Industry: Of Consolidation and Un-regulated Spaces

Valeant, the unofficial face of consolidation in the aesthetic market, continues to expand its footprint. The company in December announced a deal to acquire Solta Medical, Inc. for approximately $250 million. When the deal closes in the first quarter of 2014, it will mark Valeant's first foray into the medical device realm. Valeant completed its acquisition of Medicis in 2012 and acquired Obagi Medical Products this spring. Additionally, Mentor Worldwide, LLC and Valeant's Medicis division collaborated to form a joint physician loyalty program called the M²VP Program (Medicis-Mentor Valued Partner Program), which will include the Mentor line of breast implant products for the aesthetics market and Medicis' non-reimbursed facial aesthetics products.

Management and personnel changes have taken place at Valeant since it acquired the eye health company Bausch + Lomb this year.

Valeant is not the only aesthetic company to make noteworthy acquisitions. This summer, Merz Aesthetics announced the acquisition of the Swiss pharmaceutical company Neocutis S.A., gaining access to the company's cosmeceutical skin care business. This fall, the company acquired Anteis, another Swiss company. Anteis specializes in the development, manufacture, and commercialization of medical devices in the area of aesthetics, and developed Belotero, which Merz launched in the US in 2012.

According to Jim Hartman, VP and US Head, Aesthetics and OTC at Merz Aesthetics (a division of Merz North America), the company's mandate is to be “a skin company,” complete with injectable and OTC products to support physicians and patients. In an interview shortly after the Neocutis acquisition, Mr. Hartman says the company had been focused on “finding synergy between injectables and topical brands.”

While Merz has emphasized its dedication to dermatology and aesthetics, Mr. Hartman stressed that the Neocutis acquisition did not signal a change in direction for the company. “It's not about changing direction,” he says, “it helps complete who we are. This was a wonderful evolutionary opportunity for us.” While the company will continue to develop its OTC presence, Mr. Hartman says it's not the company's only focus.

Belotero, providing what Mr. Hartman calls “precision reflation,” is the fastest-growing filler. Merz remains dedicated to growing its filler franchise, which also includes Radiesse, he says. “We see ourselves being a leader, if not the leader in the filler side of the market.” He says the company also remains committed to the neurotoxin market and the success of Xeomin.

TAPPING THE UNREGULATED MARKET

While “traditional” dermatology companies continue to emerge—and to consolidate—one company is taking a new tack by targeting the “unregulated” market. Alphaeon, Corp., a wholly-owned subsidiary of Strathspey Crown Holdings, LLC, is a lifestyle healthcare company that launched this fall. Strathspey Crown acquired Evolus, Inc. of Santa Barbara, CA this fall, giving Alphaeon the exclusive license to market, in the US and several international markets, an advanced botulinum toxin type A neurotoxin developed by South Korea's Daewoong Pharmaceutical Co., Ltd. under the brand name Evosyal. Alphaeon also acquired an exclusive US license for the full line of products from Teoxane Laboratories and worldwide licensing rights to TouchMD, an interactive software platform that helps specialty physicians educate patients before, during, and after practice consultation, with the goal of improving practice conversion rates and enhancing the patient experience.

According to Alphaeon Chief Executive Officer Robert E. Grant, the company is focused only on non-reimbursed medical services and procedures and will accept no government funding, thereby avoiding many of the regulations that affect other medical companies and service providers. In addition to bringing to market effective treatments for aesthetic concerns, the company will also focus on eyecare and wellness. The goal, he says, is to realign the “4 Ps” of modern medical care so that Patients and Physicians come before Products and Payors.

The novel model for Alphaeon includes physician membership. While all licensed physicians will have access to the company's products, there will be a number of exclusive services to benefit member physicians. The Alphaeon brand will target individuals seeking non-reimbursed wellness care and preventive services and drive these patients to Alphaeon providers.

“We want to put the health back in healthcare,” Mr. Grant said in a recent interview. “We're also not just looking at sick care and repair but rather, we are trying to transition to a more wellness model. Wellness, beauty, and performance, we believe, is going to be a strong part of how patients look at and perceive healthcare. And Alpahaeon is going to be the brand that delivers those results.”

—Paul Winnington, with reporting by Stephen Daily