DIEGO—The past few months have been particularly busy for Carl Zeiss Vision’s North American arm. The launch of several major business and technology initiatives is creating new momentum for the San Diego-based company. On the international level, the acquisition by Carl Zeiss AG of Carl Zeiss Vision from private equity firm EQT and its subsequent integration as a business unit of the Carl Zeiss Group puts the German parent company on stronger financial footing and presents new growth opportunities.

The most important development may be the arrival of a new president, Joe Donahoe, an experienced manager who brings an expansive knowledge of the medical side of the optical industry and an enthusiastic attitude to Carl Zeiss Vision.

(L to R), Steve Mitrakos, Joe Donahoe and Claude Labeeuw at Carl Zeiss Vision’s San Diego, Calif. headquarters.

In addition to heading up Carl Zeiss Vision's North American operations, Donahoe, is also responsible for the company’s commercial activities in Australia and New Zealand. Donahoe previously served as president of sales in the Americas for Carl Zeiss Meditec, which markets instruments and surgical products for ophthalmology, dentistry, ENT, neurosurgery and gynecology. He began his career at Humphrey Instruments—now Carl Zeiss Meditec—selling lens analyzers to optical laboratories, before progressing from sales to marketing and customer service and finally to the executive suite. Now, as president of one of Carl Zeiss Vision’s key divisions, he has come full circle as he oversees the company’s ophthalmic lens, laboratory and equipment businesses.

High on Donahoe’s agenda is the launch of i.Scription, a new approach to measuring, designing and dispensing eyewear. Another new initiative is Zeiss Experience, which involves the comprehensive integration of Zeiss products, technology and branding into an eyecare practice.

Last month, VM’s lenses and technology editor, Andrew Karp spoke with Donahoe at Zeiss’s San Diego headquarters about the company’s current direction for its spectacle lens, sunlens, coatings, optical laboratory and equipment businesses. Joining in the discussion were Claude Labeeuw, vice president of marketing and Steve Mitrakos, vice president, retail and managed care. The following are highlights from their wide-ranging conversation.

Andrew Karp: What synergies do you see between the medical and optical sides of Zeiss? How would you leverage those strengths?

Joe Donahoe: Carl Zeiss Meditec plays within the medical model. The business is about 50 percent optometry and 50 percent ophthalmology.

In this space [optical], the diagnostic equipment is important to all our customers. A big segment of our customers are optometrists, and we have a lot of opticians too. There are ways to come full circle with the doctors, to have diagnostic equipment such as iProfiler [an instrument that combines corneal topography, autorefraction and aberrometry that is part of the iScription system], so practitioners have an opportunity to really use our lens portfolio to acquire more of the diagnostic equipment. So we have a bigger, broader reach in the market with quite a bit larger stake in the ground with sales from Carl Zeiss Meditec and our team at Carl Zeiss Vision.

There are a lot of opportunities to work together. I’m really excited to take what I’ve learned at Carl Zeiss Meditec on the eyecare practitioner side and use that to blend the companies and leverage their strengths into one Zeiss.

AK: What’s the game plan for rolling out iScription?

JD: We showed it at Vision Expo West and had

very successful business there, probably double our expectation. We’ve had some early access accounts, but we just started new shipments in January. We’re ahead of our goals.

AK: You’ve begun introducing the Zeiss Experience in the U.S. Can you describe it?

Claude Labeeuw: It’s a visionary concept. We’re leveraging the Zeiss brand, the latest technology, and the look and feel, elevating the customer experience. I always call it bringing the lenses to life. It also involves equipment and selling tools.

Steve Mitrakos: We have a number of Zeiss Experience locations globally, including Palermo, Munich and Frankfurt. Leading opticians see an opportunity in partnering with us.

AK: So it’s a merchandising and design concept?

CL: Yes, we have different levels, one through four, with level four being more or less a remodeling. But it’s not just the look and feel of the practice, it’s also a selling process and training as well. The diagnostic equipment such as the iTerminal and iProfiler really elevates the whole experience a patient has when they come in for an exam. The patient gets a book that goes with them throughout the exam and dispensing process. The optician has a discussion guide that describes the lenses in simple terms. Ideally, it’s to link the lenses to everything else that goes on, including the Rx capture.

AK: Carl Zeiss Vision has recently changed ownership and is now wholly owned by Carl Zeiss AG. Now that your parent company has a bigger cash reserve, what growth opportunities does this present for your business, particularly in the U.S.?

