Changewave Research: 2007 Cosmetic Medicine Survey

ChangeWave Research: 2007 Cosmetic Medicine Survey

ChangeWave Research Report:

2007 Cosmetic Medicine Survey

Trends inCosmetic Procedures

Overview:

This report presents the results of a November 2-6, 2006ChangeWave Alliance survey on Cosmetic Procedures. A total of 154 Alliance healthcare members involved in or knowledgeable about cosmetic procedures participated – including 93 doctors.

Bottom Line:More than three-quarters of doctorrespondents report seeing an increase in patient inquiries and requests for cosmetic procedures at their work locale over the past 12 months.That’s 11-ptsmore than we found in an October 2005 survey. Nonetheless, the overall growth rate for cosmetic procedures appears to be slowing – with fewer doctors believing that it is growing faster than the growth rate for medical services generally.

Palomar Medical (PMTI) is considered the best positionedcompany in the Cosmetic Medicine marketplace – topping the list of vendors that our doctor work locales havepurchased products from over the past 12 months. Importantly, PMTI also topsthe list of vendors that work locales say they’ll purchase products from over the next 12 months.

Procedures with Momentum. The survey results show Gastric Surgical Procedures to Limit Eating (Change in Net Difference Score = +11) had the most improved growth rate over the past year – with gastric banding growing faster than gastric bypass surgery. By a wide margin, however, Botox Procedures for the Face (Net Difference Score = +59) experienced the greatest overall growth in the Cosmetic Procedures industry.

Procedures to Treat Lines & Wrinkles:

Patient Interest in Botox. The consensus among doctors is that 12% of the patients at their work locale have requested/inquired about Botox over the past 12 months. Looking ahead, the consensus is that 10% of their patients will actually use Botox over the next 12 months.

Botox Satisfaction. Overall, 61% of doctors say they are satisfied with the results of Botox, compared to just 11% unsatisfied.

Reloxin – A Botox Competitor? A total of 40% of doctors say they are likely to recommend Reloxin to patients if it is approved by the FDA, while 13% say they are unlikely to recommend it. The consensus estimate among doctors’ is that 12% of the patients at their work locale would use Reloxin if it was approved.

Prospects for Juvéderm.Nearly a third of doctors (32%) say they are likely to recommend Juvédermover the next 12 months, while 19% say they are unlikely.

On average, doctors think about 8% of patients at their work locale will use Juvéderm over the next 12 months.

The Isolagen Process. If approved in the US, 40% of doctors believe that some patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen. Only 9% say they don’t see a market for it.

The consensus estimate among doctors is that 6% of patients at their work locale would use the Isolagen process, if approved.

Thermage Usage. More than half of doctors (51%) are familiar with Thermage, but only 2% currently offer Thermage treatments onsite. However, 9% are considering them.

Looking ahead, 20% of doctors say they are likely to recommend Thermage to patients over the next 12 months (2% Very Likely; 18% Somewhat Likely), while 41% say they are unlikely. We note that ourdoctors’ consensus estimate is that only 4% of patients at their work locale will use Thermage over the next 12 months.

Summary of Key Findings

The ChangeWave Alliance is a group of 10,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

Helping You Profit From A Rapidly Changing World ™

Table of Contents

Summary of Key Findings...... 2

The Findings...... 4

(A) Overall Cosmetic Medicine Marketplace...... 4

(B) Product Vendors and Equipment...... 8

ChangeWave Research Methodology...... 16

About ChangeWave Research...... 17

I. The Findings

Introduction

This report presents the findings of a recent ChangeWave Alliance survey on Cosmetic Medicine. It was conducted November 2-6, 2006.

Total Respondents (n = 154)

Doctors (n = 93)

(A) Overall Cosmetic Medicine Marketplace

(1) Question Asked: Based upon what you are seeing in your work locale, has there been an increase, decrease, or no change over the past 12 months in patient inquiries or requests for cosmetic procedures?

