In the 1980’s, a commercial that seemed to run incessantly featured an aging woman – a Linda Evans type – saying the tag line, “I don’t intend to age gracefully. I intend to fight it every step of the way.” It turns out that the rest of us huddled masses also want to fight the ravages of Father Time, even in a recession. According to an annual survey by the American Academy of Facial Plastic and Reconstructive Surgery (AAFPRS), approximately 80 percent of board certified facial plastic surgeons reported an increase in non-invasive cosmetic procedures within the past year among consumers looking to delay the effects of aging and more costly surgeries. Medtech Insight estimates the market for energy-based aesthetic devices (read: lasers) will surpass the $1 billion mark by 2011, double its 2006 level of $510M. http://www.medicaldevicestoday.com/2008/07/energizing-the.html
One might be wrong to view cosmetic treatments merely as a nod to one’s vanity. Many believe that looking younger is as an investment in one’s career. The same survey showed that 75 percent of plastic surgeons said they had treated patients who requested facial plastic surgery to stay competitive in the workplace. The trend applies to men as well as women and is not limited to the U.S. London has named the trend the “City severance surgery,” and The Financial Times wrote of laid-off bankers using their severance packages to rejuvenate their appearance to boost the chance of finding a new job.http://www.ft.com/cms/s/0/cf6420a6-fde6-11dd-932e-000077b07658.html
Of course, improving one’s marketability in the workforce sounds better that admitting surgery to improve one’s marketability in the dating world, and that could bias the survey sample. Taken with a grain of salt, the survey demonstrates that the the market for highly discretionary cosmetic procedures is not as correlated to the recession as one would think.
Earlier this month, the aesthetic laser market had a big moment. Burlington, MA-based Palomar (NASDAQ:PMTI) received FDA approval to market its wrinkle removing device to the home market. The stock jumped roughly 60% the day of the news and hit a one time, 52 week high of $18.94, before settling to its current $15 price. The Company also markets laser treatment for body contouring, acne, warts, hair removal, tattoo removal and likely countless other epidermal imperfections one could think of. The at-home market could add anywhere from $12.5M to $40M in revenue for 2010, according to a Maxim Group analyst.
Palomar maintains that the market for the do-it-yourself wrinkle removal market could be in the billions of dollars, but there will be plenty of competition. The industry seems ripe for consolidation as very little seems to separate the leading players, allowing for for merger(s) of equals. Palomar, with a market cap of $267M is the largest “pure play”, but the profiles of the next largest four companies are striking in their similarities.
Cutera, INC. (Nasdaq:CUTR). Average Daily Volume 115K shares. Market Cap $114M
Syneron Medical (Nasdaq:ELOS) 114K shares. $198M
Cynosure (Nasdaq:CYNO) 106K Shares. $98 M
Solta Medical (Nasdaq:SLTM) 75K shares. $75M
Solta Medical, formed from last year’s merger between Thermage and Reliant, was expected to lead to other deals. In covering the deal for In Vivo, Mary Stuart wrote that “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.” http://sis.windhover.com/buy/abstract.php?id=2008800128
It made sense then and it makes sense now.