Allergan’s Q1 Earnings Call: Allergan’s thoughts on it’s Botox and Juvederm Ultra XC growth.

You might want to visit our Select Partner Medical Spa RX after reading this.

First quarter sales increased year-over-year 11.2% in dollars and 6.9% in local currencies, boosted by the strong pickup in the sales of medical devices, which grew 18.4% in dollars and 13.4% in local currencies. The growth in the Medical Aesthetics businesses was even stronger outside the U.S. in all regions and across a wide range of countries, with surprisingly strong performance in Europe.

Operating performance was strong, with non-GAAP earnings per share at $0.65, marking an increase of 18.2% versus the result for Q1 of 2009, and comfortably exceeding the Q1 expectations shared with you, the investment community, of $0.57 to $0.59.

Earnings growth was driven by strong gross margin expansion, especially in the Medical Device segment. Careful spending in the selling, general administrative area, whilst we increased investment in R&D by 11.1% on a non-GAAP.

Within SG&A, we however doubled our DTC expenditures versus Q1 of 2009, which of course was the low watermark for spending when the world economy was in crisis. Our plan is to continue to invest in 2010 across our brands and into the recovery of our markets.

During the quarter, we were pleased that we continued to strengthen our R&D pipeline, supplementing our internally development programs with acquisitions and licenses. In January, we acquired Serica, a company with proprietary technology for use in tissue regeneration especially applicable to breast reconstruction, as well as the license for Ser-120 in Phase III clinical development for nocturia. Strategically, we have made good progress in building up a portfolio of urology assets.

We also furthered our aspirations to be the leader in medical aesthetics also in Asia, by reacquiring the rights to BOTOX Cosmetic in Japan and China and expanded our footprint in fast-growing emerging markets by establishing direct operations for all of our businesses in Turkey, effective from the second quarter.

After the out-licensing transaction with Bristol-Myers for neuropathic pain, we’ve increased our degree of R&D focus on our core specialty areas.

Now I’d like to comment on our expectations for 2010. For the full year earnings outlook, we have brought up the bottom of the EPS range by $0.02 to $3.11 and have left the top end of the range at $3.15 which at the time of the last earnings call expressly excluded the costs of any healthcare reform bill in the United States. With the increase of the Medicaid rebate, extension to managed Medicaid and expansion of eligible hospitals in the so-called 340B program, we estimate that the cost of healthcare reform in 2010 will be approximately $12 million. This is now included in our outlook.

Turning to BOTOX

Sales growth has picked up relative to trends seen across 2009, with growth versus the first quarter of 2009 at 11.3% in dollars and at 6.6% in local currencies. Sales of $331 million were only modestly lower sequentially than Q4, which is always seasonally the highest quarter of the year. Most of this increase was due to the more economically sensitive aesthetic side of the business, as the benefits of the upper-limb spasticity FDA approval in March occurred too late in the quarter to contribute to our sales results.

Outside the U.S., we enjoyed very strong double-digit increases across a wide range of countries, with surprisingly strong growth in several of the main European markets. These global markets are precisely where we are successfully dealing with multiple competitors.

It would therefore seem that the market is recovering as we can measure our market share with only a short time lag. In Europe, on the aesthetic side, we’re holding share at just under 80%, as we deal with the incursions of both Merck’s, with their Zymine and Bocatua [ph] brands and Galderma with Azzalure.

On the therapeutic side, it seems that most of ZMM’s market share gains have been at the expense of Dysport. In the U.S., BOTOX sales growth is less buoyant, as there was no base of Dysport sales in the prior year, but it is clear that the market is growing again.

We estimate that in the aesthetic market, Dysport had somewhere between 13% and 14% share in the first quarter. We’ll be curious to see the lasting impact of the Dysport Love It or Leave It promotion after it terminates at the end of May.

