Abg Weathering Storm Article

While banks, farms and manufacturing failed during the Great

Depression of 1929 to 1939, the beauty business remained strong and

history promises to repeat itself in 2009. Although recession-strapped

consumers are tightening their belts, the aesthetic industry continues to

expand, albeit at a lower rate than in the past.

Market Forecast PredictsContinued Growth for AestheticsBy Michael Moretti, Editor

THE European Aesthetic Guide Spring 2009 www.euroabg.com60

EAG_spring09.qxp:ABG_ 3/2/09 1:38 PM Page 60

lower, which is typical in the early stages of an industry’slife. In mid 2004, for example, when Medical Insight, Inc.(Aliso Viejo, California, U.S.) released its firstGlobal AestheticMarket (GAM) Report, total global sales for dermal fillers,BOTOX, chemical peels, devices and microdermabrasionequipment were estimated at $1.4 billion in 2003, withgrowth of 15.6% per year predicted, resulting in sales of$2.9 billion in 2008.

Since then, overall growth remains healthy with a com-pound annual growth rate of 10.9% per year from $3.2billion in 2007 to $5.4 billion in 2012 (net of breastimplant and physician-dispensed cosmeceutical sales).This forecast is a bit lower than the annual growth of16.8% predicted by GAM IV in May 2007 and therevised 13.5% annual gains forecasted by GAM V inMay 2008. It also reflects rising competition coupled witha temporary dip in consumer buying power.

But that’s hardly bad news, since actual market per-formance continues to exceed GAM estimates, as shownin Figure 1 below.

These estimates are based upon the most recentlyreported sales of publicly traded companies, as well asextensive interviews with physicians, practice managersand industry executives.

Looking at individual market segments, the large pho-totherapy sector will grow the slowest, at just 1.4% peryear through 2012, while the much smaller body shapingsector will expand fastest, at an estimated 21.0% annual-ly. This will take photonic devices from $1.1 billion in2007 to $1.2 billion in 2012 while body shaping systemswill expand from $290 million to $752 million. Skin tight-ening will also see strong gains, at 14.4% per year from$88 million in 2007 to $171 million in 2012. This makessense, since light-based hair removal and skin rejuvena-tion are mature technologies that most aesthetic practices

Historically, the aesthetic industry hasn’t always beenbooming. In fact, the 1980s and 1990s started slowlywith laser tattoo removal, laser removal of pigmented andvascular lesions and laser hair removal as the primarytreatments. Laser skin resurfacing was just starting tobecome popular in the mid 1990s, however with longhealing times this ablative procedure was performed onfewer than 150,000 Americans each year.

Aesthetic surgery was originally the domain of plastic sur-geons, whose primary tools consisted of surgical techniques

to lift the skin. Bovine col-lagen was occasionallyused to plump wrinkles,but the requirement of apre-treatment skin test dis-couraged many patients.At this time BOTOX, fromAllergan (Irvine, California,U.S.), had not yet receivedFDA approval for cosmet-ic use but was increasing-ly being used off-label tofreeze wrinkles. However,this application remainedrelatively limited until thelate 1990s.

In 1996, Q-Med (Uppsala, Sweden) introducedRestylane, a hyaluronic acid dermal filler that couldsmooth out wrinkles without pre-treatment testing. Asusage spread across Europe, interest in injectables grew.Around this same time, less invasive photonic skin rejuve-nation procedures emerged. Erbium lasers were largelyreplacing carbon dioxide devices for ablative proceduresby offering lighter treatments with reduced downtime.Lasers that targeted vascular structures began to be re-packaged as non-invasive skin rejuvenation systems,offering effects such as skin smoothing and evening of thecomplexion. Dermatologists started acquiring devicesand expanding into aesthetics; they were quickly fol-lowed by other specialists who were eager to satisfy con-sumers’ growing appetite for effective, medically-basedtreatments.

However, the boom in aesthetic services wasn’t limitedto physicians. In early 1997, the first microdermabrasionmachine was sold in the U.S., and along with light chem-ical peels, facials and other less medically intense treat-ments, has since become a staple of aestheticians andcosmetologists. These procedures soon moved into thegrowing spa industry, which subsequently spawned themore medically-oriented medispa segment.

In essence, the aesthetic industry as we know it todayis only about ten years old. Initially, sales were much

Overall growthremains healthywith a compoundannual growth rateof 10.9% per yearfrom $3.2 billion in2007 to $5.4 billionin 2012.

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Figure 1: Changes in Total Global Aesthetic Sales Estimates, 2003 - 2012



THE European Aesthetic Guide Spring 2009 www.euroabg.com 63

have already embraced. Device sales depend on prac-tices upgrading equipment and physicians newly enteringaesthetics. Body shaping and skin tightening, on the otherhand, are emerging as must-have procedures for seriousaesthetic practitioners with the latest systems offeringresults not previously attainable.

Neuromodulators such as BOTOX and dermal fillerswill also see strong growth, at 16.0% and 14.7% peryear, respectively, as demand rises for these highly cost-effective wrinkle reducers. Dermal fillers are expected torise from $739 million in 2007 to $1.4 billion in 2012,while BOTOX and its equivalents expand from $742 mil-lion to $1.5 billion. Physicians are fond of these treat-ments because they involve low capital outlay andrequire repeat treatments; patients like them becausethey’re inexpensive and offer almost immediate results. Infact, as consumers cancel gym memberships and forgoother non-essential services in an effort to trim budgets,many are trading down from higher priced laser treat-ments to injectables. Figure 2 shows these trends.

