One year after its approval by the U.S. Food & Drug Administration for cosmetic use, Botox injections are the most widely performed cosmetic treatment in doctors' offices. In 2002, Allergan (AGN
), which makes the treatment, reported a 43% rise in Botox sales, to $439.7 million. Allergan projects that will rise to at least $540 million in 2003.
Demand for Botox should continue so long as aging baby boomers remain obsessed with preserving their youth. New York City-based market researcher FIND/SVP predicts that spending on anti-aging cosmetic treatments of all kinds will reach about $11 billion by 2007, up from about $7.6 billion in 2002. And while nonsurgical procedures overall have taken a hit amid a tough economy, declining 23% in 2002, they've been rising in recent years, up more than three-fold since 1997, says the American Society for Aesthetic Plastic Surgery.
"TREMENDOUS SHIFT." Plastic surgeons once relied solely on surgery for revenues, but therapies such as Botox, which requires shots every few months, have added another layer of sales. That's good news not just for the surgeons but also for the companies making these treatments -- and potentially investors as well.
Soon, however, Botox may have to fight for shelf space with a number of other products. A new crop of injectable treatments, several of which are already under review at the FDA, will likely be clamoring for attention within the year.
"We're seeing a tremendous shift, where you can achieve results of rejuvenation and correction without cutting the face up," says Hani Zeini, executive vice-president for aesthetics at Inamed (IMDC
), which is one of the world's top makers of breast implants. The Santa Barbara (Calif.) company, which also has a significant business in facial cosmetic products, is in early trials with Dysport, its own Botox-like product that uses higher doses of the same active ingredient botulinum toxin A, but is meant to last longer.
INSIDE THE LINES. So-called wrinkle "fillers" are within even closer reach. But rather than leave Botox behind, plastic surgeons expect to continue using it while adding to their arsenal of anti-aging weapons. "My colleagues that do [use both a filler and Botox together] now get an additive affect," says Dr. Rod Rohrich, chairman of plastic surgery at the University of Texas' Southwestern Medical Center at Dallas and president-elect of the American Society of Plastic Surgeons. "Patients come out looking better, and [the treatment] lasts longer. The filler plumps the area."
Like Botox, fillers such as Restylane and Hylaform, which aren't yet FDA-approved, meet the desire for "beauty in a bottle" rather than under the knife, says Rohrich. However, the products function differently. Botox, which is a diluted version of the toxin that causes food poisoning, paralyzes muscles that cause skin to wrinkle, while the new injectables fill in the wrinkles.
Botox is typically used to smooth brow furrows or lines in the forehead, while fillers are used in treating the lower part of the face, including the "smile" lines around the nose. None are without side effects. Botox can cause allergic reactions, bruising, numbness, and droopy eyelids. Both Restylane and Hylaform may cause redness, itching, and swelling.
LONGER LASTING FIX. The mainstay of fillers has been bovine-based collagen (made by Inamed), but plastic surgeons are excited because new products may cause fewer allergic reactions. They're made of hyaluronic acid, a naturally occurring fluid found in joints and connective tissue, and can last six months or longer per injection, says Rohrich. Collagen, which requires the added first step of allergy testing, lasts closer to three months.
Companies clearly see potential in the new fillers. In an effort to get a foothold in the fast-growing cosmetic-dermatology business, drugmaker Medicis (MRX
), in February agreed to pay $160 million to Swedish drugmaker Q-Med for North American rights for Restylane. The FDA is reviewing Medicis' marketing application for Restylane. Medicis says it expects approval sometime in its fiscal 2004 year, which ends next summer.
Medicis hasn't given sales forecasts for the product, which Q-Med is already selling in 60 countries worldwide. Ken Trbovich, an analyst at C.E. Unterberg, Towbin figures peak sales of Restylane could hit $50 million and add 40 cents in earnings per share. That would be a substantial gain for Medicis, considering its $213 million in sales in fiscal 2002 and $1.96 earnings per share.
"PERMANENT PROBLEM"? Some products will spark controversy. Take Artecoll, made from microscopic plastic beads and cow-based collagen that permanently bind to existing collagen in the patient's skin. Made by Artes Medical, a private company in San Diego, the treatment has been used by plastic surgeons since 1994 in countries outside of the U.S., including Canada.
Earlier this year, an FDA panel voted 4 to 1 to recommend approval of Artecoll, though it won't be used for lip augmentation, where it can cause lumps. Artes CEO Dr. Stefan Lemperle says he expects final approval sometime this summer.
However, many plastic surgeons see Artecoll's permanence as a drawback. "The last thing I want is to have a permanent problem," says Beverly Hills (Calif.) plastic surgeon Dr. Garth Fisher. "It's difficult to get out from under that and correct it." Lemperle contends that the product has "very limited side effects," with one in 10,000 patients experiencing reddish bumps.
As for unevenness, "you can mold it with your finger and take care of it," Lemperle says. Still, it's no small matter for doctors that the permanent nature of Artecoll doesn't inspire repeat visits, as the other fillers would.
COMBO TREATMENTS. With so many products coming out, competition is heating up. Already, Restylane and Inamed's Hylaform are fighting for market share in European and Japanese markets. Inamed is expecting to file an application with the FDA in mid-2003. And while Botox is the dominant product of its kind, with some 89% global market share, figures Allergan, it could get direct competition after Inamed finishes testing its competing product.
Companies are also mulling ways to market combination therapies. Allergan said in late March that Botox combined with Restylane doubled the duration of anti-wrinkle effects. Inamed sees Dysport and Hylaform as products that it could market together eventually. Says Inamed's Zeini: "We're well poised to [create a combo strategy] with the products that we have." In 2002, Inamed reported $275 million sales, with facial-aesthetic products making up 27%, or $74 million, of the total. Breast implants and anti-obesity products accounted for the remainder.
While it'll take some time for practitioners and patients to figure out which of the newest treatments work best, overall trends suggest that business of Botox and other injectable cosmetic products will be forever young. Tsao covers biotechnology issues for BusinessWeek Online. Follow The Biotech Beat every week, only on BusinessWeek Online