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A new wrinkle for Botox

July 21, 2008 |

When Sue Sullivan goes in for Botox to help with her headaches, she sometimes indulges in a few strictly cosmetic treatments, too. Sullivan, 53, of Maple Grove, pays for headache treatments out of her family’s main budget and taps her bonus for the strictly wrinkle-zapping procedures — everything from Botox and dermal fillers to laser treatments.

But with the slowing economy, Sullivan has held off on certain cosmetic treatments she’d like to try. And she’s unsure whether she’ll be able to maintain her current level of spending — about half of the $3,000 Sullivan spent last year on treatments went for cosmetic care.

“The part that I use in terms of pain management, I haven’t cut back on that,” said Sullivan, a first-grade teacher who receives treatments at Belladerm MedSpa in Maple Grove. “But the part that’s strictly cosmetic — I’m being more careful about that.”

The nation’s slowing economy is softening the market for wrinkle treatments. The makers of products aimed at helping Americans combat the effects of aging say ugly economic trends and sagging consumer confidence are marring sales figures for the year.

The unflattering results have some investors taking a second look at a sector that once looked unblemished — at least in terms of delivering growth.

“It’s not as impervious as we thought it was during the last downturn, and I think that’s because between now and six years ago the market has expanded to a much broader customer base,” said Thomas Gunderson, an analyst with Piper Jaffray in Minneapolis.

“It used to be just the rich, and the rich weren’t as impacted by these things,” Gunderson said. “Now, it encompasses all economic levels, so when the economy fails (the sector) isn’t as resistant to a downturn.”

In bull and bear markets alike, skin keeps on wrinkling. That’s because wrinkles, lines and creases are an inevitable consequence of aging, doctors say, as skin becomes thinner, less elastic and more susceptible to damage.

For decades, cosmetic surgeons have offered patients the chance at smoother-looking skin through face-lift surgeries. But in the past 10 years or so, injected products that temporarily treat wrinkles have become much more popular.

The granddaddy of them all is Botox Cosmetic, the brand name for a form of purified botulinum toxin manufactured by California-based Allergan.

In 1997, surgeons performed 99,196 facelifts in the United States while Botox injections for wrinkles totaled 65,157, according to the American Society for Aesthetic Plastic Surgery. Last year, facelifts came in at 138,153 while patients racked up nearly 2.8 million cosmetic Botox injections.

Within the past five years or so, a growing number of patients also have started receiving “dermal filler” treatments that can be used to treat wrinkles that aren’t helped by Botox. One of the most popular — a product called Juvederm — also is manufactured by Allergan, while other big-name fillers include Restylane from Arizona-based Medicis and Radiesse from California-based BioForm Medical Inc.

“Botox is mostly used on wrinkles (that are) due to muscle action,” said Dr. Themistocles “Sam” Economou of Plastic Surgery Consultants in Edina. “The fillers are used on what we call static wrinkles — wrinkles that are due to aging of the skin.”

Noting the impact of the U.S. economy on demand for Botox, dermal fillers and even breast implants, John Boris, an analyst with Citigroup in New York, cut his firm’s rating on Allergan last week from buy to hold.

“The U.S. aesthetics franchise is largely a cash business that is susceptible to unfavorable economic swings,” Boris noted in a report to clients.

In March, Gunderson and colleagues at Piper Jaffray published a report on the “medical aesthetic market,” including Botox, dermal fillers and cosmetic lasers. Those products largely drove the growth of the retail market for minimally invasive aesthetic treatments from $4.3 billion in 2000 to $8.7 billion in 2006, according to the report.

The bottom line, Gunderson said at the time, was that investors should not take market growth of greater than 15 percent per year as a given. On the contrary, the report projected the facial filler market would grow by about 7 percent per year.

The idea that revenue growth for manufacturers wasn’t inevitable was quickly supported by company earnings reports.

BioForm Medical in May lowered revenue guidance, citing “rapidly declining consumer confidence.” A few days later, Allergan officials described how sales for the company’s elective products had been hit during the first quarter as “the U.S. economy showed signs of softening and consumers adjusted their spending.”

