The Allergan-Medicis Vanity Pharma Death Match Is About to Get Complicated
Imagine your drug company has the following problems:
A portfolio of expensive, discretionary cosmetic products that Medicare and Medicaid won't reimburse for; it's under investigation by the Department of Justice for alleged off-label promotion; the recession is crimping consumers' desire to spend money on non-essential drug products; and the marketplace is only becoming more crowded with competitors.
Sounds awful. Unless you're Allergan -- maker of wrinkle-killer Botox and skin-fold-filler Juvederm -- a company that is in precisely this position and yet is growing like gangbusters. Allergan sales were $1.1 billion in the last quarter, up 20 percent on the year before.
(The DOJ probe -- which is looking at whether Allergan promoted Botox for headaches even though it is not approved that -- is currently projected to cost the company $35 million.)
Allergan isn't alone. Its most famous competitor is Medicis, which makes Restylane and Perlane (fillers that compete with Juvederm). Its second quarter revenue was $132.5 million, up 22 percent.
Welcome to the recession-proof world of "medical aesthetics." It's different from major pharma. That picture of a flawless babe at the top of this post isn't a Medicis ad -- it's the cover of the company's annual report.
Allergan and Medicis have been locked in a highly profitable death-match for several years, with both companies bringing out me-too versions of the others' products, just like Coke and Pepsi. Consider:
- Medicis is waiting for the FDA to approve Reloxin, a rival to Allergan's Botox.
- In addition to fillers and Botulinum toxin products, Allergan will soon launch an Rx acne product, Aczone, which will no doubt steal a few scrips from Medicis' star brand, Solodyn.
- Medicis recently acquired LipoSonix, which makes a "body sculpting" product. Allergan already had the Lap-Band stomach restricter.
The market is being complicated further by the entry of Johnson & Johnson, which just launched Evolence, another dermal filler. J&J is the newcomer to the field, and it will have a lot of catching up to do, culturally and economically.
But with growth rates of plus-20 percent even in a recession, this entertaining fight will only end the day that America's Baby Boomers put aside their vanity and decide to age gracefully -- i.e. never.