Hello and welcome to the Alcon Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to your host today, Karen King. Please go ahead, Ma’am.

Welcome to Alcon's fourth quarter sales update and full year 2019 conference call. We issued a press release at 20-F yesterday, and posted a supplemental slide presentation a few hours ago, to our website to enhance today's call. You can find all three documents in the Investor Relations section of our website at www.investor.alcon.com. Joining me on today's call are David Endicott, our Chief Executive Officer; and Tim Stonesifer, our Chief Financial Officer. Our press release, slide presentation and discussion will include forward-looking statements. We expressly disclaim any obligation to update forward-looking statements as a result of new information or future events or developments except as required by law. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements. Important factors that could cause our actual results to differ materially from those in our forward-looking statements are included in Alcon's earnings press release and Form 20-F annual report on file with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov. Included in the press release are selected non-IFRS measures, Company management uses these measures as aids in monitoring the Company's on-going financial performance from quarter-to-quarter and year-to-year on a regular basis and for benchmarking purposes. Non-IFRS financial measures used by the Company may be calculated differently from and therefore may not be comparable to similarly titled measures used by other companies. These non-IFRS financial measures should be considered along with, but not as alternatives to the operating performance measures as prescribed per IFRS. Please review the financial tables provided in the press release and our filings that reconcile such non-IFRS measures to directly comparable financial measures presented in accordance with IFRS. In just a few moments, we will be discussing net sales results for the quarter and year-to-date. In our press release, we provide a table that shows both reported net sales growth and constant currency growth. So you can see the impact of foreign currency fluctuations. For discussion purposes our comments on net sales growth during opening remarks will be expressed in constant currency. And with that, I'll now turn the call over to David.

Thanks, Karen. And good afternoon to you all. Welcome to today’s call. As we wrapped up our first calendar year, I’m pleased to report that we’ve accomplished a lot, and we have ended the year and are really well positioned for the future. I’ll start by recapping notable highlights from 2019 in recent months, including an update on our new launches and some perspective on market dynamics. And after my comments, Tim will discuss our sales performance by business and provide you with additional color on the financials in China. I'll wrap up with some closing comments before we move to Q&A. Now as I reflect back on 2019, I'm really proud of what Alcon accomplished in our first nine months of being a new public company. We delivered strong top line results ending the year with 5% sales growth, which was at the upper end of our full year guidance range. We grew core operating income by 4% or 11% on a constant currency basis, and we generated $367 million in free cash flow despite significant spin readiness and separation costs, interest on financial debt and capital for our new Vision Care lines. Now the strong performance was a result of some positive wins and overcoming a few challenges. We start with the headwinds. Foreign currency negatively impacted operating margins in 2019 by 60 basis points. We also had pressure from China tariffs, the uncertainty of Brexit, and a new Japanese consumption tax. And we're still working to offset our flat-to-declining legacy products like contact lens care with our growth drivers. Now as far as the tail winds were particularly proud of several accomplishments in 2019, which were driven by our focused strategy and execution. We made some smart decisions around product flow and our investments are starting to…

Thanks, David. We're pleased to report 6% top line growth in the fourth quarter, and 5% for the full year, marking 13 consecutive quarters of revenue growth. Our U.S. business posted its strongest quarterly increase this year, thanks to new product launches. Surgical sales were up 8% in the fourth quarter, driven by growth across all categories. For the full year, surgical sales are up 7%. Implantable sales of $338 million increased by 17% in the fourth quarter, primarily due to strong gains in PanOptix. As David mentioned earlier, we're seeing high demand for PanOptix in our newly launched countries, Japan and the U.S. and continued strong performance in Europe and APAC countries. For the full year implantable sales were up 9%. Consumable sales of $594 million increased by 4% in the fourth quarter. Demand for cataract and VitRet consumables is aligned with a mid-single digit increase in procedural market growth. Also, recall that consumption tax increased in Japan, pulled forward sales from fourth quarter to third quarter. For the full year, consumable sales were up 6%. Sales from the equipment and other category where $172 million in the fourth quarter, an increase of 10% versus prior year. This was primarily due to the addition of a large refractive order in the U.S. and a good quarter for service revenue and procedural eyedrops. For the full year, equipment and other sales were up 6%. Vision Care sales were up 3% in the fourth quarter and for the full year. Contact lens sales were $460 million up 3% versus the fourth quarter of 2018. The increase was primarily driven by strong demand for our leading product, DAILIES TOTAL1 with growth in both sphere and multi focal. While the product contribution in 2019 was minimal, we have seen very good early reception…