Last week, shares of BioForm Medical, Allergan and Medicis all were trading anywhere from about 20 percent to 33 percent off their price of one year ago.

“The stocks have been beat up disproportionately,” said Gunderson of Piper Jaffray, which makes a market in BioForm Medical securities. “The belief appears to be that people will no longer invest in improved cosmetic looks, but I just find that categorically wrong.”

To Dr. Joseph Gryskiewicz of Gryskiewicz Twin Cities Cosmetic Surgery in Edina, there’s no doubt that the economic slowdown is having an impact. As chairman of the emerging trends committee with the American Society of Plastic Surgeons, Gryskiewicz talks with colleagues across the country who’ve seen their practices slow dramatically.

“This is a luxury item,” he said. “If people can’t afford it, they then put it off.”

Even so, Dr. Jane Lisko, a dermatologist with Associated Skin Care Specialists in Eden Prairie, said she hasn’t seen demand fall off in her practice. And manufacturers continue both to churn out new treatments and to heavily promote old ones.

Just last month, medical products giant Johnson & Johnson announced approval by the U.S. Food and Drug Administration for a new dermal filler. That approval alone could help generate business, doctors say, since Botox Cosmetic and dermal fillers increasingly are being marketed directly to patients.

“If JJ is involved, it’s very important,” said Dr. Steven Hopping, president of the American Academy of Cosmetic Surgery, who practices in Washington, D.C. “There will be a big marketing campaign.”

On Tuesday, Allergan announced that Olympic gold medalists Nadia Comaneci and Mark Spitz — both Botox users — would be part of a new company-backed consumer education campaign to share tips about staying healthy and wrinkle-free.

With such costly marketing in support of other anti-wrinkle treatments, local companies hoping to break into the market could face challenges.

Lifecore Biomedical, a Chaska company that was acquired this year by a private equity firm, disclosed plans in 2007 to develop and commercialize aesthetics products with the Cleveland Clinic.

At the time, the company noted that Cleveland Clinic researchers were trying to address a primary limitation of dermal fillers — that they last for only a limited amount of time — by developing a new hyaluronic acid material that might provide a longer acting filling agent. Hyaluronic acid is a key ingredient in some dermal fillers.

“I would call Lifecore Biomedical one of the premier hyaluronic acid manufacturers in the world,” said Gunderson. “They have not yet entered the … filler market, but it’s not a technology limitation — it’s simply a matter of a clinical trial.”

St. Paul-based Gel-Del Technologies announced in June that it had completed clinical trials of CosmetaLife, a dermal filler injection under development that the company says could be a more effective alternative to currently available wrinkle treatments. If all goes well, the treatment could be available in 2009, the company says.

“We’re involved in discussing licenses for our technology to be sold by a marketing partner,” said David Masters, the founder and president of Gel-Del Technologies. “Nobody is slowing down on that front. If anything, there’s a huge amount of competition that we see amongst all the players, and the people who want to be players.”

Back at Belladerm MedSpa in Maple Grove, Sue Sullivan said that when she first tried Botox she was afraid she wouldn’t look like herself. She also worried it would diminish the facial expressions that are key to handling kids in the classroom.

Now, she’s a big believer in the treatments and is hopeful that insurance companies some day will at least cover her Botox injections for pain relief from headaches. Currently, Botox is not indicated for such a use, although Allergan is expected to release results in September from studies of patients with chronic daily headaches.

In May, the St. Paul-based American Academy of Neurology published guidelines saying that the protein at the heart of Botox hasn’t been shown in studies to work on headaches. And financial analysts have voiced skepticism about whether Allergan’s forthcoming study results will support an indication for chronic daily headache.

But Sullivan remains a believer.

“Every time I try to cut back I end up with terrible headaches,” she said. As for dermal fillers, Sullivan said: “I’d like a little bit more of the filler in my jaw line, but I have put that off because of the cost.”

Christopher Snowbeck can be reached at 651-228-5479.

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