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business newsOutlook for Breast Implant, Botox Procedures Is Good News for Allergan
By
Brett Chase
Jul 27, 2011 1:45 pm
A survey of plastic surgeons and dermatologists found that doctors are bullish on demand for more cosmetic procedures in the next year.
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That’s all good news for Allergan (AGN), the maker of Botox and a leader in aesthetic drug products. While rival Medicis Pharmaceutical’s (MRX) Dysport injection continues to chip away at Allergan’s dominant market share, Botox still accounts for about 87% of the market for such procedures, Leerink Swann analyst Seamus Fernandez says.
Leerink Swann just disclosed a survey of doctors that shows an expected 7% increase in breast implant consultations, Botox injections and facial filler treatments over the next 12 months. The survey asked 41 plastic surgeons and 41 dermatologists across the US for their expectations based on current demand and trends they’re seeing.
Plastic surgeons were even more confident about breast implants than they were earlier in the year before a government advisory was issued on safety of silicone products in June. The US report found that the implants are safe but may have problems such as leakage or rupture. More than half the doctors in the survey said they expected no impact on business following the US advisory.
“Plastic surgeons forecast a significant uptick in breast implant consultations” in 2012 and 2010, Fernandez says, “reflecting diminishing concerns post (recent US) advisories on breast implants.”
Allergan reported $319 million in sales from breast implants last year, which was up 11% from 2009 and marked a 3% increase from 2008.
The doctors surveyed represent a group that performs about 500 breast augmentations,1,250 Botox injections and more than 900 dermal filler procedures a month. Some doctors cited a poor economy and slow recovery for sluggish business. But the overall trend has to be positive for both Allergan and Medicis. (Allergan also makes the wrinkle filler Juvederm. Medicis makes a rival product, Restylane.)
The survey shows some continuing recovery for the sale of cosmetic procedures following declines that began with the market meltdown of 2008.
Allergan’s stock was hurt in ‘08, dropping to below $32 a share late in the year. The shares have climbed by more than a third in the past year, trading at $81.62 midday Wednesday. Fernandez recommends buying the stock and has set a 12-month price target in the low $90s.
Medicis shares rose almost 40% this year and traded at $37.13 Wednesday. Medicis CEO and founder Jonah Shacknai has been in the news more recently for a pair of tragedies: the death of his 6-year-old son after a fall at the executive’s mansion and the mysterious hanging death of Shacknai’s girlfriend, which also occurred at the California home. (See Report of Medicis CEO’s Dead Girlfriend Triggers Sell-Off.)
Allergan will update investors on sales trends when it reports second-quarter earnings August 3.
While Allergan’s Botox still dominates Medicis’ Dysport, the survey suggests that the smaller rival could gain several percentage points in the next couple of years -- suggesting more of an 81% Botox to 19% Dysport new-patient market by 2013. Botox is approved for additional uses besides cosmetic treatments, including neck pain and migraine headaches. Botox sales rose 8% to $1.4 billion last year. The company’s largest business is its family of eye-care products, including Restasis, for chronic dry eye.
No positions in stocks mentioned.
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