Thanks, Tim. In 2019, we did what we said we'd do. We delivered solid financial results and achieved several important operational milestones, which Tim and I have touched on today. We're harnessing the energy created by the spin-off and building even greater momentum through our transformation all to unlock Alcon’s full potential and to deliver value to all our stakeholders. I spent a lot of time with customers, this is actually one of the things I like to do most and something I consistently hear from customers is that Alcon is back. And indeed, we are back to our sole focus for nearly 75 years and that's eye care. We've gotten really good at understanding the markets we participate in and applying our technical expertise to develop the right solutions. Over the past few years we've focused on building a solid foundation and robust pipeline with success as evidenced by our 13 quarters of positive top line growth. We look forward to new and exciting decade of bringing innovative products and solutions that will drive the best patient outcomes, and advance the eye care industry, and that's a great place to be. So with that operator, we're ready for questions.

Yes, thank you.[Operator Instructions] And the first question comes from Anthony Petrone with Jefferies.

Hi. Great. Congratulations on the quarter. Maybe a couple on IOLs, PanOptix and then maybe just to clean a little bit up on the numbers you gave there on coronavirus. But, the U.S PanOptix launch, just trying to get a sense, you know Dave you mentioned 55% share in the quarter, just wondering where that could go in the U.S. and how pricing specifically is holding up for PanOptix, to follow up on IOL would be you know to what extent is Vivity the launch in Europe baked into guidance? And then I'll have one follow up on the coronavirus. Thanks.

Yes, thanks Anthony. Let me just cover PanOptix. We're pleased with the performance and the uptake right now. It's been well received, I think by surgeons. We've had a good four months of launch through kind of the end of the year, and we did accomplish. I think the share position that we'd hoped to, and so on the quarter as I said it was a 55 share, which had an exit rate obviously that would've been a little bit higher than that. So we expect that to do well. And we have not really had a lot of pricing pressure on it per say. The price remains, I think premium to restore and I think really it's a product that I think is going to speak for itself. The outcomes are terrific so far, and we're kind of excited to keep moving with it. On the Vivity side, we have included Vivity in all of our projections going forward this year so we do have a full European launch in it, and we hope to have a U.S. approval later this year. We'll see when and how that comes through. That is also in our current views. I think you had a follow up on something else.

Yes just on the coronavirus math there, I'm just kind of running through so, 5% of total is China 80% of that is surgical is sort of if you annualize I guess the February impact. I'm wondering if I'm getting this right. But it comes out to maybe a 165 to 170 hit. I just want to make sure that, that’s sort of accurate. And then just in terms of timing, is there an estimate at this point I know the situation is fluid, but some other companies have sort of mentioned you know we think possibly we're looking out to maybe April as we're forecasting and then we'll make an update there. So just a little bit of clarity on the China comments. Thanks. Congratulations again.

Yes. So just to help you out with some of the math. So yes, you're thinking about it in the right framework. I mean, I would take -- you can take the 377 that we did last year, apply a growth rate to that, kind of divide it by 12, and as we said to get you a monthly rate. And as we said in February, we were about 10% of what our internal plans were. So if that were to carry through for the next 10 months or 11 months, you can do that math there. What we have assumed in our numbers, because again, we don't want to speculate. We've assumed that run rate carries through March, and that we've assumed it's sort of back-to-normal run rates in April. So that's the first assumption. The second assumption is really around the lost sales that we see in Q1. We are not anticipating or have not incorporated that as far as getting those sales back, because we feel that the clinics will be full and procedures will not be rescheduled. No, they'll be rescheduled eventually, but, we've assumed that they will not be rescheduled this year, so that's how we sort of came up with the $0.04 for Q1. Again, we don't want to speculate. It's a very fluid situation. We'll continue to monitor it, and incorporate that as we get more information.

Thank you. And the next question comes from David Lewis with Morgan Stanley.

