Changewave Research: Cosmetic Procedures

ChangeWave Research: Cosmetic Procedures

ChangeWave Research:

Cosmetic Procedures Report

Signs of a Slowdown in Growth Rate for Cosmetic Procedures –

But Momentum Still Found in Collagen and Other Dermal Fillers

Overview

A March 2005 Alliance survey on the Cosmetic Medicine industry showed a very strong market, led by Botox procedures and Gastric Surgery. As a follow-up, we went back to Alliance healthcare members the week of September 27 – 30, to take a closer look at where cosmetic medicine is heading. A total of 98 healthcare members participated in the survey, including 56 doctors.

Bottom Line: For the first time, doctor respondents report they’re seeing signs of a slowdown in patient interest for cosmetic procedures. And while 61% say the growth rate is faster than the average growth rate for medical services generally – that’s still down 8-points from previously. Moreover, 37% report the cosmetic procedures growth rate is similar or slower than the average for medical services – up 8-pts from previously.

Where is the momentum within the industry? By a wide margin, doctors report Collagen and other Dermal Filler Procedures to Treat the Face currently have the most momentum. On the down side, Surgical Procedures to treat the Face/Facial Area and Liposuction Procedures to Reduce Body Fat are showing the least momentum.

Dysport still looks like a serious competitor to Botox – if and when it becomes available. In addition, Doctors believe 6-10% of patients using Dermal Fillers or Botox treatments will migrate to Hyaluronic Acid-Based Fillers.

Nearly three-in-five respondents also believe some patients using Dermal Fillers or Botox treatments will migrate to Isolagen – if approved – a 16-point increase over our March survey results.

A Further Look at Key Findings:

· Interest in Cosmetic Procedures Begins to Slow. Although a third of doctors (32%) report a “Significant Increase” in patient inquiries/requests for cosmetic procedures over the past 12 months – that’s down 6-pts since the previous survey. At the same time, 34% say there’s been “No Change” or “A Decrease” – up 12-pts.

· And the Growth Rate Slows. While three-in-five doctors (61%) say the growth rate for cosmetic procedures is faster than the average growth rate for medical services generally – this is down 8-points from March 2005. Another 37% say the growth rate is similar or slower than the average growth rate generally–up 8-pts from previously.

· Procedures With Most Momentum – Past 12 Months. By a wide margin, the survey results show Collagen and other Dermal Filler Procedures to Treat the Face (Change in Net Difference Score = +18) with the most momentum in the cosmetic medicine industry. On the down side, Surgical Procedures to Treat the Face/Facial Area (-19) and Liposuction Procedures to Reduce Body Fat (-14) have the least momentum.

· Dysport Sticking it to Botox? Four-in-five doctors (79%) see Dysport – if approved – capturing at least 6% of the Botox market the first year it becomes available. The consensus estimate is that Dysport can command 11-25% of the market in year one.

· Increased Prospects for Isolagen Process. If approved, three-in-five respondents (59%) now believe that some patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen – a 16-point increase over our March 2005 results. And the consensus estimate is that 6-10% of patients currently using Dermal Fillers/Botox treatment would migrate to Isolagen.

· Hyaluronic Acid-Based Dermal Fillers. While three-in-four respondents (74%) believe there is a market for Hyaluronic (HA) Acid-Based dermal fillers, the consensus estimate has declined slightly regarding the percentage of patients that will migrate to it. The current consensus is that approximately 6-10% of patients using Dermal Fillers/Botox treatments will migrate to HA.

Summary of Key Findings

The ChangeWave Alliance is a group of 6,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

Helping You Profit From A Rapidly Changing World ™

www.ChangeWave.com

Table of Contents

Summary of Key Findings 2

The Findings 4

ChangeWave Research Methodology 9

About ChangeWave Research 10

I. The Findings

Introduction

Total Respondents (n = 98)

Doctors (n=56)

(1) Question Asked: Based upon what you are seeing in your work locale, has there been an increase, decrease, or no change over the past 12 months in patient inquiries or requests for cosmetic procedures?

