Medical Aesthetics: A Untapped Pharma Market With Incoming Competition
Executive Summary
Medical aesthetics is a unique biopharmaceutical niche that may scare off companies due to the consumer marketing and doctor relationship-building skills needed to compete in this market, but the potential for growth keeps major players engaged and searching for new technology.
Allergan PLC is the dominant player in medical aesthetics with its blockbuster wrinkle-reducing neurotoxin Botox (onabotulinumtoxinA) and portfolio of injectables, implants and other products, but it is not alone. Merz Pharmaceuticals GMBH and Galderma SA also have spent years curating collections of products to entice doctors who are seeing surging interest from patients in non-invasive procedures to improve their appearance.
One of the biggest challenges for all biopharma players in medical aesthetics is to grow the overall market. Allergan's research indicates that about 40 million people are interested in medical aesthetics, but only about 10% of those individuals have pursued treatment. The company expects the market to double in the next five to seven years. Revenue from both invasive and non-invasive treatments is expected to increase at a compound annual growth rate of 10.8%, according to a recent report by Global Market Insights on the worldwide aesthetic medicine market, bringing total revenue for the sector to $18.5 billion in 2024 – most of which will come from non-invasive treatments, rather than plastic surgery. Increased interest in improving physical appearance, rising disposable incomes, the development of less invasive treatments and improved health care facilities will drive global growth.
Unlike therapeutic medicines, where pharmacy benefit managers and other payers stand between drug developers and patients, biopharma companies sell products directly to the dermatologists and plastic surgeons who administer the treatments. This is a cash-pay business where doctors buy injectables and devices that they sell as services to their patients, who increasingly are looking for effective, in-office treatments as an alternative to costly and invasive plastic surgeries. "Patients love being able to come into the office for cosmetic procedures that have minimal downtime and a reasonable price tag," dermatologist Patricia Farris said. "I don’t think we have made surgery obsolete, but there are now many patients who choose injectables over surgery or use them to delay surgical procedures."
Farris, of Sanova Dermatology in Metairie, La., said she saw growth across age groups, including an increasing number of men and younger women.
Top Player: Allergan Adds Adjacencies
Allergan has capitalized on the demographic with double-digit quarterly and annual sales growth for its Botox-led medical aesthetics portfolio, which also includes the double chin-reducer Kybella (deoxycholic acid), the Juvederm line of dermal fillers, breast implants, the Alloderm regenerative medicine products for plastic surgery, and the CoolSculpting body-contouring device.
Botox brought in $3.17 billion in 2017 sales, which was up 13.7% from 2016, and sales for the first three quarters of 2018 totaled $2.63 billion, up 14.2% year-over-year, for both aesthetic and therapeutic uses. The total for the first three quarters of 2018 includes $1.13 billion in Botox Cosmetic sales and $1.5 billion for therapeutic Botox indications. The neuromodulator is approved in the US to reduce the appearance of wrinkles between the eyes, crow's feet at the outer corners of the eyes, and forehead lines. It is also approved to treat overactive bladder, urinary incontinence, spasticity, cervical dystonia, axillary hyperhidrosis, blepharospasm and strabismus, and to prevent chronic migraine headaches.
But Botox Cosmetic is only about half of Allergan's medical aesthetics portfolio in the US, where facial injectables (including Botox), plastic surgery, regenerative medicine, body contouring and skin care brought in $2.04 billion during the first three quarters of 2018, up 17.3% year-over-year. Medical aesthetics was the company's only therapeutic segment in the US to cross the $9 billion mark between January and September.
Senior vice president, US medical aesthetics, Carrie Strom, noted that it was difficult for new entrants to the medical aesthetics market to gain a foothold in the growing market, due to the required investment in R&D as well as manufacturing, which can be complex – particularly in facial injectables. The commercial expertise also can be daunting, because of the need to grow the market itself and remain in close contact with physician customers. One of Allergan's biggest investments in the medical aesthetics space was physician training, Strom said.
Allergan also has increased its investments in direct-to-consumer advertising. Its new digital ventures unit, Moonwalker, launched an unbranded website called Spotlyte in September to educate consumer about medical aesthetics and direct them to dermatologists and plastic surgeons offering non-invasive treatments, such as Botox injections.
Merz: Investing In DTC To Gain Ground
In terms of growing the market, Merz, which sells the Botox competitor Xeomin (incobotulinumtoxinA), has been surprised by the amount of interest from millennials – people in their 20s and early 30s – in medical aesthetics.
Merz Americas CEO Bob Rhatigan said the company's direct-to-consumer (DTC) campaign featuring 63-year-old model Christie Brinkley had been effective in capturing the interest of women in her demographic, but she was also resonating with the millennial generation as well, who see Brinkley as a fashion and beauty icon. Brinkley is a spokesperson and user of both Xeomin and Ultherapy, Merz's device that uses ultrasound energy to lift and tighten the neck, chin and brow, and improve lines and wrinkles on the chest.
