Johnson & Johnson may soon cause frown lines at Allergan
Inc, maker of Botox. J&J expects to seek US approval next year for an
anti-wrinkle drug that could break Botox's near monopoly, an 85% market share.
The J&J product could be available in the United States
in 2015 and overseas a few years later, the company said. Two smaller
drugmakers with similar products haven't made substantial inroads into the
almost $900 million a year market.
But dermatologists and analysts say J&J could be a real
threat to Botox, an iconic brand since it was introduced more than a decade
ago. Allergan declined to comment on the potential rival."J&J is probably
the only company that can go head to head directly with Allergan," said
Morningstar analyst Michael Waterhouse. "They have a big marketing budget
and sales force, and an attractive cosmetic portfolio" of other products
to offer dermatologists.
What analysts say
about the product
Still, J&J's quest won't be easy. Analysts and
dermatologists said its product likely would need to work faster, last longer
or be significantly cheaper than Botox in order to wrest market share from the
original injectable wrinkle fighter."
J&J is a company I'd take seriously; they have great
research and try to be industry leaders in every category," said Dr
Kenneth Beer, a dermatologist in West Palm Beach, Florida who has been a
consultant for Allergan and J&J. But he said patients aren't quick to
switch from something with which they are familiar. "Allergan has built
such a strong brand. People ask for Botox by name.
This will be an uphill struggle" for Johnson &
Johnson. J&J has not yet unveiled the data from completed late-stage trials
for the still unnamed drug. But David Wilson, president of J&J's Mentor
division, told Reuters he was pleased with the results."
Product a comparable
quality to Botox
What we hope to offer is a product of certainly comparable
quality to Botox...to basically be on par with them" in terms of
effectiveness and safety, Wilson said."We've worked to make sure our data
are exactly what the FDA is expecting to see," he added.
Morningstar's Waterhouse said the J&J product likely
would generate annual sales of $500 million within five years as a cosmetic
product. Sales could hit $1 billion within a decade if it also is tested and
approved for medical conditions such as migraine headaches, he said.
People want bigger
Botox, approved in 2002 in the United States to temporarily
smooth severe lines between the eyebrows, has become a $1.8 billion-a-year
brand, used worldwide by celebrities, movie stars, the wealthy and
increasingly, the middle class in both developed and emerging markets.
Botox procedures in the United States can cost as much as
$1,500 for full treatment on three areas of the face. The cosmetic treatment is
not covered by health insurance. The drug, a form of botulinum toxin that works
by temporarily paralyzing muscles, has also been approved for lucrative medical
uses such as preventing underarm sweating, migraine headaches and overactive
But about $850 million, or 48% of Botox sales, comes from
original cosmetic uses - the market J&J is going after, Wilson said. Despite
Botox's lock on the market, many patients are on the quest for a better Fountain
of Youth and will give J&J's product a chance, said New York dermatologist
Howard Sobel."Some people are going to want bigger and better even if it's
not bigger and better," Sobel said.
"These are the patients that tell me, 'Doctor, you used
to make me look much better.' They don't realize 'used to' was 10 years ago and
I can only bring them back to a certain point."Other companies have tried
and failed to knock Botox from its pedestal.
Two similar anti-wrinkle fighters are approved in the United
States: Valeant Pharmaceuticals International Inc's Dysport, and Xeomin from
privately held Merz Pharma Group, which was launched in January after a
prolonged US court battle with Allergan. Together, they have a 15% share of the
cosmetic toxin market.
Valeant and Merz did not comment on the potential J&J
threat. J&J, one of the world's biggest healthcare companies with annual
sales of almost $70 billion, aims to leapfrog Dsyport and Xeomin and become a
solid No 2 in the market, Wilson said. Now-completed trials of the product will
be the basis of a marketing application in the first half of 2014 to the US
Food and Drug Administration, Wilson said.
"We'll make all the appropriate investments to support
our program," he said. "Professional education and training will be a
significant pillar of our success."Wilson noted, however, that the J&J
drug has not been tested head to head against Botox or other wrinkle fighters.
Longer effect would
Wilson's unit, which J&J acquired through its purchase
of Mentor Corp in 2009, is the world's top seller of breast implants and also
markets dermal fillers and liposuction equipment. The addition of a wrinkle
treatment would give Mentor greater sway with dermatologists and plastic
surgeons, Wilson said. "The more we can offer doctors, the better.
Our customers are using a lot of toxin and it will
strengthen our position to provide it to them."In the long term, Jeff
Jonas, a healthcare analyst for Gabelli & Co, said J&J can be expected
to study and seek approvals of its product for the same lucrative medical uses
as Botox."Given the size of J&J and their expertise in clinical
trials, I think they'll want to go after the whole market, not just half of
it," Jonas said.
Sobel, who has many Botox patients, said J&J's product
would be a hit if it were able to last five or six months, rather than the
three or four months typical of Botox, Dysport and Xeomin."That would be a
breakthrough," the dermatologist said, and allow patients to make fewer
doctor visits for re-injections of the drug.
"Or, if it's not truly different in its activity, they
can distinguish it by making it cheaper," Sobel said, speculating it could
capture 20 to 25% of the market within three years if the price is right. The
fiercest competition between the products will likely occur in emerging markets
such as China and South America, where Botox is not firmly entrenched,
Morningstar's Waterhouse said."There's a lot more opportunity for growth
there because you can grow from new customers who want premium luxury-type
products," he said. "Botox kind of aligns with luxury cars."