Learn if investing in the contact lens market is right for you—and get some key tips on the right type of investments to target in this market.

Contact lenses are a well-established e-commerce market. That’s in contrast to selling eyeglasses over the Internet. That’s more complex, as it’s harder for buyers to visualize how they will look in their glasses, and they may think that they will have trouble fitting them.

Still, note that there is also a lot of competition overall not just in the eyeglass business, but in the contact lens market as well.

How Successful Investors Get RICH Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor. How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.  I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

Demand for contact lenses and ocular health care keeps rising

There are two major segments to today’s vision-care market: the $8-billion global market for contact lenses; and the $6-billion market for ocular health, which includes dry eye, contact-lens care, allergies and red eye.

Several factors are driving the growth of both segments:

• a shift to disposable lenses from reusable lenses;
• advancements in specialty lenses combined with increasing demand for multifocal and cosmetic lenses;
• a significant population of undiagnosed dry-eye sufferers;
• increasing use of vision-care products in emerging markets, such as Asia, which have only 3% contact-lens penetration compared to 15% for the U.S.;
• rising consumer access through expanding distribution, including online sales and other direct-to-consumer channels;

Today’s global contact-lens market is dominated by four competitors: Johnson & Johnson, Alcon, CooperVision, and Bausch Health. Johnson & Johnson leads with the biggest market share; Alcon is tied for second with CooperVision. Each of them has about a 22% market share.

Meantime, the contact-lens market has significant growth potential due to technological and demographic changes.

With technological advances, customers are now moving away from lenses that last for weeks or months and need to be cleaned and stored each night. Disposable daily lenses, which are healthier for the eyes, are gaining popularity. They also generate more revenue for contact-lens makers: daily-use lenses represent a quarter of the market, but account for half of the industry’s revenues.

An estimated 5 billion people will identify as nearsighted by the year 2050. That’s half the planet’s projected population. While contact lenses are one way to correct this, they remain uncommon outside the U.S., Western Europe and Japan. That represents significant growth potential for the industry.

Furthermore, new technology is creating new contact lens products such as the toric lens. A toric lens is a contact lens that’s shaped in a particular way. Standard contact lenses have a spherical surface, but a torus, in contrast, is a geometric shape that looks like a donut. The shape of toric contact lenses creates different refractive, or focusing, powers on the vertical and horizontal orientations. The refractive strength increases or decreases gradually as you move around the lens. Toric contact lenses correct for astigmatism issues that arise from a different curvature of the cornea or lens in your eye.

Some companies operate in both the contact lens market and the surgical market

The surgical market now has estimated annual sales of $10 billion and is projected to show growth of 4% a year from 2018 through 2023. It benefits from several growth drivers:

• aging baby boomers and the resulting demand in developed markets for cataract and vitreoretinal procedures. (The latter refers to any operation to treat eye problems involving the retina, macula, and vitreous fluid. These include retinal detachment, macular hole, epiretinal membrane and complications related to diabetic retinopathy.)
• increased access to eyecare in emerging markets where the cataract surgery rate is currently about a quarter of the U.S. rate. Key markets are China, Brazil, and Russia—where greater affluence is leading to increased demand for cataract surgery.

Look for top eyecare stocks that invest in research and development in the contact lens market

Research and development includes the expenses incurred to develop new products or improve the efficiency of existing products. It’s also commonly known as R&D. Today’s best hidden asset is research and development spending.

Companies have to treat this spending as a day-to-day expense, much like maintenance or tax payments. So research spending comes out of the current year’s sales, and it lowers the current year’s earnings—high research spending can make a company appear less profitable than it really is..

But when you do it right, research and development spending pays dramatic long-term dividends. All in all, it helps a company stay ahead of changes in the industry, which should pay off in faster growth in sales and earnings.

Use our three-part Successful Investor approach for all of your investments, including ones in the contact lens market:

1. Hold mostly high-quality, dividend-paying stocks.
2. Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry, Resources & Commodities, Consumer, Finance and Utilities.
3. Downplay or stay out of stocks in the broker/media limelight.

Do you find the contact lens market an attractive option for investing in healthcare?

How do you foresee the growth in vision care and the contact lens market impacting your investing decisions?