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Allergan's Botox still king of aesthetics industry, but rivals eager to tap in


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Allergan's Botox still king of aesthetics industry, but rivals eager to tap in

Allergan PLC's Botox is by far the most recognized and sought-after aesthetic injectable in the U.S. and around the world. But the company's long-time mainstay is facing more and more competition that could test the limits of the peculiar market that is medical aesthetics.

Contrary to most pharmaceutical ventures, the medical aesthetics market is driven by sales to surgeons offering the procedures to their patients who tend to ask for it by brand. The name recognition still held by Botox, therefore, is crucial to its success.

Botox put Allergan on the map, and while companies have always looked to take some of that market share, a couple of newcomers might finally be on the cusp of breaking through.

Former Allergan officials launch generic

In late August, the U.S. Food and Drug Administration accepted a new application from California-based Evolus Inc. for a version of botulinum toxin, the generic name for the wrinkle-erasing aesthetic drug. The company hopes to launch the generic by the spring of 2019, pending FDA approval. The drug, called prabotulinumtoxinA, worked as well as Botox in studies.

The Evolus executive suite has some familiar faces for Allergan: CEO David Moatazedi and chief marketing officer Michael Jafar both previously held executive roles at Allergan.

Another player, Revance Therapeutics Inc., is competing with Allergan with a version of the drug that has shown a longer duration than Botox. Duration is an important factor in the injectable aesthetics space as it allows patients the desired result with fewer treatments.

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If Evolus and Revance are successful, they will join established U.S.-approved Botox competitors Dysport from Ipsen S.A. and Nestlé SA's Galderma SA, and Xeomin from Germany's Merz Pharmaceuticals GmbH. Other entries include Chinese and South Korean products outside the U.S. market, and Myobloc in the U.S. that treats cervical dystonia and is not intended for aesthetics.

Allergan CEO Brent Saunders is mostly unfazed by the encroaching crowd. He said during a Sept. 5 presentation at the 2018 Wells Fargo Healthcare Conference that although Allergan takes its competition seriously, the company has been successfully dealing with rivals outside the U.S. for a long time.

"I think the fact that there'll be four or five potential neuromodulators on the market in the U.S. is probably a good thing for the overall market, because our penetration in this market is single-digits," Saunders said. "This market should expand significantly."

Considering the rise of botulinum procedures in the U.S. for the last two decades, competition seems to have only increased the fervor. Saunders said that investors "don't appreciate the competitive environment for neurotoxins in and of itself."

In the U.S. more than 4.5 million botulinum toxin procedures were performed in 2016, according to the American Society for Aesthetic Plastic Surgery, or ASAPS. The number of injectable aesthetic procedures overall made a 40% jump in five years. At an average procedure cost of $376, the total expenditure for aesthetic uses in 2016 was more than $1.7 billion.

As Allergan's best-selling product, Botox brought in $3.17 billion for aesthetic and therapeutic uses in 2017, almost 20% of the company's entire revenue. By way of comparison, Ipsen made $382 million total with Dysport.

One factor that sets Botox apart is the number of uses for which it has been approved. Its sales figure comprises revenue from treatments for overactive bladder, urinary incontinence, migraines and more. Allergan is also undergoing clinical trials to demonstrate Botox's effectiveness as a treatment for depression, where it has demonstrated success.

Allergan is also looking to expand in the younger market. Millennials have increasingly become a more viable target for Botox and other medical aesthetics. Patients ages 19 to 34 represent 14% of the botulinum toxin market, according to ASAPS, and that growing number is changing the way aesthetics businesses are thinking about their products.

"We do believe the millennials will be more price-sensitive as they come into the category. The strategy we use for the baby boomers doesn't give me the strategy we use for the millennials," Saunders said. "And you'll see some of that really changing with the way we go to market in the coming year or two as millennials become more important to us."

Allergan has also diversified in the aesthetics business by offering its dermal filler Juvederm and double-chin reducer Kybella, among others. Galderma entered the filler space with Restylane, Sculptra and Emervel.

These are all non-surgical procedures with big growth potential to possibly rival botulinum toxins, Saunders said.