Good morning. Just a couple of questions from me here this morning. First I’m just kind of follow up on China. So if you're not assuming those procedures are coming back, I appreciate you're guiding the five or six constant currency, but an underlying basis, the guidance is actually closer to 6% to 7%. Correct me if I'm wrong, and that's obviously trending in excess of the LRP, so maybe for you or David; A, is that correct? And B, what are some of those drivers? I think we're thinking about P0 and P1 is a significant driver of the business. But to what extent is clearly on Vivity, PATADAY contributing to that sort of at the top end or slightly above the top end of the LRP from a growth perspective, then I have a couple of follow ups.

Yes David. I think on the sales number, we've got most all of the products in there at 5 to 6 top line. So we're guiding that way with the view that we can accomplish that and obviously we're doing that on the back of offsetting legacy businesses that aren't growing superfast with new product flow that is helping us quite a little bit. The China piece you're going to need to take out of that because if we do have a continued slowdown beyond the first quarter, then we'll obviously have an impact against that number. So we haven't really -- we haven't assumed higher than that per say. So we're starting with the annual guidance we think we can make in that five to six range. Obviously, we backed out China, but only the first quarter so far.

Okay. Very helpful. Then maybe just two more quick ones from me. One, just David the PATADAY opportunity, can you just give us any sense of how we should think about it, that product transitions to OTC, how expansive it could be to the addressable market for the product, or any thoughts about impact over the next couple of years? And then just Tim, for margins in 2020, can you give us any relative sense GMs were a little softer in the fourth quarter, we're assuming that may have been Vision, just in terms of as you think about expansion or operating margins into 2020 what's that balance of GM versus the middle of the income statement leverage? Thanks so much.

Yes, David. Just a quick comment on the size. You know we obviously are excited about PATADAY. It's -- we think the market in total is probably approximately 600 million at its maturity. I would say that's a combination of moving about half of that market. 300 million of that is a switch from our ex-status to OTC. So if took the RX volumes and brought them into the OTC market and then charged them basically an OTC price that would generate about $300 million. Now, the pace of that you'd have to model on your own, there are other our OTC switches that may give you some guidance on that piece of it. And our current view is that, that combined with some share gains that we could pick up on our own capitalizing some of our own stuff but also really getting after the rest of market gives us a sizable market opportunity I would say.

And then on the margin point, you are correct. We did see some pressure in Q4 on some of the Vision Care lines that we're installing. As you think about the accretion in 2020, we're going to get some gross margin accretion and then we're going to continue to get operating leverage exits. I’d say it's probably about maybe a third, two thirds somewhere in that range.

Thank you. And the next question comes from Veronika Dubajova of Goldman Sachs.

Hi. It's actually Kara [ph] for Veronika, sorry about that. Just one question on the guidance. So at this point in time, other than obviously coronavirus, what do you see as the single biggest moves in variable between the lower and the upper end of that guidance range, please?

Well, I think it's new product flow. Kara, thanks for the question. I do think that we are excited about our are our pipeline maturing kind of as we as we accept that well obviously we have yet to see how PRECISION1 really performs. I think, we'll get a good view of that near the second -- end of the second quarter once you've got to have an unconstrained run at it. I also think that Vivity performance in Europe will be an interesting opportunity for us, and we have yet to really understand exactly how high that's going to go or what will happen there. So I think we feel good about PRECISION1, sorry I should say DAILIES TOTAL1's, SYSTANE and PanOptix all of which we have a pretty good view of from our own historical work. But, I think some of the newer products we're going to have to see how they do, and that will be in there. The only other variable I would give you on a go-forward is, you know again we had a pretty good assistance from the market in some of the more mature markets last year. So, think reusable contacts for example, last year, the MAT [Ph] was roughly about 1%, 2% growth for a period of time, and then in the fourth quarter it fell off again. So I'm not 100% sure where that goes. And of course we had the contact lens care business, which again tends to be an anchor for us, until we see some stability there. So those are the kind of dynamics, I think we're trying to work against and variables are probably the new product flow.

Thank you. And the next question comes from Sebastian Walker with UBS.