Doctors
Current
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05 / Doctors
Previous
Survey
May ‘04
A Significant Increase Over Past 12 Months (10% or More) / 32% / 38% / 24%
A Small Increase Over Past 12 Months (Less Than 10%) / 34% / 38% / 51%
No Change Over Past 12 Months / 25% / 22% / 20%
A Decrease Over Past 12 Months / 9% / 0% / 0%
Don't Know / 0% / 2% / 4%

Interest in Cosmetic Procedures Begins to Slow. Although a third of doctors (32%) report a “Significant Increase” in patient inquiries/requests for cosmetic procedures over the past 12 months – that’s down 6-pts since the previous survey. At the same time, 34% say there’s been “No Change” or “A Decrease” – up 12-pts.

(2A) Question Asked: Year over year consumption of medical services in general is increasing by double digits. How would you characterize the growth rate for cosmetic procedures?

Doctors
Current
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05 / Doctors
Previous
Survey
May ‘04
Growth rate for cosmetic procedures is faster than the average growth rate for medical services generally / 61% / 69% / 55%
Growth rate for cosmetic procedures is similar to the average growth rate for medical services generally / 32% / 22% / 37%
Growth rate for cosmetic procedures is slower than the average growth rate for medical services generally / 5% / 7% / 2%
Don't Know / 2% / 2% / 6%

And the Growth Rate Slows. While three-in-five doctors (61%) say the growth rate for cosmetic procedures is faster than the average growth rate for medical services generally – this is down 8-points from March 2005. Another 37% say the growth rate is similar or slower than the average growth rate generally–up 8-pts from previously.

(3A) Question Asked: Based upon the number of patient requests or inquiries you are seeing in your work locale, which of the following cosmetic procedures would you say have increased the most over the past 12 months? (Check All That Apply)

Doctors
Current
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05 / Doctors
Previous
Survey
May ‘04
Botox Procedures to Treat the Face/Facial Area / 68% / 71% / 67%
Collagen and other Dermal Filler procedures to Treat the Face/Facial Area / 48% / 40% / NA
Gastric Surgical Procedures to Limit Eating / 45% / 53% / 39%
Hair Removal Procedures / 34% / 31% / NA
Breast Cosmetic Surgical Procedures / 34% / 31% / 33%
Surgical Procedures to Treat the Face/Facial Area / 29% / 40% / 47%
Varicose Vein Procedures / 25% / 28% / 39%
Liposuction Procedures to Reduce Body Fat / 21% / 36% / 41%
Procedures to Eliminate Scars/Tattoos/Blemishes / 18% / 26% / 37%
None of the Above / 0% / 0% / NA
Don't Know / 7% / 3% / 6%
Other / 4% / 7% / 4%

(3B) Question Asked: And which cosmetic procedures would you say have increased the least over the past 12 months? (Check All That Apply)

Doctors
Current
Survey
Oct ‘05 / Doctors Previous Survey
Mar ‘05 / Doctors Previous Survey
May ‘04
Varicose Vein Procedures / 29% / 24% / 24%
Liposuction Procedures to Reduce Body Fat / 18% / 19% / 22%
Procedures to Eliminate Scars/Tattoos/Blemishes / 16% / 19% / 20%
Hair Removal Procedures / 16% / 17% / NA
Gastric Surgical Procedures to Limit Eating / 14% / 14% / 27%
Breast Cosmetic Surgical Procedures / 14% / 14% / 22%
Surgical Procedures to Treat the Face/Facial Area / 13% / 5% / 8%
Botox Procedures to Treat the Face/Facial Area / 9% / 7% / 10%
Collagen and other Dermal Filler procedures to Treat the Face/Facial Area / 4% / 14% / NA
None of the Above / 4% / 2% / NA
Don't Know / 18% / 26% / 20%
Other / 0% / 2% / 0%

Change in Net Difference Score – Doctors

Current
Survey
Net Difference Score
Oct ‘05 / Previous
Survey
Net Difference Score
Mar ‘05 / Change
in Net
Difference
Score
Collagen and other Dermal Filler procedures to Treat the Face/Facial Area / +44 / +26 / +18
Hair Removal Procedures / +18 / +14 / +4
Breast Cosmetic Surgical Procedures / +20 / +17 / +3
Botox Procedures to Treat the Face/Facial Area / +59 / +64 / -5
Procedures to Eliminate Scars/Tattoos/Blemishes / +2 / +7 / -5
Gastric Surgical Procedures to Limit Eating / +31 / +39 / -8
Varicose Vein Procedures / -4 / +4 / -8
Liposuction Procedures to Reduce Body Fat / +3 / +17 / -14
Surgical Procedures to Treat the Face/Facial Area / +16 / +35 / -19

