April 11 (Bloomberg) -- Shares of Bausch & Lomb Inc. fell the most in five years after the contact lens maker stopped shipping a cleansing solution linked to a rare fungal infection that can cause blindness.

The shares dropped as much as 21 percent. Bausch & Lomb suspended the solution ReNu with MoistureLoc, its fastest growing product for cleaning contact lenses, after the U.S. Centers for Disease Control and Prevention said it was reviewing reports of 109 cases of suspected fungal keratitis. Wal-Mart Stores Inc., Walgreen Co. and Rite Aid Corp. stopped selling the product.

Of 30 cases reviewed so far, 26 involved wearers of soft contact lenses who were using Bausch & Lomb's ReNu products, the Rochester, New York-based company said. While ReNu with MoistureLoc accounted for $45 million in 2005 sales, other products in the ReNu line may also be tarnished, said Michael Weinstein, a J.P. Morgan analyst in New York, in a note to clients today.

``Halting lens-care sales in the U.S. represents a worst- case scenario of sorts, reminiscent of Johnson & Johnson's 1982 Tylenol scare,'' Weinstein said. He called the solution Bausch & Lomb's ``flagship product within the company's most profitable segment.''

J&J recalled 31 million bottles of Extra Strength Tylenol in 1982 after seven people died of poisoning by cyanide introduced into pill bottles on store shelves. The company subsequently packaged the pills in tamper-proof containers. The incident became the textbook case for product-crisis management after the medicine quickly recouped lost sales, partly because of the safety steps.

Market Leaders

More than 30 million Americans wear contact lenses, according to the St Louis-based American Optometric Association, representing 34,000 optometrists, students and technicians. According to Alcon Inc., the largest eye-care company with 2005 sales of $4.4 billion, Bausch & Lomb and Alcon each account for about 26 percent of the U.S. market for contact-lens solution.

Bausch & Lomb, a 153-year-old maker of optical products, gets 23 percent of its sales from lens-care products and 30 percent from contact lenses, according to its 2004 annual report. The company had 2004 sales of $2.2 billion.

The shares fell $8.41, or 15 percent, to $49.03 at 4:15 p.m. in New York Stock Exchange composite trading, after dropping as low as $45.50. Today's decline was the biggest since a 36 percent plunge on Aug. 24, 2000, when the company reduced its earnings forecast and fired Chief Executive Officer Carl Sassano. Analysts at First Albany Corp., Robert W. Baird & Co., Piper Jaffray & Co. and J.P. Morgan issued downgrades today.

Alcon, Advanced Medical

The stock has lost 29 percent this year. Bausch & Lomb stopped selling the contact lens product earlier this year in Singapore and Hong Kong following an unusual increase in the fungal disease. The company also delayed filing its 2005 financial report and expects to restate results from 2001 through 2004 and for the first two quarters of 2005, pending an investigation by the company's audit committee.

Shares of rival producers Alcon and Advanced Medical Optics jumped. Alcon, based in Hunenberg, Switzerland, and 75 percent- owned by Nestle SA, jumped $2.80, or 2.8 percent, to $104.02 in New York Stock Exchange composite trading.

Advanced Medical Optics, the Santa Ana, California-based, maker of the competing Complete and UltraCare lines of contact lens solutions, gained $3.01, or 6.6 percent, to $48.48 in New York Stock Exchange composite trading.

Wal-Mart, Walgreen

Wal-Mart, the world's largest retailer, based in Bentonville, Arkansas, will stop selling ReNu with MoistureLoc ``pending further tests'' by the CDC, said spokesman Kevin Gardner in an e-mailed statement.

Walgreen spokesman Michael Polzin said in an interview that the biggest U.S. drugstore chain, based in Deerfield, Illinois, will also remove the product from its shelves and is notifying stores today.

No. 3 U.S. drugstore chain Rite Aid, based in Camp Hill, Pennsylvania, will remove the Bausch & Lomb product form its stores in the next 24 hours, said spokeswoman Jody Cook in an interview.

Bausch & Lomb has no estimate how long shipments may be halted, spokeswoman Meg Graham said yesterday. Graham didn't return calls today seeking additional information and didn't respond to a request for an interview with Chief Executive Officer Ron Zarrella, 56, the former General Motors Corp. executive vice president who has been at the Bausch & Lomb helm since 2001.

The U.S. Food and Drug Administration didn't declare the Bausch & Lomb action a recall. The agency declined to comment further as it investigates the matter, said Susan Cruzan, an agency spokeswoman, in an e-mailed statement.

Eye Fungus

The eye fungus can cause severe corneal infections that can lead to blindness, according to the American Optometric Association. Symptoms include sudden blurred or fuzzy vision, red, irritated eyes, pain and sensitivity to light.

Some patients reported significant vision loss and needed corneal transplants, the FDA said in a statement yesterday. Contact lens users may want to ``rub and rinse'' their lenses to reduce the risk of germs and infection rather than just immersing them in cleanser, the agency said. The source of the infection hasn't been identified, the FDA said.

``Until now, fungal keratitis has been rarely reported in the healthy soft contact lens-wearing population,'' the optometric association said in a note on its Web site.

``There is not yet enough evidence to suspend the use of the product or to withdraw it,'' said Acting FDA Commissioner Andrew von Eschenbach in an interview today on the television network CNBC. ``We want patients to be aware of the concern.''

Corneal Transplants

Antifungal drugs can be used to treat the infection and surgery may be necessary, depending on the amount of damage to the eye, according to the optometric association. Alcon's Natacyn is the only approved topical treatment for fungal keratitis and is often effective against strains like Fusarium, according to the association.

Eight people who contracted the infection needed corneal transplants, the Atlanta-based CDC said. Two of the 30 patients with eye infections investigated by the CDC didn't use contact lenses and two others didn't remember which cleansing solution they used, the agency said.

The solution itself doesn't appear contaminated, said Art Epstein, chairman of the contact lens and cornea section of the optometric association, in a phone interview today. The product passed tests conducted so far and more work is still under way, he said.

If the ReNu solution is involved, ``somehow the product isn't doing what it is supposed to do, which is disinfecting appropriately in a real-world setting and protecting the eye,'' Epstein said. ``At this point, it's just speculation.''

(Bausch & Lomb scheduled a conference call for 8:30 a.m. New York time tomorrow at (1) (913) 981-5542 from the U.S., also available on the company's Web site, http://www.bausch.com.)

To contact the reporter on this story: Juliann Walsh in New York at jwalsh10@bloomberg.net.

Last Updated: April 11, 2006 17:06 EDT