Hi, thanks for taking the questions. I’ve got three piece if I could. So, first on I think thing the questions have got at three please. I could. So first on PanOptix, the 55% market share over the four months, could you just help us with how that's being defined? And then if there is anything in the 17% growth that you want to flag off -- flag is being kind of a one-off in nature in terms of stocking patterns for example. The second question is on the contact lens market overall, some of your competitors are talking about eight very healthy markets driven by the structural shift towards daily wear. Is that something that you expect to continue happening for the next kind of three to five years? And the higher level of growth than what we've seen recently. And then just lastly, a technical one on in the Ocular health business. Could you just comments on what proportion your sales are kind of the declining business and what proportion is the growing business, and where you expect those both to go? Thanks.

Sure. Let me start with the PCIOL definition. So we are obviously thinking about market share in a very specific element of the category of IOL, so we're looking at it relative to multi focal lenses within the foldable lens category. So that's a relatively fine cut. So hence the fairly rapid movement in share. But I think it's the most accurate way to think about it, because it really is a swapping of lenses, it's going on inside of that particular market. Maybe one other piece of information, I think that we get a lot, and that is, if the category itself is really isn't moving a ton on a year, on a yearly basis, so we're still seeing kind of that normal half a share point movement in penetration on PCIOLs and in particular [Indiscernible] view for correcting. That's that's kind of what we'd expected, and so the share gain is what we are looking at, and it is inside of that particular element. On the -- and there wasn't any particular stocking. I don't think it was anything other than our normal course of business. So we don't really stock, because they're used directly into the IOLs and we consign the inventory into the OR, so it’s generally not an issue relative to our output. And then the last one was, market growth structurally. No I think, I think you're right about the market growth that I think everybody's kind of talking about the same thing, which is daily disposals are increasing the value growth of the market and they are doing that by trading people from reusable lenses to DAILIES. I would say, the fourth quarter was a little soft in general, because the total lens market I think grew probably around 2%. That has a lot to do with the Japanese pull forward. So if you look at Japan itself, it was off in the quarter almost 10%. So I think, you see a little bit of odd effect between Q3 and Q4. And if you're thinking about it more in terms of the long run, the long range plan, I think you're going to see consistent growth in the market close to where the M-80 [ph] is moving annual runs right around 5%. DAILIES have been running somewhere in that 8% to 9%, those are value numbers. So I would think that you know it's kind of the way to think about it. The last one was the Ocular health split. And I think the best way that we can give you that information is to say we typically have said that the tier business is about 60% of our revenue there, and 40% is the contact lens care. So if you think about the contact lens care is the probably the more challenged part of our business. That's probably the best way to think about it.

Thank you. And the next question comes from Chris Pasquale of Guggenheim.

Thanks. [Indiscernible] had an unusually large order in the U.S. equipment business this quarter. Could you just quantify that, and kind of frame how you would think about growth in that segment going forward is pretty lumpy this year?

Yes, we did have a very good order from a large customer in refractive. We continue to be the market leader in the refractive space in terms of procedure growth, and I think we feel good about our shares there. I would say that the refractive market is still relatively -- internationally it's pretty good. I mean the Asia markets had historically been growing nicely. U.S. has been pretty flatish, but I guess, I think in general, we've gained a little share along the way. So we've been kind of I would say, low single digits, in a way which we've been thinking about refractive. But that's really all there is to it, and again, refractive for us is, it's a good business, but it is at the -- you know it's a small part of our kind of equipment business I would say.

Thank you. And the next question comes from Matt Miksic with Crédit Suisse.

Hi, thanks for taking the question. So just one on margins, and then I had a couple of quick follow ups on the products comments that you've made. So just looking at the margin goals for this year, I guess, last year ex-currency I guess you were up maybe 70, 80 bips year-over-year or something like that. Is there an element of acceleration that we should look at this year. Is it that 50 to 100 basis points if we were looking at a constant currency basis. You know any kind of color on just trends of leverage and then couple of quick questions on products.

Yes, I would just say this is with regards to FX, when you look at '20 as compared to '19 there's really nominal pressure from an FX perspective. Now again, that assumes at the rate as we took average rate in January, that assumes that those rates all throughout the course of the year. So, you know as far as acceleration, margins will improve over the course of the year. Q1 will have some pressures as we talked about, as you think about some of those stand up costs, some of the marketing spend that I talked about for the new launches. So you should see or we would expect a natural progression over the course of the year with regards to margins and end up in that 17.5% to 18.5% range.

