J&J Buys Mentor, Gets into Aesthetics
The depressed economy has hit all medtech stocks, but some harder than others, in particular, those that rely on nervous consumers to pay out of pocket for elective procedures, namely, medical aesthetics, and refractive surgery. J&J was thus able to acquired breast-implant manufacturer Mentor for much less than it would have had to pay a year ago, when it was first rumored to be looking to get into the aesthetics market.
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Signs point to a suppressed market for all aesthetics products for at least the remainder of 2009, but there's some evidence that dermal fillers have escaped the worst effects of the economic downturn. The American Society of Plastic Surgeons reports that while there was a 5% decrease in facelifts in 2008, the use of hyaluronic acid fillers was up by 6%, although dermal filler sales started to take a hit in the final quarter of the year.
The aesthetics industry is becoming increasingly competitive and there are very few intellectual property barriers to entry; as soon as one company develops a new wrinkle-reducing device, it's not long before others come up with something that sounds similar. Sales and marketing account for the biggest costs of medical aesthetic companies, and because a number of the newer one-product companies now find themselves bumping into their competitors in physicians' offices and at trade shows, consolidation in the industry appears to be in order. In this challenging environment, the recent merger of skin tightening company Thermage with skin resurfacing firm Reliant is designed to create a stronger competitor.
Although no major breakthroughs were reported at this year's American Academy of Dermatology meeting, participants emphasized ongoing progress in existing aesthetic technologies. The dermal filler market proved to be one of the most dynamic topics. Although growth is expected to slow somewhat in the next three years, the worldwide market for dermal fillers is projected to continue to grow at double digit or near double-digit rates, approaching $950 million by 2010.