Doctors
Current
Survey
Nov ‘06 / Doctors
Previous
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05 / Doctors
Previous
Survey
May ‘04
A Significant Increase Over Past 12 Months (10% or More) / 31% / 32% / 38% / 24%
A Small Increase Over Past 12 Months (Less Than 10%) / 46% / 34% / 38% / 51%
No Change Over Past 12 Months / 17% / 25% / 22% / 20%
A Decrease Over Past 12 Months / 2% / 9% / 0% / 0%
Don't Know / 3% / 0% / 2% / 4%

Interest in Cosmetic Procedures is Rising. More than three quarters of doctors (77%) report seeing an increase in patient inquiries and requests for cosmetic procedures over the past 12 months. That’s 11-pts higher than we found in an October 2005 survey.

(2) Question Asked: Year over year consumption of medical services in general is increasing by double digits. How would you characterize the growth rate for cosmetic procedures?

Doctors
Current
Survey
Nov ‘06 / Doctors
Previous
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05 / Doctors
Previous
Survey
May ‘04
Growth rate for cosmetic procedures is fasterthan the average growth rate for medical services generally / 52% / 61% / 69% / 55%
Growth rate for cosmetic procedures is similarto the average growth rate for medical services generally / 37% / 32% / 22% / 37%
Growth rate for cosmetic procedures is slowerthan the average growth rate for medical services generally / 8% / 5% / 7% / 2%
Don't Know / 4% / 2% / 2% / 6%

But the Cosmetic Procedure Growth Rate Declines. Although more than half of doctors (52%) think the growth rate for cosmetic procedures is faster than the growth rate for medical services generally – that’s still 9-pts lower than our October 2005 survey. Another 8% think the growth rate for cosmetic procedures is slower – 3-pts higher than previously.

(3A) Question Asked: Based upon the number of patient requests or inquiries you are seeing in your work locale, which of the following cosmetic procedures would you say have increased the most over the past 12 months? (Check All That Apply)

Doctors
Current
Survey
Nov ‘06 / Doctors
Previous
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05 / Doctors
Previous
Survey
May ‘04
Botox Procedures to Treat the Face/Facial Area / 67% / 68% / 71% / 67%
Gastric Surgical Procedures to Limit Eating / 53% / 45% / 53% / 39%
Collagen and other Dermal Filler procedures to Treat the Face/Facial Area / 44% / 48% / 40% / NA
Hair Removal Procedures / 31% / 34% / 31% / NA
Surgical Procedures to Treat the Face/Facial Area / 29% / 29% / 40% / 47%
Breast Cosmetic Surgical Procedures / 29% / 34% / 31% / 33%
Varicose Vein Procedures / 28% / 25% / 28% / 39%
Liposuction Procedures to Reduce Body Fat / 27% / 21% / 36% / 41%
Procedures to Eliminate Scars/Tattoos/Blemishes / 22% / 18% / 26% / 37%
None of the Above / 2% / 0% / 0% / NA
Don't Know / 6% / 7% / 3% / 6%
Other / 8% / 4% / 7% / 4%

(3B) Question Asked: And which cosmetic procedures would you say have increased the least over the past 12 months? (Check All That Apply)

Doctors
Current
Survey
Nov ‘06 / Doctors
Previous
Survey
Oct ‘05 / Doctors
Previous
Survey
Mar ‘05 / Doctors
Previous
Survey
May ‘04
Liposuction Procedures to Reduce Body Fat / 25% / 18% / 19% / 22%
Varicose Vein Procedures / 23% / 29% / 24% / 24%
Breast Cosmetic Surgical Procedures / 20% / 14% / 14% / 22%
Collagen and other Dermal Filler procedures to Treat the Face/Facial Area / 16% / 4% / 14% / NA
Surgical Procedures to Treat the Face/Facial Area / 15% / 13% / 5% / 8%
Hair Removal Procedures / 15% / 16% / 17% / NA
Procedures to Eliminate Scars/Tattoos/Blemishes / 13% / 16% / 19% / 20%
Gastric Surgical Procedures to Limit Eating / 11% / 14% / 14% / 27%
Botox Procedures to Treat the Face/Facial Area / 8% / 9% / 7% / 10%
None of the Above / 5% / 4% / 2% / NA
Don't Know / 26% / 18% / 26% / 20%
Other / 0% / 0% / 2% / 0%

