Medical market: Consumers still rule

For many years in the medical field, lasers were seen primarily as surgical tools for the ablation, cutting, or coagulation of tissue.

Jan 1st, 2006

NASHUA, NH - For many years in the medical field, lasers were seen primarily as surgical tools for the ablation, cutting, or coagulation of tissue. During the last decade, though, some of the most successful medical-laser applications have been noninvasive: selective laser trabeculopasty, skin rejuvenation, hair removal, photodynamic therapy, low-level laser therapy, and, more recently, laser treatments of psoriasis, acne, cellulite, and dental bacteria. In addition, laser-based diagnostic tools such as optical coherence tomography and multiphoton microscopy have gained acceptance among the medical community for noninvasive imaging, while optical sensors are finding their place in the detection and monitoring of chronic and other diseases (see “Ultrafast lasers link diagnostics and therapy at the cellular level,” Laser Focus World, April 2005).

For the time being, however, the consumer continues to drive the bulk of medical laser sales, particularly for vision correction, wrinkle removal, hair removal, and, more recently, benign prostatic hyperplasia (BPH; see “Patients driving growth of laser BPH,” Medical Laser Report, October 2005, p. 1).

Overall, while the year-on-year growth was slightly lower than in 2004, sales of medical-laser systems still rose 15% in 2005 to about $2.7 billion, according to Medical Laser Report (January 2006). This growth is expected to continue in 2006, with systems sales projected to top $3 billion for the first time ever. Looking more closely at the particular laser types, hair removal is once again spurring sales of solid-state and diode lasers. Among the solid-states lasers used in this application, sales of Nd:YAG and alexandrite lasers have been especially strong over the past 12 months.

The excimer remains the primary laser source for vision correction; sales fell in 2005 but are expected to bounce back by 9% in 2006.

This overall growth trend is reflected in the performances of a number of medical-laser systems manufacturers, especially those focused on the aesthetic market. Shares of Cutera (Brisbane, CA), for example, rose more than 70% between October and December 2005; a year ago, the company’s stock stood at about $12/share; after reaching a high of $44/share in early December, the stock closed at around $30/share on December 14, following news that a Massachusetts court had denied Cutera’s request to dismiss a patent-infringement case brought against the company by Palomar Medical Technologies (Burlington, MA). In fact, Palomar saw its stock rise more than $2/share to close at $37.81 the same day-and this is after the stock has already gone up more than 40% in recent months.

Patent lawsuits aside, the stock prices are pretty heady numbers for a couple of mid-sized laser companies, especially medical-laser companies. And they are not alone; several other publicly-traded aesthetic-laser manufacturers are finding themselves in Wall Street’s favor these days. Shares of Candela (Wayland, MA) are up 56% since October, while Syneron (Yokneam, Israel) shares are up 32% in the same period. Candela’s stock closed at $15/share on December 14; Syneron closed at $41/share the same day. And fellow competitor Cynosure (Westford, MA) just completed a public offering, selling 5 million shares at $15/share. Outside the aesthetic arena-but still in the consumer-driven realm-shares of VISX (now part of Advanced Medical Optics; Santa Clara and Santa Ana, CA) have been hovering around $45/share for the past month.

What is driving these stocks to seldom-seen heights? In a word (or two): the consumer. As has been the case for the last several years, the medical-laser market is closely tied to those applications paid for out-of-pocket by the consumer. This has translated into primarily aesthetic procedures involving skin resurfacing/rejuvenation and vision correction. However, the American Society of Plastic Surgeons reports that the number of these procedures being performed annually has actually dropped in recent years; for example, laser skin resurfacing procedures declined 4% between 2001 and 2004 while laser hair removal procedures fell 22%.

These numbers fly in the face of industry reports that sales of both these types of laser systems are on the rise. One theory has it that doctors are still buying the systems even if they are not using them as often. Another-and likely more accurate-theory is that the end-user market for these systems-that is, the practitioners buying the systems-is broadening.

“We believe this market is barely penetrated and is expanding out from the traditional dermatologists and plastic surgeons to include general practitioners, OB/GYNs, and skin-care clinics,” said Ron Santilli, CFO of Cutera. “And we see no indication of a slowdown at this time.”

Santilli is not alone in this assessment. John Calcagnini of CIBC World Markets noted in early November at the CIBC Health Care Conference that the global market for cosmetic lasers (which apparently includes dental lasers) remains “very underpenetrated.” Calcagnini says the potential user base has expanded from what traditionally was 45,000 dermatologists and plastic surgeons to 495,000, with 150,000 spas now in the target market and 300,000 “other physician specialties.” As a result, there is now a $650 million “new” market for cosmetic lasers, and it is expected to grow 80%-85% annually, with worldwide procedure volumes increasing from 40 million in 2004 to 60 million in 2006.

Looking ahead, the medical market can expect to feel the impact of fiber-laser technology in the next few years. Fiber lasers have become one of the hottest topics in photonics in recent years, particularly as the technology has grown in robustness and reliability. But most of what we read or hear about these lasers is related to industrial and telecom applications involving powers in the 1-2 kW range. Some research groups and commercial entities, however, are pursuing lower-power fiber-laser applications in medicine, such as optical coherence tomography, microsurgery, and skin resurfacing. In fact, they anticipate that fiber lasers will increasingly replace more-established light sources in medical applications, thanks to their lower cost, inherent user-friendliness, broad range of energy delivery (pulsed and continuous wave), and applicability for both surgery and diagnostic imaging.

“For surgical applications it is important that the laser be compact, low maintenance, and efficient,” said Stuart Jackson of the Optical Fibre Technology Center (OFTC), University of Sydney (Australia). “The high efficiency and good thermal management of fiber lasers make them very suitable for surgical applications, and because they are diode-pumped, they are also compact. The fiber geometry has an additional advantage over bulk solid-state lasers because it alleviates the need for an additional delivery fiber, thus reducing cost and system complexity.”

In the medical field, the most desirable wavelengths are in the 1.3-µm range for imaging and the 1.5-µm (a water absorption peak) to 4-µm range for surgical applications, at powers ranging from milliwatts to more than 100 W.

“Any biomedical application that uses a CW laser, particularly a high-power CW laser, can benefit from a fiber laser,” Jackson said. “The higher efficiency, wider tunability, and better beam quality over the entire power range offered by fiber lasers are significant advantages; as a result, fiber lasers widen the utility of lasers in general for medical applications.”

-Kathy Kincade

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