http://www.icosmed.de Market Forecast Predicts Continued Growth for Aesthetics

1. Market Forecast Predicts
Continued Growth for Aesthetics
By Michael Moretti, Editor
While banks, farms and manufacturing failed during the Great
Depression of 1929 to 1939, the beauty business remained strong and
history promises to repeat itself in 2009. Although recession-strapped
consumers are tightening their belts, the aesthetic industry continues to
expand, albeit at a lower rate than in the past.
60 THE European Aesthetic Guide Spring 2009 www.euroabg.com

2. Historically, the aesthetic industry hasn’t always been lower, which is typical in the early stages of an industry’s
booming. In fact, the 1980s and 1990s started slowly life. In mid 2004, for example, when Medical Insight, Inc.
with laser tattoo removal, laser removal of pigmented and (Aliso Viejo, California, U.S.) released its first Global Aesthetic
vascular lesions and laser hair removal as the primary Market (GAM) Report, total global sales for dermal fillers,
treatments. Laser skin resurfacing was just starting to BOTOX, chemical peels, devices and microdermabrasion
become popular in the mid 1990s, however with long equipment were estimated at $1.4 billion in 2003, with
healing times this ablative procedure was performed on growth of 15.6% per year predicted, resulting in sales of
fewer than 150,000 Americans each year. $2.9 billion in 2008.
Aesthetic surgery was originally the domain of plastic sur- Since then, overall growth remains healthy with a com-
geons, whose primary tools consisted of surgical techniques pound annual growth rate of 10.9% per year from $3.2
to lift the skin. Bovine col- billion in 2007 to $5.4 billion in 2012 (net of breast
lagen was occasionally implant and physician-dispensed cosmeceutical sales).
Overall growth used to plump wrinkles, This forecast is a bit lower than the annual growth of
but the requirement of a 16.8% predicted by GAM IV in May 2007 and the
remains healthy pre-treatment skin test dis- revised 13.5% annual gains forecasted by GAM V in
with a compound couraged many patients. May 2008. It also reflects rising competition coupled with
At this time BOTOX, from a temporary dip in consumer buying power.
annual growth rate Allergan (Irvine, California,
U.S.), had not yet received But that’s hardly bad news, since actual market per-
of 10.9% per year FDA approval for cosmet- formance continues to exceed GAM estimates, as shown
from $3.2 billion in ic use but was increasing-
ly being used off-label to
in Figure 1 below.
2007 to $5.4 billion freeze wrinkles. However, Figure 1: Changes in Total Global Aesthetic Sales Estimates, 2003 - 2012
7000
this application remained
in 2012. relatively limited until the
GAM Sales Predictions in $MM
6000
late 1990s.
5000
In 1996, Q-Med (Uppsala, Sweden) introduced
Restylane, a hyaluronic acid dermal filler that could
4000
smooth out wrinkles without pre-treatment testing. As
usage spread across Europe, interest in injectables grew.
3000
Around this same time, less invasive photonic skin rejuve-
nation procedures emerged. Erbium lasers were largely 2000
replacing carbon dioxide devices for ablative procedures
by offering lighter treatments with reduced downtime. 1000
Lasers that targeted vascular structures began to be re- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
packaged as non-invasive skin rejuvenation systems, May-04 May-05 May-06 May-07 May-08 Dec-08
offering effects such as skin smoothing and evening of the
Source: GAM, GAM II, GAM III, GAM IV, GAM V, GAM VI, Medical Insight, Inc.
complexion. Dermatologists started acquiring devices
and expanding into aesthetics; they were quickly fol- These estimates are based upon the most recently
lowed by other specialists who were eager to satisfy con- reported sales of publicly traded companies, as well as
sumers’ growing appetite for effective, medically-based extensive interviews with physicians, practice managers
treatments. and industry executives.