Procedures With Most Momentum – Past 12 Months. By a wide margin, the survey results show Collagen and other Dermal Filler Procedures to Treat the Face (Change in Net Difference Score = +18) with the most momentum in the cosmetic medicine industry. On the down side, Surgical Procedures to Treat the Face/Facial Area (-19) and Liposuction Procedures to Reduce Body Fat (-14) have the least momentum.

(4) Question Asked: A Botox competitor called Dysport, manufactured by Inamed, is currently in trial. Dysport requires fewer injections for the same results as Botox. If approved, what percent of the Botox market do you think it would command in its first year on the market?

Doctors
Current
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05 / Doctors
Previous
Survey
May ‘04
0-5% / 2% / 3% / 2%
6-10% / 20% / 19% / 12%
11-25% / 34% / 17% / 35%
26-50% / 18% / 21% / 10%
Over 50% / 7% / 7% / 10%
Don't Know / 20% / 33% / 31%

Dysport Sticking it to Botox? Four-in-five doctors (79%) see Dysport – if approved – capturing at least 6% of the Botox market the first year it becomes available. The consensus estimate is that Dysport can command 11-25% of the market in year one.

(5) Question Asked: Are you familiar with the company Isolagen or the Isolagen process?

Doctors
Current
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05
Yes / 32% / 21%
No / 68% / 79%

(5A) Question Asked: Isolagen has pioneered a process, available in England, that extracts fibroblast cells from a patient and manufactures large quantities of them. The duplicated cells are then re-injected into the patient. The treatment could last up to a year and could cost between $7,000 and $10,000. The Isolagen process is currently awaiting FDA approval in the US. Do you see a market for this cosmetic procedure?

Doctors
Current
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05
Yes, 1-5% of patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen / 30% / 24%
Yes, 6-10% of patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen / 20% / 10%
Yes, 11%-20% of patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen / 4% / 9%
More than 20% of patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen / 5% / 0%
Do not see a market for the Isolagen process / 20% / 10%
Don't Know/No Answer / 22% / 47%

Increased Prospects for Isolagen Process. If approved, three-in-five respondents (59%) now believe that some patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen – a 16-point increase over our March 2005 results. And the consensus estimate is that 6-10% of patients currently using Dermal Fillers/Botox treatment would migrate to Isolagen.

(6) Question Asked: Several companies are working on HA (Hyaluronic Acid) based dermal fillers and will eventually market them as a "natural alternative" to animal based collagen fillers. If competitively priced (within 10% of current dermal fillers) do you see a market for this product?

Doctors
Current
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05
Yes, 1-5% of patients currently using dermal fillers/Botox treatments will migrate to HA (Hyaluronic Acid) based dermal fillers / 13% / 7%
Yes, 6-10% of patients currently using dermal fillers/Botox treatments will migrate to HA (Hyaluronic Acid) based dermal fillers / 25% / 14%
Yes, 11%-20% of patients currently using dermal fillers/Botox treatments will migrate to HA (Hyaluronic Acid) based dermal fillers / 9% / 16%
More than 20% of patients currently using dermal fillers/Botox treatments will migrate to HA (Hyaluronic Acid) based dermal fillers / 27% / 34%
Do not see a market for HA (Hyaluronic Acid) based dermal fillers / 5% / 2%
Don't Know/No Answer / 21% / 28%

Hyaluronic Acid-Based Dermal Fillers. While three-in-four respondents (74%) believe there is a market for Hyaluronic (HA) Acid-Based dermal fillers, the consensus estimate has declined slightly regarding the percentage of patients that will migrate to it. The current consensus is that approximately 6-10% of patients using Dermal Fillers/Botox treatments will migrate to HA.

II. ChangeWave Research Methodology

This report presents the findings of a recent ChangeWave Alliance follow-up survey on Cosmetic Medicine. The survey was conducted from September 27 – 30, 2005 and a total of 98 Alliance healthcare members participated, including 56 doctors.