Net Difference Score – Doctors (Current Survey)

Doctors
Increased
Most
Past 12
Months / Doctors
Increased
Least
Past 12
Months / Net
Difference
Score
Botox Procedures to Treat the Face/Facial Area / 67% / 8% / +59
Gastric Surgical Procedures to Limit Eating / 53% / 11% / +42
Collagen and other Dermal Filler procedures to Treat the Face/Facial Area / 44% / 16% / +28
Hair Removal Procedures / 31% / 15% / +16
Surgical Procedures to Treat the Face/Facial Area / 29% / 15% / +14
Breast Cosmetic Surgical Procedures / 29% / 20% / +9
Procedures to Eliminate Scars/Tattoos/Blemishes / 22% / 13% / +9
Varicose Vein Procedures / 28% / 23% / +5
Liposuction Procedures to Reduce Body Fat / 27% / 25% / +2

Change in Net Difference Score – Doctors (Current Survey vs. Previous Survey)

Current
Survey
Net Difference Score
Nov ‘06 / Previous
Survey
Net Difference Score
Oct ‘05 / Change
in Net
Difference
Score
Gastric Surgical Procedures to Limit Eating / +42 / +31 / +11
Varicose Vein Procedures / +5 / -4 / +9
Procedures to Eliminate Scars/Tattoos/Blemishes / +9 / +2 / +7
Botox Procedures to Treat the Face/Facial Area / +59 / +59 / 0
Liposuction Procedures to Reduce Body Fat / +2 / +3 / -1
Hair Removal Procedures / +16 / +18 / -2
Surgical Procedures to Treat the Face/Facial Area / +14 / +16 / -2
Breast Cosmetic Surgical Procedures / +9 / +20 / -11
Collagen and other Dermal Filler procedures to Treat the Face/Facial Area / +28 / +44 / -16

Procedures with Momentum. The survey results show Gastric Surgical Procedures to Limit Eating (Change in Net Difference Score = +11) had the most improved growth rate over the past year – with gastric banding growing faster than gastric bypass surgery. By a wide margin, however, Botox Procedures for the Face (Net Difference Score = +59) experienced the greatest overall growth in the Cosmetic Procedures industry.

(3C) Question Asked: Gastric Bypass surgery and Adjustable Gastric Banding (gastric belt) surgery are both used to reduce the ability of patients to consume food. Which of the following statements best reflects your opinion on the relative market growth of these two procedures?

Doctors
Current
Survey
Nov ‘06 / Doctors
Previous
Survey
Nov ‘05 / Doctors
Previous
Survey
Feb ‘05
The market for gastric bypass surgery is growing faster than the market for adjustable gastric banding (gastric belt) surgery / 20% / 17% / 29%
The market for gastric bypass surgery is growing slower than the market for adjustable gastric banding (gastric belt) surgery / 30% / 29% / 24%
The market for gastric bypass surgery is growing the same as the market for adjustable gastric banding (gastric belt) surgery / 18% / 12% / 13%
Don't Know / No Answer / 31% / 43% / 35%

Gastric Bypass vs. Gastric Banding. A total of30% of doctors see the gastric bypass surgery market growing slower than the gastric banding market. Another20% see gastric bypass growing faster.

(B) Product Vendors and Equipment

(4) Question Asked: From which of the following vendors – if any – has your work locale purchased products over the past 12 months? (Check All That Apply)

Doctors
Palomar Medical / 11%
Candela / 9%
Laserscope / 9%
Lumenis / 9%
Syneron / 6%
Cutera / 2%
IRIDEX / 2%
None / 35%
Don't Know / 18%
Not Applicable / 17%
Other / 2%

(4A) Question Asked: Looking ahead 12 months, from which of the following vendors – if any – do you think your work locale will purchase products? (Check All That Apply)

Doctors
Palomar Medical / 9%
Candela / 5%
Laserscope / 5%
Cutera / 4%
Lumenis / 4%
IRIDEX / 3%
Syneron / 3%
None / 17%
Don't Know / 42%
Not Applicable / 19%
Other / 4%

Top Product Vendors. Palomar Medical (11%) tops the list of vendors purchased from over the past 12 months, followed by Candela (9%), Laserscope (9%) and Lumenis (9%).

