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    View from 'The Street' Tech-driven with ample upside

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    National report The cosmetic surgery arena became one of the darlings of Wall Street in 2002 when Botox (Allergan medical) hit the market with the U.S. Food and Drug Administration's cosmetic nod of approval.

    Since then, cosmetic surgery has been looking better and better to investors. Thomas Gunderson, medical technology stock analyst, with Minneapolis, Minn.-based investment banking firm Piper Jaffray & Co., tells Cosmetic Surgery Times that Wall Street's view of cosmetic surgery has evolved right along with technology.


    Mr. Gunderson
    According to Gunderson, historically, plastic and cosmetic surgery has relied on the surgeon, his skill and art.

    "Very little was done outside of the surgeon's hands, a scalpel and some suture," he says. "As good as that is for society and cosmetic results, it doesn't leave a whole lot for Wall Street to invest in. Technology is necessary — and for a long time, the only technology that was available were breast implants. But Wall Street became less enthusiastic about those when silicone gel was taken off the market."

    THE BOTOX BOOM As silicone gel breast implant manufacturers weathered years of lawsuits and the inability to fully market their technology, cosmetic surgeons were using Botox off-label to ward off signs of aging. It was the FDA's approval of Botox to treat frown lines which got Wall Street's attention.

    "I think it surprised everybody how fast [Botox subsequently] took off," notes Mr. Gunderson. "Now that an American corporation could put its advertising and media clout behind it — the numbers and the excitement went up; it opened up a whole new technology area for investors to look at," he says.

    TECH DOLLARS Botox preceded a line of technology-driven wrinkle fighters: Restylane, Radiesse, Juvéderm, Thermage™, Titan, Reliant and Apsala, to name a few.

    "Restylane also had a very steep curve of adoption and revenue generation and created wealth," Mr. Gunderson says. "Investors who bought in early to the Restylane story did well, as those who bought in early to the Botox story." The technology floodgates in cosmetic surgery have opened, the analyst says, with a flurry of lasers, injectables and healthy competition. For the companies that have had a substantial revenue base in cosmetic surgery for at least the last two years, there seems an unquenchable thirst for product, according to Mr. Gunderson.

    "This gets into the aging of America," he says. "The demographic — the boomers — who used to be hippies and did not seem to care too much about what they looked like. Now the front end [of this generation] is hitting 60 years old and they seem to have a bottomless desire to look good. That is very interesting to people who want to invest in new technologies." Another trend he predicts will impact cosmetic surgery is the obesity epidemic, the popularity of weight loss surgeries and the resulting need for massive amounts of skin removal.

    DUAL SERVICE APPROACH The changing cosmetic surgery practice is on the front burner, according to Mr. Gunderson. Cosmetic surgeons who have reached professional pinnacles in their careers, earned by long years in medical school and training and experience, should take note that having high skill levels does not preclude the need to offer clients low-level services. Those ignoring low-end cosmetic surgery procedures might find that consumers look the other way for one-stop shops that help them look younger. Cosmetic surgery practices should offer both.

    "If you want to be successful from a surgical career standpoint, that is up to the doctors," he says. "But business is what I know, and business would be better served by having womb-to-tomb [services]." Mr. Gunderson thinks that technology turf wars will also work to zap away some of the comfort of those highly trained cosmetic surgeons. High skill levels often translate to good surgical outcomes. But, today, he says, technology exists that allows just about anybody to achieve reasonable results.

    "You end up with specialists who have to work harder to keep their territory because you have everybody from ophthalmologists to gynecologists to internists doing cosmetic procedures. Ten years ago, that wasn't the case," Mr. Gunderson says.

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    Lisette Hilton
    Lisette Hilton is a writer in Boca Raton, Fla., who heads up her company, Words Come Alive.

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