And then -- thanks. And then on the products, just in Surgical, impressive start for PanOptix for sure, and strong surgical equipment. But I just wanted to make sure, we're looking at Q1 and maybe the sequential trends correctly so on PanOptix, is there an element of folks trying at seeing what kind of results they get? And then you expect maybe some settling at least in the near term before it continues to go or. And then on equipment, you mentioned this order, just want to make sure, we're thinking about that right, if you could quantify that or give us some sense of how the sequential numbers or year-over-year numbers should look?

Yes. Let me start with the PanOptix piece. I mean, I think the experience we've had with intraocular lenses is that there'll be a steady trial phase. It will begin to kind of settle in and then the growth will kind of continue on in a way that's relatively organized. I think, I wouldn't say linear, but I don't think it's where you go up and you kind of some kind of over the top bar shape curve before you start growing again. So I do think it's a little bit more steady as she goes, and I would think that's what we see right now. So I don't anticipate any leveling off necessarily other than you get to the upper limits of what you can do with the product you know relative to competition and I think as we've seen in most cases that that happens in that kind of 18 to 24 month frame. So I think that's probably where I'd leave that piece. On the equipment piece and on the equipment other bucket, because I think the growth was solid this quarter. I would point to two other point -- pieces of it that you should keep in mind. The service revenue was relatively strong as was procedural eyedrops. And so, I wouldn't read too much into the refractive order that we got. It was reasonably good. But the -- for the full year, I think you should think about equipment as growing roughly around procedures are relatively flat, but to we had very good equipment here last year. And frankly, it should be a low single digit number on a year-on-year basis. So read the remainder of that as largely service revenue and procedural eyedrops, because I think that's really where it is.

Thank you. And the next question comes from Scott Bardo with Berenberg

Hi there guys, it’s Michael Healy today in for Scott. And thanks for taking my questions. Just a couple on PRECISION1 really, if you can give us a bit of color really on how many machines you’ve installed at the moment and how many you expect to install by the end of the year? And then maybe just some of the speciality lenses? Is this still the plan to launch toric version of PRECISION1 by the end of 2020. And toric in DAILIES TOTAL1 and I appreciate it still might be early, but is there any feeling of what sort of cannibalization in DT1 you might see from the launch of PRECISION1? Thanks a lot.

Yes Michael, I think what on P1, I’m presuming that consignments and or fit sets I should say, and I do think that we've had a pretty good run on fit sets. We've got quite a lot of them out there. We should have the vast majority of the market covered by the end of the quarter with fit sets. It'll be -- I will inch up over the next quarter beyond that, but I would say the 80/20 rule is pretty much covered by the end of this quarter, which is what we've said in the past. So I think that's the way to think about distribution of fit sets. If anybody wants the lens today, they can order it. So we're basically, we've opened it up to any retailer, any practice with or without consignment. So we feel good about where we are relative to supply, but obviously consignments or I should say fit sets are a -- aren't expensive adventure. So we try and put them in where we have definitive commitments, and so we'll work our way through that process in the next 90 days or so. On the Toric lens, we are excited about Toric business. We are continuing to build toric inventory of both DAILIES TOTAL1 and PRECISION1, those are likely late this year with a real full effect next year. But we would like to get him out obviously as soon as possible to complete the family. I do think there's a lot of opportunity in that over the long haul, because DT1 is a very popular product. Patients prefer it. And I think we are -- if you really look at where we're getting hurt in the market, it's the lack of having a toric. And if we can shore that up, I think that helps our business quite a little bit. Lastly, on the cannibalization piece, I'd just say that we are we are really early in the process and I'd be careful about assuming too much around this one. But our early read would be that we don't really see a lot of cannibalization, there’s a little bit, not a lot on DT1. I think more likely we're seeing a little bit more cannibalization of our DAILIES [Indiscernible] plus product which again, I think is what we would have expected given the positioning of those two products relative to the value patient.

And then on a capacity front, we tend to be very sensitive on the capacity communication. So I would just say this, we're putting in more lines this year than we did last year. This will be sort of our peak year, so again that will drive some near-term gross margin pressure as it takes some time to get those lines fully optimized and up and running.