Looking at future purchases over the next 12 months, again it’s Palomar Medical (9%), followed by Candela (5%), Laserscope (5%) and Lumenis (4%).

(5) Question Asked: Within the overall cosmetic medicine industry, what piece of equipment and/or vendor – if any – do you think will gain the most market share over the next 12 months? (Open-Ended)

Equipment:

Total
Respondents
Laser Treatments / 12%
Subdermal Fillers / 8%
Other Equipment / 16%

Vendors:

Total
Respondents
Allergan / 12%
Isolagen / 8%
Candela / 8%
Botox / 8%
Palomar / 8%
Other Vendors / 20%

Cosmetic Medicine Market Share. When asked what piece of equipment and/or vendor will gain the most market share over the next 12 months, doctors named Allergan (12%) as the number one vendor andLaser Treatments (12%) as the number one piece of equipment.

(6) Question Asked: Over the past 12 months, what percentage of patients at your work locale would you say have requested or inquired about Botox?

Doctors
0% / 2%
1-10% / 49%
11-20% / 16%
21-30% / 6%
31-40% / 3%
41-50% / 1%
51-60% / 1%
61-70% / 1%
71-80% / 0%
81-90% / 0%
91-100% / 0%
Don't Know / 11%
Not Applicable / 9%

Consensus Estimate = 12%

(6A) Question Asked: And over the next 12 months, what percentage of patients at your work locale do you think will use Botox?

Doctors
0% / 0%
1-10% / 59%
11-20% / 14%
21-30% / 6%
31-40% / 1%
41-50% / 0%
51-60% / 0%
61-70% / 0%
71-80% / 1%
81-90% / 0%
91-100% / 0%
Don't Know / 12%
Not Applicable / 6%

Consensus Estimate = 10%

Patient Interest in Botox. Over the past 12 months, the consensus among doctors is that 12% of patients at their work locale have requested or inquired about Botox. Looking ahead 12 months, the consensus is that 10% of patients will actually use Botox.

(6B) Question Asked: Overall, how satisfied are you with the results of Botox treatments?

Doctors
Very Satisfied / 16%
Somewhat Satisfied / 45%
Somewhat Unsatisfied / 9%
Very Unsatisfied / 2%
Don't Know / 10%
Not Applicable / 18%

Botox Satisfaction. Overall, 61% of doctors say they’re satisfied with the results of Botox, compared to 11% unsatisfied.

(7) Question Asked: A Botox competitor called Reloxin (Dysport), manufactured by Ipsen Limited, is currently in phase III trials in the United States. Reloxin requires fewer injections for the same results as Botox. Are you familiar with Reloxin (Dysport)?

Doctors
Yes / 29%
No / 71%

(7A) Question Asked: If approved, how likely is it that you would recommend Reloxin (Dysport) to patients?

Doctors
Very Likely / 10%
Somewhat Likely / 30%
Unlikely / 13%
Don't Know / 38%
Not Applicable / 10%

(7B) Question Asked: If approved, what percentage of patients at your work locale do you think would use Reloxin (Dysport)?

Doctors
0% / 0%
1-10% / 41%
11-20% / 2%
21-30% / 4%
31-40% / 2%
41-50% / 1%
51-60% / 1%
61-70% / 0%
71-80% / 0%
81-90% / 0%
91-100% / 1%
Don't Know / 34%
Not Applicable / 13%

Consensus Estimate = 12%

Reloxin – a Botox Competitor? A total of 40% of doctors say they’re likely to recommend Reloxin to patients if it is approved by the FDA. Another 13% say they’re unlikely to recommend it.

Doctors’ consensus estimate is that 12% of patients at their work locale would use Reloxin if it was approved.

(8) Question Asked: Juvéderm, a new hyaluronic acid-based dermal filler from Allergan, was approved by the FDA in June 2006 to temporarily correct moderate to severe facial wrinkles and folds. Are you familiar with Juvéderm?

Doctors
Yes / 33%
No / 67%

(8A) Question Asked: How likely is it that you will recommend Juvéderm to patients over the next 12 months?

