17 Jul 2019
Cosmetic procedures are big business.
Or at least, we think they are.
As with other research questions for the Council’s current project on cosmetic procedures, we’ve come up against a roadblock in trying to find out the financial value of the cosmetic procedures industry: a lack of data.
These data are lacking because they have not been gathered at all, or because they are commercially sensitive and are therefore unreleased. However, even where data are available, they provide the plucky researcher with mixed messages.
For example, one financial forecasting report (cited by Sir Bruce Keogh’s 2013 review of the regulation of cosmetic interventions) suggests the market value of the cosmetic procedures sector in the UK rose from £720 million in 2005 to £2.3 billion in 2010, with a further projected rise to £3.6 billion in 2015. However, a further market update published by another business intelligence company suggests that the value of the UK market in the sector is significantly lower: £646 million in 2010 and £725 million in 2014, with further growth forecast to £795 million in 2017 and £913 million in 2019. Part of the discrepancy in these figures might be due to the fact that each forecaster draws its data from different sources.
Despite mixed messages from these market reports, other clues can be identified to suggest that the finances of the cosmetic procedures sector are in rude health.
Our first clue can be found in the financial reports of manufacturers associated with cosmetic procedures.For example, Allergan – which manufactures a range of products used for cosmetic procedures, including dermal fillers, Botox, and breast implants – reported global net revenue in 2015 as $1.98 billion for Botox, and $573 million for fillers. In 2014, breast implant manufacturer GC Aesthetics also announced that it had raised $60m from investors to fund new product development. A further clue to the health of the cosmetic procedures sector, to support the notion that the cosmetic procedures sector is ‘big business’ can therefore be found in venture capitalists’ interest in the sector.
Venture capitalist investment: cosmetic procedure providers
In addition to their support for manufacturers, venture capitalist firms have also invested in group providers of cosmetic procedures.
For example, in July 2016, investment group Aurelius reported its acquisition of The Hospital Group “a leading provider of cosmetic procedures in the UK as well as a market leader for treating weight loss” which generated revenues of £30.4 million in 2015. Aurelius also acquired Transform in July 2015, which was accompanied by a press release which noted that the sector is “currently experiencing attractive demand drivers.” Aurelius observes “significant potential for synergies between The Hospital Group and Transform”, and its vice-president has commented that “With the acquisitions of The Hospital Group and Transform, we have reached a leading position in the British market for cosmetic surgery and treatment. We see large growth potential in this market in the coming years.”
Venture capitalists have also acquired other UK-wide providers of cosmetic procedures in recent, including Harley Medical Group (in 2012, following the PIP scandal), and Sk:n (a provider of non-surgical skin treatments). Graphite Capital, which invested in Sk:n in 2006, notes that the provider “operates in a fragmented market, which is growing strongly.” This growth is exemplified by a note on Graphite’s website which states that, since its investment, the number of clinics which Sk:n operates has grown from 17 to 41.
Our final clue, and the one of which we have direct experience as part of our project, is the size and success of trade fairs for the cosmetic procedures industry which provide an opportunity for manufacturers and developers to sell their products. The rhetoric at such fairs therefore focuses heavily on revenue growth.
For example, some of the literature collected at three fairs we have attended in the last year (the Clinical Cosmetic and Reconstructive (CCR) Expos in October 2015 and 2016, and the Aesthetics Conference and Exhibition (ACE) at the end of April 2017) highlight opportunities for attendees to increase their profits. One particular company cites research which suggests that clients saw, on average, a 23 per cent increase in consultations after investing in its technology. It claims that the technology can make “a significant difference in increasing both consultations and conversion rates.” A pamphlet issued by the same company states that those who invest in its imaging technology will be able to “engage in a streamlined, persuasive consultation as you view the three-dimensional image from any angle”. (Whether consultations should indeed be ‘persuasive’ is perhaps a subject for a different blog.)
Another product supplier’s accompanying literature states that “[we] care about the success of your business. We will offer you profitable products and services that will help your business to grow. A treatment that works well at a low operating cost is your number 1 priority and therefore it’s ours too.”
Devices used to support cosmetic procedures therefore appeal directly to providers who wish to increase their turnover. Indeed, in promotional literature for the forthcoming 2017 CCR Expo, the organisers of the event note that 83 per cent of attendees had “purchasing power or were an influencer”, and that its visitors “had potential spend in excess of £298 million”.
At the same time as attending the general CCR Expo, attendees can also sign-up for its Practice Management Expo which, according to its website, enables visitors to see “first-hand the latest technologies, software and services that can increase revenue streams and profitability.” At the 2016 Expo, sessions were offered on various aspects of business growth, including ‘A marketing masterclass in facial aesthetics – how to make your facial aesthetics business thrive instead of survive’, where the presenter offers to “turbo boost your facial aesthetics business.” Expo attendees are also able to watch live demonstrations of procedures which show new products and techniques ‘in action’. Watching volunteers being given injections into their faces in front of a live audience, however, was perhaps a little challenging for this uninitiated researcher...
The size of such fairs – each take place in large venues in Central London – clearly offers businesses an excellent opportunity to promote their products to cosmetic procedure providers. Some businesses may even invest in sponsoring the event. For example, the 2016 BAAPS Annual Scientific Meeting (co-located with the CCR Expo) was sponsored by Coolsculpting by ZELTIQ® Aesthetics Inc., a company that manufactures and markets a ‘fat freezing’ device for body contouring, that has been FDA-approved for safety and effectiveness.
Again, potential financial gains for investing in Coolsculpting were highlighted clearly, and marked as a particular area of growth: attendees were alerted to an estimate that the value of the body contouring market is set to rise from $671.8 million in 2015 to $1.1 billion in 2016.
What do all these clues tell us?
On our hunt for clues in this blog, we’ve seen a brief overview of some of the financial successes – and promises of future success – enjoyed by manufacturers, markets, investors, and providers involved in cosmetic procedures. Overall, the concluding remark is best left to a respondent to our call for evidence: “the provision of cosmetic procedures is predominantly a commercial venture”.
Are cosmetic procedures ‘big business’? It would seem so.
The Council will launch its report Cosmetic procedures: ethical issues on 22 June 2017.