Thank you. And then next question is from Lawry Biegelsen with Wells Fargo.

Hey, good morning guys. Thanks for taking the question. Can you hear me okay?

Yes, yes.

Good, good. One clarification on the guidance, one on PATADAY. So the 3% negative impact in Q1 from Coronavirus. Tim, that's included in the 5% to 6% guidance, so that by my math 55 million or so came back. It would it would represent upside, is that the right way to think about it?

Yes that would be -- that would be the a quarter's worth of revenue growth. So yes. So that would -- we'd still be within our range of 5% to 6%. And again, your math is directionally correct.

Just be careful Larry, though that we are assuming at this point it's not going to come back. So in the watch out right now with the China pieces that, that the hospital system there you know most patients are not going in right now and almost all the Ophthalmology guys have cancelled their surgeries while we're going on with this. So the hospitals, public hospitals run pretty close to capacity most of the year. We have a good private business, which is where we might see some pickup. But I would just be careful in assuming much is going to come back later in the year.

Thank you. [Operator Instructions] And the next question comes from James Gordon with JPMorgan.

Hello, thanks for taking the questions. James Gordon from JPMorgan. Weren’t implantables one on contact lenses, so on implantables and PanOptix, I noted the comment about being a 55% market share after four months. I think you said that is up by 20 percentage points from where you were before you launched the product. So the question is, are you -- are you hoping or planning to be able to expand the market faster for ATLs any quicker now? Or is it a finite market and you already have more than halfway there after four months above the ceiling of where you can get to is only twice what you're where you currently are? So that's the first question. And then just contact lenses, so quite deceleration in Q4. I think you were up from 7% last quarter to 3% this quarter. I think in Q3 Japan stock comp was only seen as about percentage point delta. And for other content and peers, it's not been a big impact from Japan. Its maybe one or two percentage points. So is there a reason that there was a bigger deceleration of your business in Q4 or anything you could extrapolate forward there? Thanks.

Yes. Let me take the first one. I think the -- I think you're right -- you're correct in the way you're assessing the market penetration versus share growth. I do think there is --you have a full year of share growth to be observed. So, I think, you know because we started this in September we'll get a full wrap around on whatever the share entry is. And we'll probably have some additional accumulation of share this year, one would hope. So I think the bulk of the growth should again happen this year and slightly into the following, which again is kind of that 18, 24 month timeframe we've talked about to get to the peak share. I do think that you are going to see most of the market take shape for us with PanOptix on a share basis, not a expansion basis. So, we haven't seen a ton of expansion. We saw a little bit in the fourth quarter, which could have been pent-up patients waiting for this. We'll see what happens going forward. But on a year-on-year basis the moving annual penetration is pretty much as we typically expected. It's in that kind of half a percentage point of penetration growth and that's fairly consistent with what has been over the years. On the contact lens piece, you're also correct that it is -- there is about a percentage point of Japanese movement here. And I would say that the contact lens piece is a little bit stronger than it's reported as because of that. But it was a little bit weaker, I would say on two fronts. One is a reusable lenses for us and we're particularly soft on the market and we did lose a little bit of share in that market. So, we were a little bit softer there for those reasons. So that's the right way to read it.

Thank you. And the next question comes from Jeff Johnson with Baird.

Hey, guys. Just one follow-up question for me and it would be on Vivity. One, a potential launch in the U.S. or at least a potential FDA approval in the U.S. this year seems a little bit ahead of the schedule we were thinking. Just any update you can provide there on what you're seeing with the FDA? And two, from a pricing perspective, what kind of pricing or where are you positioning pricing in the -- in Europe for Vivity? And how to think about where you might position it in the U.S. for maybe in AT-IOL price point versus a standard monofocal somewhere in between just high level kind of how should we think about pricing? Thank you.

Yes. Jeff, two things. One is, Vivity, we submitted last year to FDA and we expected some kind of a response from them this year. We don't have a timeline that we've talked about yet on that lens. In Europe we have set a price. It is similar to the PanOptix price. So there won't be any, I think trade-off between the two. And I think you should think about those two products that's roughly going to be the same price, plus or minus a little bit on the market we launch. And so that's where we are with those.