Doctors
Very Likely / 6%
Somewhat Likely / 26%
Unlikely / 19%
Don't Know / 26%
Not Applicable / 23%

(8B) Question Asked: What percentage of patients at your work locale do you think will use Juvéderm over the next 12 months?

Doctors
0% / 9%
1-10% / 28%
11-20% / 5%
21-30% / 2%
31-40% / 0%
41-50% / 2%
51-60% / 0%
61-70% / 0%
71-80% / 0%
81-90% / 0%
91-100% / 0%
Don't Know / 38%
Not Applicable / 16%

Consensus Estimate = 8%

Prospects for Juvéderm. A total of 32% of doctors say they’re likely to recommend Juvéderm to patients over the next 12 months. Another 19% say they’re unlikely to do so.

On average, doctors think 8% of patients at their work locale will use Juvéderm over the next 12 months.

(8C) Question Asked: Which product – if any – is mostly likely to be displaced by Juvéderm? (Open-Ended)

Total
Respondents
Restylane / 36%
Collagen / 28%
Botox / 12%
Retin-A / 8%
Other / 16%

(9) Question Asked: Are you familiar with the company Isolagen or the Isolagen process?

Doctors
Yes / 24%
No / 76%

(9A) Question Asked: Isolagen has pioneered a process, available in England, that extracts fibroblast cells from a patient and manufactures large quantities of them. The duplicated cells are then re-injected into the patient. The treatment could last up to a year and could cost between $5,500 and $7,500. The Isolagen process is currently in phase III trials in the US. Do you see a market for this cosmetic procedure?

Doctors
Yes, 1-5% of patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen / 22%
Yes, 6-10% of patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen / 8%
Yes, 11%-20% of patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen / 5%
More than20% of patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen / 5%
Do not see a market for the Isolagen process / 9%
Don't Know / 52%

(9B) Question Asked: If approved, what percentage of patients at your work locale do you think would use the Isolagen process?

Doctors
0% / 15%
1-10% / 27%
11-20% / 0%
21-30% / 2%
31-40% / 0%
41-50% / 0%
51-60% / 0%
61-70% / 0%
71-80% / 1%
81-90% / 0%
91-100 / 0%
Don't Know / 44%
Not Applicable / 11%

Consensus Estimate = 6%

Prospects for the Isolagen Process. If approved in the US, 40% of doctors believe that some patients currently using Dermal Fillers/Botox treatments would migrate to Isolagen. Only 9% say they don’t see a market for it.

The consensus estimate among doctors is that 6% of patients at their work locale would use the Isolagen process if approved.

(10) Question Asked: Thermage has a radio frequency based wrinkle treatment which was approved by the FDA in October 2005. Are you familiar with the company Thermage or the Thermage process?

Doctors
Yes / 51%
No / 48%
No Answer / 1%

(10A) Question Asked: Does your work locale currently offer Thermage treatments onsite, or are you considering offering them onsite?

Doctors
Yes, Currently Offer Thermage Treatments Onsite / 2%
Yes, Considering Offering Thermage Treatments Onsite / 9%
No, Do Not Offer Thermage Treatments Onsite and Not Considering It / 56%
Don't Know / 17%
Not Applicable / 16%

Thermage – Current Usage. More than half of doctors (51%) are familiar with Thermage, but only 2% currently offer Thermage treatments onsite. However, another 9% are considering offering them.

(10B) Question Asked: How likely is it that you will recommend Thermage to patients over the next 12 months?

Doctors
Very Likely / 2%
Somewhat Likely / 18%
Unlikely / 41%
Don't Know / 19%
Not Applicable / 19%

(10C) Question Asked: What percentage of patients at your work locale do you think will use Thermage over the next 12 months?

Doctors
0% / 23%
1-10% / 19%
11-20% / 3%
21-30% / 0%
31-40% / 1%
41-50% / 0%
51-60% / 0%
61-70% / 0%
71-80% / 0%
81-90% / 0%
91-100% / 0%
Don't Know / 40%
Not Applicable / 14%

Consensus Estimate = 4%