Merz's DTC advertising push is part of a multi-pronged effort to boost Xeomin and the rest of Merz's medical aesthetics franchise, which includes the dermal fillers Radiesse and Belotero, Asclera (polidocanol) for sclerotherapy to reduce varicose veins on legs, the Cellfina device to reduce the appearance of cellulite, over-the-counter skin care brand Mederma, the physician-dispensed skin care line Neocutis, and the laser tattoo-removal product Describe PFD Patch. "We went through a major sales force restructure and we organized our field selling teams [in 2017] so they were more product-specific versus generalists," Rhatigan said.
The company also increased its focus on relationship-building with physician customers who use and dispense Merz's medical aesthetics products. Rhatigan said the relationship between aesthetic medicine manufacturers and their physician customers "is really critical, because what we learn and do and decide as a result of that high degree of connectivity with physicians is really a rudder – that's what drives our ship."
Merz, as a private company, does not disclose sales figures for its products. Medical aesthetics is a significant portion of its business, but Merz also has a neuroscience franchise via therapeutic indications for Xeomin – adult upper limb spasticity, cervical dystonia, blepharospasm and adult chronic sialorrhea in the US. The latter indication was approved by the US Food and Drugs Administration (FDA) in July. (Also see "Merz Neurology Business Boosted By Xeomin Sialorrhea OK " - Scrip, 5 Jul, 2018.)
In its 2017/2018 fiscal year ending June 30, the German company’s revenue totaled €1.02 billion, which was on par with the €1.02 billion reported for the 2016/2017 fiscal year, but still below the €1.09 billion in 2015/2016 revenue. The aesthetics and neurotoxins business increased 19% in the most recent fiscal year, and those segments accounted for 67% of Merz's 2017/2018 revenue.
"We are extremely pleased with the results and have started our new fiscal year in a strong position," Rhatigan said. "Based on publicly available information, we believe that Xeomin is by far the fastest-growing brand in the aesthetics toxin space right now."
Galderma: Selling Ipsen's Dysport For Aesthetic Uses
Ipsen praised Galderma, a division of Nestle SA, during its third quarter 2018 earnings call on Oct 25 for Galderma's sales of the neurotoxin Dysport (abobotulinumtoxinA), for which sales increased 15.4% year-over-year during the first nine months of 2018 to $260.5 million across neuroscience and aesthetic indications. Galderma has commercial rights for aesthetic uses in the US, Canada, Brazil and Europe; Ipsen's territories include Russia and the Middle East.
The company has said that it anticipates a 10% per year growth rate for the product driven by both aesthetic and therapeutic indications, and it is taking Dysport into Phase II trials for hallux valgus (bunions) and vulvodynia (vulvar pain), both of which have no approved therapies. Ipsen also has a fast-acting neurotoxin in Phase I and a longer-lasting neurotoxin in preclinical development.
CEO David Meek said during the company's second quarter earnings call in July that aspiring competitors would be "going up against the aesthetic powerhouses, such as Allergan and Galderma. Having a suite of aesthetic products is going to be very important for them to compete along with a significant commercial organization, and price alone will not be a strategy."
Galderma markets Dysport for aesthetic uses within a portfolio that includes the Restylane, Sculptra and Emervel dermal fillers. The Nestle subsidiary also sells the well-established consumer skin care brand Cetaphil.
Galderma's Chris Chapman, vice president and general manager for its prescription business, said in an interview that the company's "primary focus is on the physicians we serve – the dermatologists – and as their practices evolve we offer a full suite of solutions that include both prescription aesthetic as well as consumer" products.
Vice president of medical affairs, Howard Marsh, said Galderma welcomed competition from new market entrants, because "it keeps us on our toes… We don't mind new players coming into the market, because it makes us perform well."
Unmet Needs And New Competition
Two more neurotoxin developers expect to seek FDA approval in 2019 and 2020 for products that will compete with Botox, Xeomin and Dysport. However, these two new products may not satisfy unmet needs in medical aesthetics, such as longer-acting injectables, treatments for sagging necks and other non-invasive treatment options that can help patients delay or avoid plastic surgery.
So, what is being used most now and where should biopharma companies invest in medical aesthetics next? In Vivo spoke with three dermatologists about current products and unmet needs in this space and asked biopharma companies how they are investing in the future.
Devices are a growing area of investment for both Allergan and Merz, who have looked outside of their drug development comfort zones to offer physicians treatments that meet patients' demands.