Thank you. And the next question comes from Bob Hopkins with Bank of America.

Well, thanks and good morning. Just love to comment on two quick things. First just one last question on coronavirus. Just curious, are you seeing any impact outside of China or you assuming any? And then the other topic I'd love you to offer a quick comment on is just the IOL growth obviously in the quarter was phenomenal and a very strong year, I think around 9% for the total year, but much stronger growth in the back half. Can you give us any rough directional sense what you're assuming for IOL growth in 2020 relative to that 9%? Thanks for taking the questions.

Yes. So as far as impact on the rest of Asia, you know, we have not seen much impact if you look at February sales. So there's been a little bit of impact but not much. We've assumed those trends continue. But again it's too early to tell. We don't want to speculate. But certainly it's not the impact that we talked about in China.

Yes. We're -- and the guidance assumes no impact beyond China. So I think we have to think about it. So, obviously there may be some and we haven't accommodated for yet because we haven't actually seen it yet. So there is something to think about with that. The other pieces just on -- what was the other piece?

Implantable.

The implantables, yes. Just directionally we had very -- obviously we had a back half launch of really fourth quarter launch. On a year-on-year basis, let me just give it to you this way. I think we have a additional half year in Japan. We'll have a full year or almost three quarters wrap around on the United States and we should have approval. We have approval in China, presumably, we get back to business there we should be able to launch maybe second half of this year. So I think in our implantables business that plus Vivity piece we should be able to kind of reproduce a pretty good year. So I would be a little -- I don't want to forecast the individual category for you. But I would say that we feel good about the implantables.

Thank you. And the next question comes from Steve Willoughby with Cleveland Research.

Hi. Thanks for taking my questions. I have two for you. First just on the guidance, and again kind of clarifying some of the comments around China. You made -- I believe you made a comment saying that what you're assuming in February and March will impact you by 3% in the first quarter and $0.04. And if that happens, the EPS number might be closer to the low end of the guidance you gave? I just want to confirm that's what you said. And then I have a follow up question.

Yes. So again, we've assume that the February run rates for China progressed through March. That cost us about $0.04 of EPS pressure. That would take us down to the low end of the range. And then what we've assumed is that it's sort of business as usual from April 1st moving forward. Again, it's very fluid. So we wanted to give you guys some transparency around what we're seeing and what we have decent line of sight to. But we don't think it's prudent to speculate how long this is going to progressed going forward.

Okay. Thank you. And then secondly, just wondering if you had seen any impact to the company from any of the sterilization changes that have happened over the last 90 to 120 days in terms of availability for sterilization services?

Yes. It's a good question Steve. And we have -- I would say that the ETO piece has been the closure of the facilities in Illinois and Georgia, while they don't affect us directly. Indirectly they're putting a lot of pressure on the system. So there is, I think very demand and supply on sterilization services is a little bit difficult right now. So we have been sporadically out of custom packs off and on as we kind of went through last several weeks in the first part of this year. So we are struggling with it. We are working very closely with our vendors on that topic. We hope to have that settled before too long. But again it is a little bit hand to mouth right now.

Thank you. And the next question is a follow-up from Larry Biegelsen with Wells Fargo.

Hey. Good morning guys. Thanks for taking the follow-up. Hey, just, David on PATADAY, I don't think I've heard you talk about how long Alcon has exclusivity. And also could you talk a little bit about the ramp. It seems like a product like this should have a relatively quick ramp. And you talk -- you mentioned that looking at analogs in this space. ZADITOR does about $40 million in the U.S. It would seem PATADAY should do better given the product profile. Is that reasonable? Thanks for taking the follow-up question guys.

Yes. Look I mean, you're not wrong on number of those points. So we'll start with the patent piece. There is no unexpired patent protection on PATANOL. That one expired like in 2015. But for PATADAY there's two remaining patents in the orange book. One in 22 and one in 24. But there is a number of companies who've already filed NDAs and which they've been settled for early entry. So I think we're going to see some near-term entries from folks that want to be in the OTC business. So we'll have to see whether they want that kind of a business or not. But that will be the question we'll have going forward. The ramp itself, Larry, I don't know. I mean I think the -- we've modeled it after a couple of other OTC Rx switches, so you could probably find the same data we've got and give yourself a sense of how fast people will move off of the Rx. A lot of it -- often it's the de-listing from the benefit plan that actually creates the forced movement to OTC and that doesn't happen but once a year usually. So again we're in the wrong part of that cycle. That should usually happen at the beginning of the year. So we'll see whether that can take shape over the next few months. What I do think is going to happen is that we're going to see an allergy season. On the good side of things we made this in time for the allergy season. So I think you're going to see some direct advertising to consumers to make them available. I think it get prescription strength for probably a little bit less than their co-pay. So I think that's the message we're going to get out there early and hope that we can bring that market in.