However, the boom in aesthetic services wasn’t limited Looking at individual market segments, the large pho-
to physicians. In early 1997, the first microdermabrasion totherapy sector will grow the slowest, at just 1.4% per
machine was sold in the U.S., and along with light chem- year through 2012, while the much smaller body shaping
ical peels, facials and other less medically intense treat- sector will expand fastest, at an estimated 21.0% annual-
ments, has since become a staple of aestheticians and ly. This will take photonic devices from $1.1 billion in
cosmetologists. These procedures soon moved into the 2007 to $1.2 billion in 2012 while body shaping systems
growing spa industry, which subsequently spawned the will expand from $290 million to $752 million. Skin tight-
more medically-oriented medispa segment. ening will also see strong gains, at 14.4% per year from
$88 million in 2007 to $171 million in 2012. This makes
In essence, the aesthetic industry as we know it today sense, since light-based hair removal and skin rejuvena-
is only about ten years old. Initially, sales were much tion are mature technologies that most aesthetic practices
62 THE European Aesthetic Guide Spring 2009 www.euroabg.com

3. have already embraced. Device sales depend on prac- Of the smaller market segments, emerging skin rejuve-
tices upgrading equipment and physicians newly entering nation devices will see gains of just 0.4% per year with
aesthetics. Body shaping and skin tightening, on the other the removal of Rhytec’s (Waltham, Massachusetts, U.S.)
hand, are emerging as must-have procedures for serious plasma system from the market.
aesthetic practitioners with the latest systems offering
results not previously attainable. Microdermabrasion equipment sales will rise by 4.8% per
year from $50 million to $63 million, as machine lifecycles
Neuromodulators such as BOTOX and dermal fillers are long and product
will also see strong growth, at 16.0% and 14.7% per innovation will remain
year, respectively, as demand rises for these highly cost- low. Chemical peels will Body shaping and
effective wrinkle reducers. Dermal fillers are expected to
rise from $739 million in 2007 to $1.4 billion in 2012,
similarly maintain slow
growth of 4.5% annually,
skin tightening are
while BOTOX and its equivalents expand from $742 mil- increasing from $55 mil- emerging as must-
lion to $1.5 billion. Physicians are fond of these treat- lion to $69 million and
ments because they involve low capital outlay and liposuction equipment will have procedures
require repeat treatments; patients like them because gain 2.2% per year,
they’re inexpensive and offer almost immediate results. In growing from $58 million for serious aesthet-
fact, as consumers cancel gym memberships and forgo
other non-essential services in an effort to trim budgets,
in 2007 to $65 million in
2012. Both of these tech-
ic practitioners.
many are trading down from higher priced laser treat- niques are mature, with
ments to injectables. Figure 2 shows these trends. limited growth from year to year in patient volume.
Figure 2: Total Global Aesthetic Sales by Market Segment, 2007 - 2012 On a regional basis, North America will remain the sin-
9000 gle largest market for aesthetic products and equipment,
8000 accounting for $2.4 billion in sales in 2007. Over the
7000 next five years, this market region will expand by 12.2%
6000
per year to reach $4.4 billion, as shown in Figure 3.
Sales in $MM
5000
Figure 3: Total Global Aesthetic Sales by Region, 2007 – 2012
4000 9000
3000
8000
2000
7000
1000
0 6000
Sales in $MM
2007 2008 2009 2010 2011 2012
5000
Phototherapy Skin Tightening Emerging Skin Rejuvenation Neuromodulators Fillers
4000
Microdermabrasion Chemical Peels Liposuction Body Shaping Breast Implants
3000
Physician-Dispensed Cosmeceuticals
Source: GAM VI, Medical Insight, Inc. 2000
1000
For the same reason, sales of physician-dispensed cosme- 0
ceuticals are rising. Through 2012, global sales are expect- 2007 2008 2009 2010 2011 2012
ed to expand by 17.8% per year to $1.5 billion from $683 North America Europe Asia Latin America
million in 2007. Physicians like being able to offer patients
Source: GAM VI, Medical Insight, Inc.
one-stop shopping for skincare products and a rising num-
ber of savvy practices have established marketing systems Europe will also maintain relatively high annual growth of
geared towards maximizing product revenues. 12.0%, increasing from $1.2 billion to $2.2 billion. Asia
and Latin America will lag, with growth rates of 10.9%
Sales of breast implants will also post gains, rising by and 9.2%, respectively. Due to the coupling of extremely
9.0% per year from $810 million in 2007 to $1.2 billion in low-cost equipment available from China and other parts
2012. Although plastic surgery procedures have declined of Asia, with limited demand for some procedures such as
significantly in 2008, with some surgeons reporting decreas- breast implants, the Asian market will only rise from
es of more than 60%, breast augmentation remains highly $619 million in 2007 to $1.0 billion in 2012. Although
desirable. Interest in breast size continues to be fueled by the demand for aesthetic procedures in Latin America is high,
media, whose idealized images of the female figure routine- the region continues to be plagued by a weak economy
ly feature large breasts. and low consumer buying power.