For the same reason, sales of physician-dispensed cosme-ceuticals are rising. Through 2012, global sales are expect-ed to expand by 17.8% per year to $1.5 billion from $683million in 2007. Physicians like being able to offer patientsone-stop shopping for skincare products and a rising num-ber of savvy practices have established marketing systemsgeared towards maximizing product revenues.

Sales of breast implants will also post gains, rising by9.0% per year from $810 million in 2007 to $1.2 billion in2012. Although plastic surgery procedures have declinedsignificantly in 2008, with some surgeons reporting decreas-es of more than 60%, breast augmentation remains highlydesirable. Interest in breast size continues to be fueled by themedia, whose idealized images of the female figure routine-ly feature large breasts.

Of the smaller market segments, emerging skin rejuve-nation devices will see gains of just 0.4% per year withthe removal of Rhytec’s (Waltham, Massachusetts, U.S.)plasma system from the market.

Microdermabrasion equipment sales will rise by 4.8% peryear from $50 million to $63 million, as machine lifecyclesare long and productinnovation will remainlow. Chemical peels willsimilarly maintain slowgrowth of 4.5% annually,increasing from $55 mil-lion to $69 million andliposuction equipment willgain 2.2% per year,growing from $58 millionin 2007 to $65 million in2012. Both of these tech-niques are mature, withlimited growth from year to year in patient volume.

On a regional basis, North America will remain the sin-gle largest market for aesthetic products and equipment,accounting for $2.4 billion in sales in 2007. Over thenext five years, this market region will expand by 12.2%per year to reach $4.4 billion, as shown in Figure 3.

Europe will also maintain relatively high annual growth of12.0%, increasing from $1.2 billion to $2.2 billion. Asiaand Latin America will lag, with growth rates of 10.9%and 9.2%, respectively. Due to the coupling of extremelylow-cost equipment available from China and other partsof Asia, with limited demand for some procedures such asbreast implants, the Asian market will only rise from$619 million in 2007 to $1.0 billion in 2012. Althoughdemand for aesthetic procedures in Latin America is high,the region continues to be plagued by a weak economyand low consumer buying power.

Body shaping andskin tightening areemerging as must-have proceduresfor serious aesthet-ic practitioners.

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Figure 2: Total Global Aesthetic Sales by Market Segment, 2007 - 2012

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Figure 3: Total Global Aesthetic Sales by Region, 2007 – 2012


In this context of expanding product and equipment sales,patient volume and physician fees will continue to rise.

During 2007, approximately 77 million aesthetic treat-ments were performed worldwide including phototherapy,skin tightening, emerging skin rejuvenation, neuromodulatorand dermal filler injections, microdermabrasion, chemicalpeels, liposuction, body shaping and breast implants.Through 2012, this number will expand by 5.5% per year

to reach more than 101million procedures. Manyof these will be per-formed on the samepatient, as physicians areincreasingly recommend-ing combination proce-dures (peels plus injec-tions plus microdermabra-sion, etc.) and roughlyhalf of these proceduresrequire re-treatment tomaintain results.

As shown in Figure 4,phototherapy comprisedthe single largest com-ponent of total patientvolume with more than

30 million treatments, followed by microdermabrasion,with 11 million procedures, dermal fillers and body shap-ing with 8 million procedures each and neuromodulators

with 7 million treatments. Procedure growth will bestrongest for skin tightening, which will expand by morethan 36% per year to reach 2 million procedures in 2012,and body shaping, which will grow by 21% annually from8 million treatments to 21 million. While many body shap-ing procedures in 2007 consisted of older endermologietreatments, over the next several years more and more

practices will offer body shaping using newer devices suchas UltraShape (Yoqneam, Israel), SmartLipo MPX fromCynosure (Westford, Massachusetts, U.S.) and others.

Procedure fees will also continue to expand, rising by6.0% per year from $29 billion in 2007 to more than$39 billion in 2012. Although many practitioners willreduce prices in response to competition, and in fact,lower product prices in some sectors will contribute tothese declines, other segments will receive price supportthat results in an overall cost increase. For example, whiletreatment fees will fall somewhat for phototherapy, skintightening, emerging skin rejuvenation, neuromodulators,microdermabrasion and chemical peels, they will rise fordermal fillers, liposuction, body shaping and implants.

In procedure fees, the greatest gains, derived mainlyfrom an increase in procedure volume, will be felt in theskin tightening sector, where they will expand by 31%per year from less than $1 billion in 2007 to $3 billionin 2012. Body shaping will also expand strongly, bothfrom rising treatment volume and increased prices associ-ated with advanced technology equipment. Body shapingfees of $2 billion in 2007 will rise by more than 23% peryear to $6 billion in 2012. Figure 5 shows these trends.

These represent overall trends; different practices andcompanies will each have their own story. Within the pho-totherapy equipment sector, for example, some manufac-turers have recently seen sales declines of 20% or more,while others with more exciting technology have experi-enced double digit gains. Similarly, many medispasacross the U.S. have begun to close, but some with excel-lent marketing and patient retention programs are expand-ing. Over the next five years, the terrain will become morechallenging for many, but players with leading edge prod-ucts and services will continue to thrive. �

Over the next fiveyears, the terrainwill become morechallenging formany, but playerswith leading edgeproducts and serv-ices will continueto thrive.

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Figure 4: Total Global Aesthetic Procedures, 2007 – 2012

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Figure 5: Global Aesthetic Procedure Fees, 2007 – 2012



Abg Weathering Storm Article

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