In the therapeutic market, Dysport’s share is so far negligible, given the long history and experience of BOTOX use. In Europe and the U.S., we have recently introduced a 200-unit vial, which is useful for injectors treating large muscle groups, as well as for differentiation from competition. Regarding global market share for the fourth quarter, the last quarter for which data is available, we estimate that BOTOX held 79% share in a market growing 13% year-over-year.

Regarding the clinical program for BOTOX for chronic migraine, the clinical trial results of our PREEMPT program were published in Cephalalgia, the journal of the International Headache Society. Regarding facial aesthetics, we’ve experienced an even stronger rebound in sales than observed with BOTOX. Dermal filler sales grew year-over-year, a very strong 42.4% in dollars, and 34.5% in local currencies, with great growth in all operating regions of the world, with Europe again surprising on the upside.

Juvederm & Juvederm Ultra XC

In the U.S., we’ve seen huge growth in the JUVÉDERM line since the launch of JUVÉDERM Ultra XC, this is the lidocaine-containing product, in early February. Although we have gained some market share, it would seem that the market is responding strongly to the reduction in treatment pain experienced with this lidocaine-containing product and already a substantial share of the mix is attributable to JUVÉDERM Ultra XC.

We have just initiated print advertising for JUVÉDERM XC and have a PR campaign with TV host Dayna Devon, as our spokesperson to further drive growth. In Europe, we launched new additions to the JUVÉDERM product line, JUVÉDERM Smile at the IMCAS Conference in Paris in January and JUVÉDERM Hydrate at the Anti-Aging Conference in Monaco in March. JUVÉDERM Smile was also approved in South Africa, JUVÉDERM XC in Korea and JUVÉDERM Ultra Plus in Taiwan.

Voluma was recently launched in Brazil and also approved in Taiwan.

Based on our analysis of the world market in Q4, which we estimate grew 12%, it is clear that global market growth has accelerated since then. Our analysis also points to JUVÉDERM market share gains in all regions of the world. Beyond superior product performance characteristics, Allergan also benefits from having full product line.

At the end of the first quarter, Allergan’s cash and cash net of debt positions totaled approximately $2 billion and $471 million, respectively. Allergan continued to maintain exceptional cash flow generation capabilities in the first quarter, with operating cash flow after capital expenditures of approximately $161 million, an increase of approximately $56 million over the first quarter of 2009.

The fake Botox case in Houston comes to a close with this sentence handed down.

A Houston, Texas physician was sentenced to five months and 15 days in federal prison and three years of supervised release for injecting patients with fake Botox, prosecutors said on Friday.

Dr. Gayle Rothenberg is a local physician specialized in providing image enhancement services. She was also ordered to pay $98,426 in restitution to her affected patients. As a condition of supervised release, Rothenberg is prohibited from seeking reinstatement of her medical license.

Rothenberg and her former husband, Saul Gower, a local attorney, operated The Center for Image Enhancement located at 2000 Bering Drive in Houston.

Rothenberg ordered and administered a drug called Botulinum Toxin Type A that was labeled with the warning “FOR RESEARCH PURPOSES ONLY, NOT FOR HUMAN USE.” Despite this label, Rothenberg injected more than 170 patients with the substance and represented to patients that they were receiving Botox Cosmetic, manufactured by Allergan Inc.

Rothenberg also admitted that she advertised in brochures, magazines and websites that she specialized in treating facial wrinkles with Botox Cosmetic, even though she intentionally stopped ordering it due to the price increase in 2004 and began ordering the unapproved drug from a company named Toxin Research International because it was half the price of the other. She admitted that she did not tell her patients that they were receiving a different substance.

Gower pleaded guilty in 2008 to misbranding of a drug while being held for sale and making false statements to an agent. He then, cooperated with agents and testified against his ex-wife in exchange for a sentence of 4 years’ probation.

If you are new to “link building”, it really isn’t as hard as it seems.

Basically, link building is just a link from another website back to your own medical spa or laser clinic. The more back links your site has, the higher it will rank on the major search engines.

