Millennials' `Lunch-Break Cosmetics' Spur China's Botox Boomby
Hong Kong company to expand Dr Reborn treatment clinics
China medical aesthetic market may reach $11.3 billion by 2020
Fretting about frown lines and crow’s feet can start early. In China, women in their 20s and 30s are spending on therapies to smooth their wrinkles -- a growing trend Union Medical Healthcare Ltd. wants to meet.
Union Medical, Hong Kong’s biggest provider of the wrinkle treatment Botox, raised HK$742.4 million ($96 million) in an initial public offering earlier this month to fund acquisitions and capital expenditure that will expand its network of Dr Reborn clinics in the territory and on the mainland.
The company is seeking a bigger share of China’s medical aesthetics market, which it predicts will double to $11.3 billion by 2020. Attracting a younger clientele offers greater potential for repeat business over the client’s lifetime, plus those in their 20s and 30s are more inclined to provide free word-of-mouth advertising, according to Gabriel Lee, Union Medical’s chief operating officer.
‘Younger and Younger’
“Hong Kong started really late in introducing medical aesthetics, but it’s catching up fast as people who seek these services get younger and younger,” Lee, 37, said in an interview. “The new generation in this region want effective results right away, and they don’t mind sharing with others that they’ve had these procedures done.”
Treatments using Allergan Plc’s Botox and other injections such as hyaluronic acid -- which Lee says smooth wrinkles and makes the face appear slimmer -- make up 30 percent of Union Medical’s sales. The company predicts revenue from this business may expand by as much as 40 percent in the next five years -- about double the market pace, Lee said.
In the U.S, people older than 35 account for 80 percent of non-surgical aesthetic procedures, whereas in China, the main buyers are younger than 35, HSBC Holdings Plc said in a report last month. Injected treatments are especially popular because of the quick recovery time and low risk of complications, according to the report, which said some devotees refer to the procedures as “lunch-break cosmetics” because of the hour-long duration of treatment.
Like Buying Clothes
“It’s like buying new clothes or new cosmetics,” Lee said. “Injections are really effective -- look in the mirror and you see the results right away.”
Union Medical’s customers are 90 percent female, with the majority aged 18 to 45, according to Lee. Minimally invasive procedures start at about HK$1,000 for first-time customers and can range from HK$10,000 to HK$100,000 for multi-treatment packages, he said.
Profit margins are attractive on treatments using hyaluronic acid dermal fillers, said HSBC -- and most customers needing annual repeats. Driven by “powerful marketing campaigns” and the influence of social media, treatment volumes will increase more than 20 percent annually over the next three years, the bank estimates.
Bloomage Biotechnology Corp Ltd. and Shanghai Haohai Biological Technology Company Ltd. are the top two domestic manufacturers of hyaluronic acid, according to an HSBC survey of 50 hospitals. Restylane -- owned by Nestle SA’s Galderma -- and Allergan’s Juvederm are among others approved for sale in China.
Union Medical has declined 2.6 percent since the shares began trading in Hong Kong on March 10, compared with a 3.2 percent advance in the Hang Seng Index. The stock fell 0.7 percent to HK$2.94 on Wednesday.
Allergan, being bought by Pfizer Inc., has beefed up its sales team in China, President Brenton L. Saunders said on a Nov. 4 conference call to discuss earnings, adding that the Asian nation offers the Parsippany, New Jersey-based company “lots of opportunity to continue to expand the aesthetic portfolio.”
Union Medical has 23 doctors on staff to administer procedures, Lee said. It doesn’t rule out branching into non-aesthetic businesses, such as health screening and gynecology, he added. Gaining prospective customers on the mainland is a priority.
The company says it has 8,400 key clients which visit more than four times a year and spend more than HK$5,000 in that time frame, and contribute to 70 percent of its business. Of these, about 10 percent are in mainland China, Lee said. The company wants that proportion to reach 15-to-20 percent over the next 18 months, spurred by investing in clinics there and promoting its Hong Kong centers in advertising.
In Asia, Hong Kong trails Thailand and South Korea in wooing plastic surgery tourists. Still, demand is rising, and will inevitably match trends in developed countries, said Jimmy Chan, a clinical associate professor at the University of Hong Kong medical faculty’s surgery department.
Chan said he has some concern about the ease with which the public can find safe and reliable practitioners, as well as how the industry ensures adequate training and supervision of those performing the procedures.
“Misleading marketing strategies and the creation of unrealistic expectations can also be dangerous, and all these culminate in a risk for the public safety,” said David Wong, head of the plastic, reconstructive and aesthetic surgery division at the Chinese University of Hong Kong.
Staci Ford, a cultural historian at the University of Hong Kong, says she’s concerned about the increasing pace and volume at which people are turning to aesthetic procedures.
“People are rightly critical of the current excesses,” said Ford, who’s affiliated with the university’s Women’s Studies Research Centre. “At the societal level, I worry tremendously about the pressure that media and popular culture puts on all of us to uphold some ridiculously unrealistic standard of beauty.”
Union Medical maintains that its procedures are performed safely and ethically. “Like many consumer products, you do want the consumer to use your product earlier,” Lee said. “What we are providing is not something that’s addictive. It’s something that keeps you looking younger, helps your skin rejuvenate.”