Dermatologist Rebecca Baxt of Baxt CosMedical in Paramus, NJ, said there is no device that can do what Botox or Juvederm can do, but there is no injectable that can do what lasers or other devices achieve. Laser resurfacing and photofacials cannot reduce wrinkles, but they can reduce red and brown spots, help collagen grow, reverse sun damage and reduce the appearance of pores.
Baxt pointed out, however, that there are no injectables or devices that effectively treat the neck or undereye bags. "We still don't have anything non-invasive that's an alternative to surgery" for the neck, she said, noting that CoolSculpting, Ultherapy and even Allergan's double-chin reducer Kybella (deoxycholic acid) can help, but nothing comes close to the results patients get with plastic surgery. Besides the undereye area and neck, another area of unmet need is neurotoxins that last longer, so that patients need less frequent injections, or topical toxins, so patients can avoid injections altogether.
Will New Neurotoxins Meet Market Demands?
In terms of new neurotoxins, Evolus Inc.'s DWP-450 (prabotulinumtoxinA) is back on track for a potential spring 2019 launch in the US after the company resubmitted its biologic license application (BLA) to the FDA in early August. The agency issued a complete response letter (CRL) in May related to the initial BLA filing based on chemistry, manufacturing and control (CMC) issues, not safety or efficacy concerns.
DWP-450 has demonstrated efficacy and duration of effect that is similar to Botox, so the company will have to find a way through price or marketing strategies – or both – to steal a significant share of the neurotoxin market. DWP-450 will have about a year to gain ground in medical aesthetics market before a potentially longer-lasting product comes to the market. ReVance Therapeutics Inc. believes that its RT002 (daxibotulinumtoxinA), based on Phase III data reported to date, will have a less frequent dosing schedule that will differentiate it from already approved competitors. (Also see "Revance's Long-Acting RT002 Will Have Slow-Moving Impact On Allergan" - Scrip, 5 Dec, 2017.)
Allergan has said its well-known Botox brand will hold up to newer toxins and doubts that RT002 will be truly differentiated, since only a portion of patients in Revance's Phase III SAKURA trials have seen benefits out to six months versus Botox's approved dosing of every three months. Revance intends to submit a BLA for RT002 in 2019 after reporting results from the SAKURA 3 long-term safety trial in the fourth quarter of this year. The study also will provide additional efficacy data to compliment results from prior SAKURA program readouts. The company believes its data support a label that indicates treatment as infrequently as two times per year versus Botox's quarterly dosing. Revance also has an agreement with Mylan NV to develop a Botox biosimilar. However, the partners acknowledge that the product will take a while to develop, given the complexity of copying and manufacturing Allergan's product.
Allergan Defends Its Position
Allergan is working on new aesthetic indications for Botox and has neurotoxin product candidates that offer a rapid-onset, short-duration option as well as a longer-acting candidate and a topical toxin. The company announced during a September 14 investor event that it agreed to pay $195 million up front to acquire
Bonti Inc., whose lead asset is the fast-acting neurotoxin EB-001. (Also see "Allergan Buys Bonti, Releases New Data In Defense Of 'Iconic' Botox Brand" - Scrip, 14 Sep, 2018.)
Allergan sees Bonti's product candidate, which reduces wrinkles within 24 hours and last for two to four weeks, as a sort of gateway drug to Botox. EB-001 can allow patients considering the longer-acting established product to test drive the short-term neurotoxin. It also could be used as an on-demand wrinkle reducer that can provide results on short notice following its first FDA approval, which is expected in 2024.
Allergan also has a topical neurotoxin delivered by microneedle technology and a long-acting injection in early stages of development. Before those candidates reach the market, the company expects FDA approval for a pre-filled syringe Botox product – versus the current product that has to be reconstituted before injection – in 2022. A liquid formulation in a vial for the follow-on product nivobotulinumtoxinA also may be approved in 2022. New Botox indications to contour the neck, define the jaw line and smooth skin are expected to launch between 2023 and 2025.
Merz also is actively looking to add indications to Xeomin's label and bring in new products to its medical aesthetics portfolio. Rhatigan said the company has looked for any biopharma product or medical device able to be used in cash-pay medical aesthetics as opposed to therapeutics or devices that require third-party payer coverage. "We're actively perusing the business development landscape in that space," Rhatigan said, noting that Merz had sold parts of its business – such as its medical dermatology business two years ago – that do not fall into the cash-pay category.
He said many of the assets Merz was looking to potentially acquire were devices and estimated that as much as 75% of available products were devices. He also pointed out that those products had at least one big advantage over biopharma assets. "There tends to be a little bit faster path to market for a device – although it's slowed down in the last 10-15 years, it's still faster than the pharmaceutical or biological market," he said.
This article is part of the Outlook 2019 series – an annual collection provided exclusively to subscribers of Informa Pharma Intelligence publications.