THE European Aesthetic Guide Spring 2009 www.euroabg.com 63

4. In this context of expanding product and equipment sales, practices will offer body shaping using newer devices such
patient volume and physician fees will continue to rise. as UltraShape (Yoqneam, Israel), SmartLipo MPX from
Cynosure (Westford, Massachusetts, U.S.) and others.
During 2007, approximately 77 million aesthetic treat-
ments were performed worldwide including phototherapy, Procedure fees will also continue to expand, rising by
skin tightening, emerging skin rejuvenation, neuromodulator 6.0% per year from $29 billion in 2007 to more than
and dermal filler injections, microdermabrasion, chemical $39 billion in 2012. Although many practitioners will
peels, liposuction, body shaping and breast implants. reduce prices in response to competition, and in fact,
Through 2012, this number will expand by 5.5% per year lower product prices in some sectors will contribute to
to reach more than 101 these declines, other segments will receive price support
million procedures. Many that results in an overall cost increase. For example, while
Over the next five of these will be per- treatment fees will fall somewhat for phototherapy, skin
formed on the same tightening, emerging skin rejuvenation, neuromodulators,
years, the terrain patient, as physicians are microdermabrasion and chemical peels, they will rise for
will become more increasingly recommend-
ing combination proce-
dermal fillers, liposuction, body shaping and implants.
challenging for dures (peels plus injec- In procedure fees, the greatest gains, derived mainly
tions plus microdermabra- from an increase in procedure volume, will be felt in the
many, but players sion, etc.) and roughly skin tightening sector, where they will expand by 31%
half of these procedures per year from less than $1 billion in 2007 to $3 billion
with leading edge require re-treatment to in 2012. Body shaping will also expand strongly, both
products and serv- maintain results. from rising treatment volume and increased prices associ-
ated with advanced technology equipment. Body shaping
ices will continue As shown in Figure 4, fees of $2 billion in 2007 will rise by more than 23% per
phototherapy comprised year to $6 billion in 2012. Figure 5 shows these trends.
to thrive. the single largest com-
Figure 5: Global Aesthetic Procedure Fees, 2007 – 2012
ponent of total patient
volume with more than 2007
30 million treatments, followed by microdermabrasion,
with 11 million procedures, dermal fillers and body shap- 2008
ing with 8 million procedures each and neuromodulators
2009
Figure 4: Total Global Aesthetic Procedures, 2007 – 2012
2007 2010
2008 2011
2009 2012
0 5 10 15 20 25 30 35 40 45
2010 Fees in $Billion
2011 Phototherapy Skin Tightening Emerging Skin Rejuvenation Neuromodulators Fillers
Microdermabrasion Chemical Peels Liposuction Body Shaping Breast Implants
2012
Source: GAM VI, Medical Insight, Inc.
0 20 40 60 80 100
Millions of Procedures These represent overall trends; different practices and
Phototherapy Skin Tightening Emerging Skin Rejuvenation Neuromodulators Fillers
companies will each have their own story. Within the pho-
totherapy equipment sector, for example, some manufac-
Microdermabrasion Chemical Peels Liposuction Body Shaping Breast Implants
turers have recently seen sales declines of 20% or more,
Source: GAM VI, Medical Insight, Inc.
while others with more exciting technology have experi-
with 7 million treatments. Procedure growth will be enced double digit gains. Similarly, many medispas
strongest for skin tightening, which will expand by more across the U.S. have begun to close, but some with excel-
than 36% per year to reach 2 million procedures in 2012, lent marketing and patient retention programs are expand-
and body shaping, which will grow by 21% annually from ing. Over the next five years, the terrain will become more
8 million treatments to 21 million. While many body shap- challenging for many, but players with leading edge prod-
ing procedures in 2007 consisted of older endermologie ucts and services will continue to thrive. I
treatments, over the next several years more and more
64 THE European Aesthetic Guide Spring 2009 www.euroabg.com