Rejuvenating Revenues: Increasing Competition Revives US Facial Injectables Market

2/11/2010

Elective aesthetic procedures were the first to feel the fallout from the credit crisis and subsequent recession that gripped the US in 2008 and 2009. Firms that manufacture facial injectable products—botulinum toxin (BTX), hyaluronic acid (HA) dermal fillers, particle and polymer fillers (PPFs), and collagen fillers—saw growth fall in concert with declining consumer disposable incomes.

2010 is expected to bring some relief to these markets, with early indicators such as Millennium Research Group’s Medtech Confidence Index (MCI) showing that confidence in procedure volumes among aesthetic practitioners is rising. In fact, in 2010 the markets for BTX, HA, and PPF products will begin to recover, and are forecast to grow at high single-digit rates through 2014. Following the 2009 announcement that key manufacturers Johnson & Johnson and Allergan are shuttering their facilities and ceasing manufacturing of the product, the collagen market, unlike the other 3 segments, will undergo precipitous decline; over the past few years, collagen has fallen out of favor among physicians and consumers as a facial injectable option.

Product Proliferation
Competitors that launched devices in 2009, and those expected to launch in the near future, will bolster the growing confidence in facial injectable markets by improving patient and physician brand and product awareness. In the coming months and years, this increased competitive activity will nevertheless act as a double-edged sword: on the positive front, as manufacturers engage in aggressive direct-to-consumer and physician marketing tactics, awareness of and demand for new facial injectable products will grow. Companies that add new products to their portfolios will be able to further boost their sales by offering product bundles, such as BTX and HA dermal fillers. With more and more lower-priced products flooding the market, however, average selling prices will decline. Despite price pressures, the US market for facial injectables will grow from a 2009 value of more than $735 million to exceed $1 billion by 2014.

2009 saw a number of new facial injectable products hit the US market. Perhaps the most anticipated was Dysport, manufactured by Ipsen and sold by Medicis in the US. Dysport is the second BTX product to be approved in the US market and will act as a direct competitor to the previously unchallenged and wildly successful BOTOX Cosmetic from Allergan. In the HA market, Anika Therapeutics launched HYDRELLE, to be distributed by Coapt Systems in the US. Notable 2009 releases in the PPF segment include sanofi-aventis’ Sculptra Aesthetic and the relaunch of Artefill, previously offered by Artes Medical and acquired by Suneva Medical after the former company filed for bankruptcy. In the coming years, competitors like Mentor, Merz Pharmaceuticals, Contura, Prollenium Medical Technologies, Anteis, and Laboratoires TEOXANE are all expected to introduce new product offerings in the US facial injectable market.

New products are not the only factors driving awareness among consumers. Existing competitors are also continually changing their product formulations to enhance procedure outcomes. For example, within the HA dermal filler segment, products with higher concentrations of cross-linked HA will offer longer cosmetic durations. HA dermal filler products that incorporate lidocaine will reduce the pain associated with undergoing an injection. Within the BTX segment, new products will enable physicians to choose products of varying vial sizes along with products from different vendors, some of whom they may already have solid relationships with.

Manufacturers are also finding way to increase sales through product bundling. Competitors that have offerings in more than one facial injectable segment are increasingly promoting the joint use of two or more of their products. The product bundle is typically sold to physicians at a discounted rate. Allergan has been bundling BOTOX Cosmetic and Juvéderm for several years, and the approval of Dysport this year creates the opportunity for Medicis Pharmaceutical to begin bundling Dysport with Restylane. This strategy will drive demand for particular brands and encourage company loyalty among physicians.

Marketing efforts surrounding both the new releases and reformulations of existing products will serve to expand public awareness of procedures and brands. Patients are increasingly aware of facial injectable procedures as a result of direct-to-consumer advertising from both facial injectable manufacturers and nontraditional service providers like medispas. Companies like Allergan actively market their products to consumers through television and radio commercials, print advertising, and interactive media, which foster greater awareness and knowledge regarding the aesthetic procedures available. Medispas are known for actively marketing the treatments and promotions they offer in order to draw more patients into their facility. Such activities promote heightened patient awareness and education, causing more patients to seek facial injectable treatments once they are aware of the benefits they offer.

Price Pressure
As competition intensifies, however, many companies are offering volume discounting to make their product more attractive to physicians and patients. New competitors will also enter the US market, offering products at a lower price compared to the incumbents, which will limit overall market value. In the coming years, manufacturers are expected to continue exerting price pressures on one another, either by lowering list prices or offering volume discounts to physicians and employing product bundling strategies. Although lower prices may be the hinge that opens the door to customer purchases, the discounts will nevertheless dampen revenues. Even so, the demand for new products and formulations will accelerate growth and push market revenues out of recessionary sluggishness. IQ

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