Botox manufacturer Allergan has seen cosmetic use of the toxin shrug off the recession, but now its potential for therapeutic treatments such as migraine and multiple sclerosis has made the firm ‘ecstatic’.
THE landscape around the west coast of Ireland is breathtaking enough to wipe years off furrowed brows. But it is not the rugged Irish scenery that has changed the face of the beauty industry. It is a pristine-looking glass-walled factory set in 12 hectares outside the picturesque town of Westport in County Mayo, which produces the entire world’s supply of Botox.
Kylie Minogue has admitted using it, as have Geri Halliwell, Courteney Cox, and Jennifer Aniston, but it is no longer just celebrities looking to iron out the wrinkles in their foreheads.
Since it began production in 1990, the factory has pumped out more than 26 million phials of the chemical otherwise known as Botulinum toxin a, generating £500m (RM2.5bil) a year for the pharmaceutical firm Allergan. In 2009, at the height of the recession, the company reported 8% earnings growth.
What makes investors “rather ecstatic”, says the chief executive, David Pyott, is that Allergan has grown from a company that relied on “purely reimbursed” business from hospitals and clinics to one that includes a booming cash business of private clients who use Botox and other medical aesthetic treatments under the Allergan umbrella, including dermal-fillers, breast implants and gastric bands. The wealthy always want to look beautiful.
“Even in the depths of the recession, the first half of 2009, the world market (for Botox) only declined 9%,” says Pyott. “In the recession men have spread out their treatments (from every three months to four months) and women have fewer things done.”
The Botulinum toxin, which is produced by the bacterium Clostridium botulinum, works by temporarily paralysing key muscles in the forehead. Pyott, 55, a Scot with a smooth-looking forehead, leads by example and uses it himself.
But it isn’t the beauty treatment that has the company so confident about future growth. It is all its other less sexy applications for Botox – 20 of them in total, including the recently approved application as a preventative medicine for chronic migraine – that opens up another potential goldmine.
There are an estimated 700,000 migraine sufferers in Britain alone reporting chronic head pain – dizziness, nausea, and headaches can put someone out of action for up to two days at a time. The chronic form is defined as someone who has 15 headache days a month, of which at least eight are migraine.
Analysts reckon that the migraine breakthrough could generate revenue of between £400mil and £1bil (RM2bil and RM5bil) by 2015 – almost double the company’s turnover.
Allergan employs 800 employees in Westport but the production of Botox is now so automated that it only requires the direct labour of 80 people. That’s about £625,000 (RM3.125mil) in revenue per employee.
“The Botox story is an amazing story and what’s really unusual is that the best may still be to come,” says Pyott, a Glasgowborn lawyer who has been chief executive since 1998.
“Right now our revenues are split 50:50 between cosmetics and therapeutics. But five years from now, 70% of our sales may come from therapeutics, and that’s not because the use of Botox will decline.”
Pyott lists some of the other Botox applications in the pipeline. “It always starts in a severe population,” he says referring to two future therapeutic applications: controlling weak bladders in multiple sclerosis sufferers and crash victims with spinal cord injuries. This is currently in clinical trials.
Many of the discoveries of the use of Botox are by accident. It was discovered that it could erase wrinkles in 1987 after an eye specialist injecting patients to correct crossed eyes reported that a patient’s frown had disappeared.
Another cosmetic application, which was approved in 2008 by the US Food and Drug Administration, was born from an eye-drop product that Allergan makes. Patients reported that one side-effect was longer and fuller eyelashes. Back in the laboratory, Allergan came up with Latisse, which has now been approved in the US and is undergoing clinical trials in Europe.
For Ireland, which is in the throes of one of the worst recessions in the eurozone, the Botox story is important.
One of the reasons that Allergan set up shop in Westport 33 years ago was relocation aid and low corporation tax, which now stands at just 12.5%. Recently the European Union’s European commissioner for economic and financial affairs, Olli Rehn, suggested that this might have to be increased if Ireland was to reduce its gargantuan budget deficit.
But Pyott is unperturbed by the threat of rising taxes: “We have long assumed the rate would go up a couple of points,” he says. Having studied European Union law, he says that Brussels can huff and puff but “at the end of the day, it’s a matter of national sovereignty.”
He is also optimistic about the overall recovery of European markets in comparison with those in the United States. “Here and there, there are patches of gloom but in our company we really see no big issues at all,” he says.
“We look at all the statistics very carefully and in fact, looking at the recovery of our markets, particularly those that are cash paid, there is no sign of the infamous ‘double dip’. In fact, I would say most European markets are recovering and growing more quickly than those in the United States.” – Guardian News & Media 2010
Serendipity: It was discovered in 1987 that Botox could erase wrinkles after an eye specialist injecting patients to correct crossed eyes reported that a patient’s frown had disappeared.