NASHUA, NH – Thanks to the ongoing proliferation of cosmetic applications, nondiode laser component sales in the medical-laser market were up 13% in 2006, reaching $445 million, with another 7% growth forecast for 2007. While diode-laser hair removal still represents the largest application in this market, skin rejuvenation saw a resurgence of sorts, although that is not all good news for the laser companies, given that a number of competing technologies (nonlaser) have made their way into the marketplace.
At the 2006 meeting of the American Society for Laser Medicine and Surgery, for example, hair removal was not the hottest topic; rather, the various approaches to wrinkle removal and skin rejuvenation—which include lasers (fractional and otherwise), intense pulsed light (IPL, radio frequency, plasma, and various combinations thereof—were what the crowd of physicians and nurses seemed most interested in. According to many analysts and industry leaders, both the patient population and the physician customer base interested in using light-based therapies for aesthetic applications are nowhere near saturated.
“We are very enthusiastic about growth opportunities in this space,” said Joseph Caruso, CEO of Palomar Medical Technologies (Burlington, MA). “I’ve been at this for more than 10 years, since we got the first hair-removal indication, and it is such a completely different business than 10 years ago. It seems like every year the enthusiasm of the physician group increases and the decision-making process is a lot easier. Five years ago doctors would lament months over buying a piece of capital equipment. But now they see it works and their patients want it. We absolutely have validation with the medical community that light-based technologies work better than anything else.”
Still, while the general consensus is that while the ability to use lasers (primarily erbium and CO2), IPL, and other sources to treat facial wrinkles and wrinkles of the neck and hands is exciting and continues to be a growing business for these surgeons, there is also much confusion over which approach is “best.” Some physicians say that there is too much competition and too much hype, which makes it difficult for them to know what equipment to invest in. Other concerns include treatment times and a need for a better way to treat deep wrinkles.
Even so, the healthy growth rate of the aesthetic-laser market should continue for some time, according to a presentation by John Calcagnini of CIBC World Markets (Los Angeles, CA) at the annual American Academy of Dermatology meeting in February 2006. Calcagnini, who has covered the cosmetic surgery field for nearly 20 years, says that with reported growth of 26% in 2005, new nontraditional channels for aesthetic-laser products, and emerging opportunities for lasers and light-based technologies in body contouring, fat treatments, and home-use products, the future is very bright indeed for suppliers of medical-laser products.
CIBC estimates the cosmetic laser market (systems sales, not component sales) at $700 million to $1 billion worldwide, noting that it grew 28% to $182 million in the fourth quarter of 2005 alone. Much of this growth is being driven, Calcagnini says, by the success of the systems manufacturers in introducing their products into markets outside dermatology and plastic surgery.
“Market growth began accelerating in 2004 with the emergence of nontraditional markets for cosmetic lasers for hair removal, skin rejuvenation, and body contouring—namely, medi spas, OB/GYNs, family practice practitioners, and internal medicine physicians,” he said.
In fact, Calcagnini speculates that the industry is only seeing the tip of the iceberg with regard to sales growth. In fact, for both hair removal and skin rejuvenation/tightening—by far the market leaders in terms of laser- and light-based aesthetic applications—the changing customer base is driving systems sales to previously unseen heights.
“The issue now is the massive underpenetration in nontraditional channels,” he said. “What is different now is the cycle is probably going to be longer this time because the nontraditional markets are so large and underpenetrated.”
While the primary markets are still hair removal and skin tightening, the big talk at the AAD meeting was full body contouring and fat treatments using light and laser-based technologies combined with radio frequency and even mechanical manipulation, he added. Syneron and Cynosure, for example, both already have body-contouring products, and Dermawave is touting mesotherapy (the practice of using microinjections of conventional or homeopathic medication and/or vitamins into the mesoderm or middle layer of skin to deliver healing or corrective treatment to a specific area of the body) intended for use in conjunction with these devices. Another approach under development involves the use of ultrasound for noninvasive liposuction.
Another potential growth market is home-use products for skin rejuvenation (fading brown spots, shrinking pores, and reducing rosacea and blood vessels in the face) and hair removal—despite the risk for systems manufacturers in alienating their core customers.
“The home-use market has the potential to be very large, but we’ll have to see how it plays out,” Calcagnini said. “We should see a lot of partnering to sell into the consumer channels, and we expect more opportunities (for home-use products) in skin tightening than in hair removal.”