Thank you. And the next question comes from Ryan Zimmerman with BTIG.

Great. Thank you for switching me in. So just on the PanOptix launch you called out Japan as being recently launched. Can you just help us frame that opportunity? How you're seeing or what you're seeing early on in that launch for PanOptix? And if you're anticipating any additional country applications over the course of 2020? Then I have a follow up on capital allocation. Thank you.

Well, on Japan, we launched in the middle part of the year. It was -- I think very well received and I'm just looking for the Japanese share as I said. I don't think we've ever described that exactly. I would say that we've had a very good run of Iowa performance in Japan. And I suspect that we will see a little bit more of that. There is a little bit of a dynamic in Japan to watch out for which is this change in reimbursement for the consumer or for the doctor. So we're watching that carefully this year. I think that takes shape in April. And I think we've got -- we're going to have to see how that lands. There's still some uncertainty around that. So I'll be careful not to predict too much around Japan other than we get a full year of effective whatever we do in PanOptix. And then on the -- what was the other one.

Capital allocation.

Yes. So I just want to ask the question. So, Tim, I mean, you talked a little bit about your cap allocation strategy. But just between the interest expense, the CapEx and separation costs. How much room do you feel like you have for M&A in FY 2020? And specifically looking out beyond that?

Yes. I mean, as we've talked about before, there's really three components of our capital allocation, right? The organic investment where -- when we do that, well, we do it right. It's good for customers. It's good for shareholders. It's good for us. We do look at M&A and BD&L. What has worked well for us, and I don't think it changes in 2020, is those 50 million to 300 million type deals. Again, we've realized that we can't develop everything. And if there's something out there that we can get at the right price that accelerates our strategy, we'll certainly take a look at it. And then obviously the third component is returning cash to shareholders either through buybacks or dividends.

Thank you. And this morning's last question comes from Richard Newitter with SVB Leerink.

Hi. This is Jamie on for Rich. Thanks for taking my questions. I guess just to kind of piggy back off of that last question. What types of assets in the M&A space are you kind of looking at that are really picking your interest that you really potentially could see as something more needle moving whether it's in the surgical space or in the contact lens and vision care space?

Yes, Jay [ph], we look at just nearly everything that's going on in eye care. And so there's -- I think typically what we're looking for things that we're not already involved in. Although we're always interested in technologies that are going to advance the category. So we've followed for some interest in the second of those. There are a number of technologies in what I obviously call energy sources for most occasions which we think are kind of interesting and different. And as we have a next generation platform we're looking to complement that with some different ideas around it. We've looked a good bit at glaucoma for some time. We continue to see that as a super interesting space one that we could get into fairly easily and one that we've been in and out of over the last several years. So I think we would be interested in something like that. And then we're also continuing to look for in our OTC businesses. Other ways of getting involved in expanding the OTC markets whether that's particularly in the international space where the technologies are not necessary things that we have multi-dose preservative free is one that we're just beginning to get into and that is an important part of what's going on internationally. So we'll work at that as well. There's a number of other things that are a bit smaller and there's some that are kind of quite ambitious, but I would say that we're following nearly everything in the eye care space.

Thank you. And it does conclude the question session; I would like to return the floor to management for any closing comments.

Yes. Just a final remark on the coronavirus. I just want to mention that our primary interest in this one is keeping our associates safe out there and then making sure that the communities in which are affected have the right support as well. So we're watching this one carefully. We are following government advice and advice from the health authorities in those countries. And obviously this is a dynamic situation that we'll continue to follow closely. But principally what we're interested in importantly is to make sure everybody safe out there. So appreciate the interest in that topic and well wishes to everybody who's affected.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.