Forget the pharmacy. Two Orange County drug makers want you to go straight from the dermatologist’s office to Sephora and Macy’s.
Irvine-based Allergan Inc. and Valeant Pharmaceuticals International of Costa Mesa are pushing cosmetic versions of their prescription skin drugs in a bid to boost sales and profits.
For now, retail products are set to be a small part of sales for Allergan and Valeant. But as for whether there’s money to be made by recasting a product for vanity-conscious consumers, look no further than Allergan’s Botox.
The wrinkle reducer drug, originally approved for neck spasms, is a key source of profit and makes up a third of sales for Allergan, thanks to plastic surgeons who use it to smooth over face wrinkles.
Earlier this month, Allergan said it is working with Elizabeth Arden Inc., the New York-based cosmetics maker, on a consumer version of its anti-oxidant cream Prevage. The cream is set to sell at Arden department store counters in early 2006.
Working with Arden “can do a lot to create more awareness and visibility,” said Bob Rhatigan, Allergan’s vice president of its U.S. dermatology unit.
The Prevage to be sold by Arden isn’t the same one you’d get from a doctor or pharmacy. The over-the-counter version is set to have half the amount of idebenone, Prevage’s main ingredient.
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Valeant’s Wheeler: “We’re targeting a carefully selected audience” |
Allergan and Arden also plan to market a non-prescription, professional-strength version called Prevage MD, which is expected to be sold through more than 1,700 doctors.
The current Prevage formulation, available only by prescription, costs around $100.
The slicing and dicing of Prevage should help to keep from alienating doctors, according to Rhatigan.
The concern about putting off doctors “would be a valid one if they were the same formulation, same strength, same pricing,” he said. “But these are different concentrations and they are going to work in a collaborative fashion.”
Valeant also is bringing a skincare drug out of the doctor’s office.
In March, the drug maker signed actress Courteney Cox Arquette of “Friends” fame as its spokeswoman for Kinerase, a line of anti-aging products. Up to now, Kinerase only was available through dermatologists and plastic surgeons.
Now you can get it at Sephora.
“I’m a businessman. I’m here to maximize my brands and our company’s value,” said Wesley Wheeler, Valeant’s president of North America, on why Valeant decided to move Kinerase into stores.
Kinerase sales were up 13% in the first quarter to $4.4 million. Valeant had total sales of $181 million for the period.
Cox Arquette debuted as the face of Kinerase advertising in April. Valeant officials said they expect the campaign to have more influence in the second quarter and beyond.
Cox Arquette’s “a likeable, beautiful user of Kinerase,” Wheeler said. “She and Jennifer (Aniston) and some of her friends at ‘Friends’ use it.”
Kinerase is aimed at well-off women ages 29 to 45. Cox Arquette turns 41 in June.
Getting Cox Arquette on board got Sephora on board, Wheeler said.
The Kinerase retail push is another sign of change at Valeant under Chief Executive Timothy Tyson. The company, formerly known as ICN Pharmaceuticals Inc., continues to remake itself after the 2002 ouster of founder Milan Panic.
Investors and company watchers “recognize we’re well along in our strategic plan and in the transformation of the company,” said Jeff Misakian, Valeant’s director of investor relations.
Kinerase is part of Tyson’s bid to focus on key markets after selling off far-flung operations that were pet projects of Panic.
Dermatology is one of three segments targeted by Tyson,a GlaxoSmithKline PLC veteran who has what analysts call “real-world” pharmaceutical experience.
Wheeler, who also hails from GlaxoSmithKline, said, “I come from the prescription pharmaceutical side of the house. But I’ve done a lot of work in direct-to-consumer advertising.”
During their time at what then was Glaxo Wellcome, Wheeler said he and Tyson started the first consumer marketing push for Valtrex, a herpes drug, after meeting with Food and Drug Administration officials.
Some 18 months ago, Valeant launched a pilot consumer push for Kinerase in Los Angeles and New York.
For the test, the drug maker hired model Victoria Whitaker to appear in print ads that ran in InStyle, Lucky and Glamour magazines. She also was in cable TV commercials and on billboards in New York and on the Web.
“The point of that was to test the market,” Wheeler said. “At that time, we were still thinking about whether we wanted to stay with dermatologists or did we want to branch out and compete with the consumer retail business.”
Valeant tested the waters at Rite Aid stores in New York. But Wheeler said Valeant soon decided a drugstore chain wasn’t the best fit for Kinerase, which sells for about $100 for a small bottle.
“The experimentation into Rite Aid was probably not the best move,” he said. “We’re targeting a carefully selected audience.”
Valeant isn’t forgetting about doctors, according to Wheeler. The company’s sales representatives call on about 3,000 dermatologists for Kinerase, he said.
Now the company is putting up displays featuring Cox Arquette in waiting rooms, according to Wheeler.
“We have a very good relationship with our doctors,” he said.
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Dermacia Raises $10M, Hires Investment Bank
Dermacia Inc., a Newport Beach maker of cosmetic and skincare products, has raised $10 million in funding from private investors.
The 5-year-old company plans to use the money to come up with products and for marketing, including on the Internet and television.
Separately, Dermacia said it hired Los Angeles-based investment banking firm Gemini Partners Inc. to look at other ways to finance products in a niche dubbed “cosmeceuticals,” or drugs used for cosmetic purposes.
They include products designed to hide post-surgery scars and dermatological conditions.
The company’s main product is Lycogel, developed four years ago. It is sold through a network of more than 1,000 doctors as well as surgical and dermatology centers and pharmacies across the U.S. and Mexico.
Lycogel is used in clinics, hospitals, universities and burn centers to speed recovery and minimize scarring of burn victims and patients undergoing reconstructive surgery.
In a statement, Dermacia said it recently started marketing its products over the Internet, and currently is in production on an infomercial set to air in September on home shopping channel QVC.
Chief Executive Matt Nicosia and Barry Knapp, Dermacia’s president, started the company in 2000.
Dermacia expects to do $15 million and $20 million in sales this year, Nicosia said. The company hopes to go public, possibly this year, he said.
“We’ll be the first company for Gemini to take public in Orange County,” he said.
Dermacia employs about 30 people at its Newport Beach headquarters and 10 at a Santa Ana warehouse.
A native of Los Angeles, Knapp, 41, showed an interest in cosmetics and skin care at age 14 when he began working with makeup artists and estheticians, according to the company’s Web site.
At 20, Knapp was the founder and creative director of a salon and spa company, which he grew to 20 locations before selling.
He’s said to have produced a number of TV shows, including the largest viewed makeover show, which featured Placido Domingo’s family and was viewed by more than 87 million people worldwide.
Nicosia, 31, has played a role in a number of small companies, including founding Transafari Inc., a provider of corporate software, and Med-Help, an online distributor of used medical equipment to South America.
,Pat Maio