LASIK hits a snag
Despite the continued popularity of LASIK, one surprise in the medical-laser field in 2006 was the downturn in laser vision correction, which impacted excimer-laser sales. Two of the major players in this market—Bausch & Lomb and Alcon—reported lower-than-expected revenues from their refractive-surgery businesses, and VISX revenues declined steadily quarter over quarter during 2006, although the company overall beat revenue estimates for the year by $25 million.
One exception among ophthalmic-laser systems companies was IntraLase (Irvine, CA), which reported $130 million in revenues for FY2006—$40 million more than most analysts expected. The company’s diode-pumped Nd:YAG femtosecond laser systems (Intralase manufactures the 1053-nm sources itself) continue to find favor in Europe and other world markets for LASIK and are catching on in North America as well. Following the annual American Academy of Ophthalmology meeting in Las Vegas, NV, last month (Nov. 11-14), one analyst noted that the IntraLase-enabled keratoplasty approach is “trending toward becoming the standard of care for cutting the flap in LASIK.”
At the same time, however, some were painting a less-than-rosy picture of the LASIK market. Consultant Michael Lachman noted in the Nov. 22 issue of EyeQ Report that “Our conversations with refractive surgeons painted a clear picture of a LASIK market that has not grown in 2006. Most surgeons report LASIK volumes for this year that are in-line with or slightly lower than last year. In some markets, it is clear that the value-priced providers, such as LCAVision’s LasikPlus centers, are taking share from surgeon-owned and premium-priced LASIK practices.”
These sentiments were echoed by reports from Executive Laser Report (www.trends-in-medicine.com), which noted in its Nov. 30 issue that “there was further confirmation of the slowdown in procedure volume year-over-year for Q42006 and Q1 2007—virtually every refractive surgeon (we) questioned said procedure volume will be lower in Q406 than the same period last year. … Doctors don’t know why volume has slowed and are assuming it is the economy, but they say they frankly don’t know. One interesting suggestion is that the initial boost from wavefront is over and procedures are settling back down.”
Several scientific presentations at the AAO meeting indicated that there is also some dissension about LASIK in the ophthalmic community. According to Lachman, during the opening session of the Refractive Surgery Subspecialty Day program several speakers made a strong case in support of surface ablation (PRK, LASEK, and Epi-LASIK) over LASIK for laser vision correction. Vision-correction pioneer Marguerite McDonald even gave a talk entitled, “Why I Hung up My Microkeratome,” in which she pointed out that evolving surgical techniques and post-operative drug regimens are addressing the issues of pain and visual recovery. She also referenced two recent unpublished studies, one by David Tanzer and another by Anelise Wallau that indicate superior wavefront-guided results for surface ablation vs. LASIK.
On the commercial front, one of the most-anticipated product introductions at the meeting was the VisuMax Femtosecond Laser System from Carl Zeiss Meditec (Jena, Germany), considered the first real competitor to the IntraLase system for LASIK. Dubbed “FLEX” (Femtosecond Lenticule EXtraction), the VisuMax approach involves removing a disc of corneal tissue to reshape the cornea as an alternative to excimer laser sculpting. The laser is used to create the front and back surfaces of this lenticule plus a flap to enable removal of the lenticule. At AAO, Zeiss reported results for the first 10 myopic eyes treated with FLEX, and visual acuity and corneal topography outcomes have been better than expected. While the actual product launch is still months away (the system does not yet have FDA or European marketing clearance, although the company hopes to gain both by mid-2007), IntraLase has already filed a lawsuit against Zeiss.
Other business news
One ongoing success story in the medical-laser field is Reliant Technologies (Palo Alto, CA), whose fiber-laser systems have taken the skin-rejuvenation market by storm. Reliant’s Fraxel SR aesthetic-laser system—which has FDA clearance for many protocols and clearance pending for treatment of acne scars and surgical scars-utilizes a 30-W erbium-fiber laser (from IPG Photonics) operating at 1550 nm that works in conjunction with Reliant’s proprietary scanning system to achieve precise resurfacing and remodeling of the skin while minimizing the collateral thermal damage. The system has generated much enthusiasm in the medical community, which has translated into significant sales for Reliant and accounts for much of the upswing in erbium-laser sales in this market in 2006.
In other business news during 2006, one of the biggest stories was Laserscope’s (San Jose, CA) acquisition by American Medical Systems (Minneapolis, MN) for $715 million. Laserscope’s aesthetics business was not considered a strategic fit for AMS, so AMS subsequently sold it to Iridex (Mountain View, CA).