Analysis: J&J's answer to Botox may escalate war on wrinkles
NEW YORK (Reuters) - Johnson & Johnson may soon cause frown lines at Allergan Inc, maker of Botox.
J&J expects to seek U.S. approval next year for an anti-wrinkle drug that could break Botox's near monopoly, an 85 percent 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.
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.
"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 AND BETTER'
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 bladder. But about $850 million, or 48 percent 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 U.S. court battle with Allergan. Together, they have a 15 percent 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 U.S. 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 HELP
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 percent 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."