JD: Carl Zeiss AG made a half billion dollar investment to de-leverage the company, bring it back in the Zeiss fold and consolidate it into Zeiss. It’s the largest investment they’ve ever made. They are believers in the business and it fits their total eyecare portfolio.

The investment has been a powerful statement, certainly to our employees and to the market that we’re here to stay. It gives us room to grow. It doesn’t give us an open checkbook, but we’re looking carefully at where we can grow. We’re doing some expansion in our sales organization. We’d never rule out acquisitions. Right now, there’s nothing specific, but everything’s on the table. We’re trying to refine, develop and grow. We’ve got a lot on our plate right now.

There’s a very strong position for Carl Zeiss in this marketplace. We find both practitioners and retail coming to us, and that’s a good thing. They want another strong player in the market. Overall, we’re growing organically, growing as a differentiated company in some of the diagnostic tools for our eyecare practitioners. With that will come some opportunities.

AK: What are your goals for the next 12 months? What kinds of investments are you planning to make, in labs, for example?

CL: The free-form revolution has been a real blessing for our customers. We’ve beaten all our forecasts. We have quite a bit of equipment on order for our labs to increase that capacity, and our expectation is it’s only going to get better. The category is growing rapidly. We were very fortunate to be one of the first big players to jump on that boat. Zeiss Individual has been a nice story, and it fits perfectly with the iScription technology. VSP Reveal optical by Carl Zeiss has been a real success, and even more of a success in the free-form version of that product

“I’m really excited to take what I’ve learned at Carl Zeiss Meditec on the eyecare practitioner side and use that to blend the companies and leverage their strengths into one Zeiss.” —Joe Donahoe, Carl Zeiss Vision

AK: Last year, Zeiss decided to reorganize its U.S. distribution by pulling its products out of competitive labs. What has been the effect of that move?

JD: It was obviously a bold move, but at the time we needed to do that because it seemed like our lenses were being used to convert customers to other lenses in some of the labs. We had a lot of concern and trepidation. But it’s actually created more opportunities for our independent partner labs, it supported them. Our customers actually have purchased more from us than what they did in the past.

CL: Only people who believe in Zeiss can properly distribute the product. You see it in any luxury brand. If the distribution doesn’t fit the brand, then you’ve got to make some tough decisions.

JD: It kind of pressure-tested the brand. We needed to see if it was the lab or the brand that customers wanted. We’ve got a good brand following so we’re pleased with that.

AK: How has Zeiss’s customized lens business been growing?

SM: We have an initiative called 100 Percent Customized Portfolio, which consists of a completely customized lens solution including both progressives and single vision lenses. We break it down into good, better and best products.

A lot of our focus is on consumer point of purchase and advertising materials. The biggest question we get from doctors, aside from “Will you train my staff?” is “We want to help the doctor market their practice to get the message across about why customized lenses are such a powerful change to their vision care.”

Also, several of the top 10 retailers are now free-form ready, and are now signing contacts to be able to produce free-form on-site with our design.

AK: Rx sunlenses are also a key business for Zeiss. What are some of the new technologies Zeiss is bringing to market?

CL: We’re the largest and most innovative sunlens manufacturer in the world. On the plano side, almost all the major sunglass brands use our lenses. We also were the first one to come out with a wrap single vision, which is Spazio.

We now have Zeiss Individual in the wrap version as well, also the other Zeiss free-form customized progressives. We have exclusive relationships with Bolle, Serengeti and NXT.

SM: We developed the PrescripSun program because we believe Rx sunwear has huge untapped potential in the marketplace. We need to make it easy to sell it, and purchase it from the customer side. We need to give practitioners the sales and marketing tools to show the patients and help them carve out frame assortments and merchandising.

The way the program has really helped is that we have these arrangements with the frame partners. We can house all their frames at our Hebron, Kentucky laboratory, so all the jobs can be sent out complete. There’s no “frame to come,” which makes it easy to work with both the independents and the retail side. And the NXT exclusive distribution with Interacast adds the dimension of Trivex, which is a great material. Between frame partners, the lens partners and the logistical operations, we believe we bring real value.

AK: Zeiss provides prescription lenses for Gunnar Optiks’s digital eyewear line. What about with prescription 3D lenses?

JD: We hope to have that happen from the Rx side. People go to Fry’s or Best Buy and get their Gunnar plano glasses. But on the Rx side, in the big box stores and with Zeiss branding, we’ll get them moving to ECPs. ■

akarp@jobson.com