Link building can be very time consuming, but the FrontDesk SEO tool can really help you go out there and find the sites you should be listed on. This saves you a tremendous amount of time.

Because you will be resubmitting the same text over and over again, make yourself a document that you can keep all of your submission text on. This should include your Page Title, your website’s URL address, a brief description of your practice, and important keywords. Website submissions also ask for a name of the submitter and email address. I would suggest setting up a email address with Google or Yahoo, one that you only use for submissions, this way your personal email won’t become inundated with confirmation and/or spam emails as a result of your submissions.

View: 5 minute video introduction to linkbuilding and SEO

There are several types of link building methods you can do. Some are just basic data submissions, and some are blog and article submissions. I will describe the differences amongst the major link building methods:

Article Submission

There are directories on the web designed just for submitting articles and some for writing blogs. When you submit something you wrote about your practice or even a particular therapy you offer, you can attach hyperlinks to keywords in your article that direct the reader back to your website. Some quality sites are Squidoo, Hubpages, Blogger, and Wordpress.com. Let me show you how this works with just one line taken from a blog I wrote on my own blogpost:

“It’s your body and you do have to be careful of who you choose to perform your laser lipo procedure. While no physician can have a 100% satisfaction rate, don’t be afraid to ask questions about how long a physician has been performing these procedures, who they trained with, how many procedures do they perform a month, and also if they have any satisfied patients you can chat with. Also, it’s important to ask to see a before and after photo book with their patients, and not someone else’s.”

By choosing a keyword you think your reader would be interested in, you can immediately direct them right to that page on your website with the hyperlinks.

Google considers a “Yahoo Directory” link as a quality back link. Unfortunately, they charge an annual fee of $300. It may be worth submitting to; however, there is no guarantee from Yahoo Directory that your site will be accepted.

Directory Submission

DMOZ is a directory worth submitting your site to. DMOZ is an Open Directory Project (ODP) mainly known as DMOZ which stands for “directory.mozilla.org” and is owned by Netscape. While DMOZ can substantially increase your SEO ranking, it’s tough to receive their approval and the entire process could take months. If you are fortunate enough to receive their approval, many smaller directories use the DMOZ directory categories so if you can become listed with DMOZ this would mean you would also become listed on many other web directories as well.
There are other major directories you can submit to such as the BOTW (Best Of The Web) directory ($99/year or $299/permanent).

Social Bookmarking

Social bookmarking is changing in it’s effectiveness all the time. In social bookmarking websites, users save links publicly (not personally on their own computers) to web pages that they want to store and/or share with others. Usually, these bookmarks are shared within an individual “group” someone may subscribe to (such as “Laser Hair Removal”). You can add descriptions to your bookmarks in the form of metadata, or meta tags, so that other users can understand what the content is of your bookmark without having to download it beforehand. Different types of “descriptions” can include comments or even reader’s votes (favorable or not - like on YouTube or Digg). Again, FrontDesk SEO makes this process relatively easy.

Blog Commenting

MedicalSpaMD is a blog and, like most blogs, it is highly susceptible to spammers like we have all seen and Jeff so diligently tries to eliminate on a daily basis as it can be a true nuisance for people like us who use this site as a valuable tool for your practices.

If you want to find blogs to participate in and comment on, try to find quality blogs that are related to what you do as a profession. Again, FrontDesk SEO can help with this. And when you add your comments, try to make them content-relative because not only do your comments add value to the blogpost in general, they also have greater chance of staying on the blogpost with a link back to your website.

Press Releases

Press Releases have worked well for me, and I’m not too proud to say that I didn’t write the ones that really worked. There are a lot of good and bad example press releases out there and I am no exception. Writing a quality press release is an art and, frankly, I don’t have the talent for them and pay someone else to do it. Let me give you an example of my own good and bad press release experiences.

While this press release still continues to give my website hits, all it is is words: Paula’s Bad Example

Now look at the one I paid Fran Acunzo from Acara Partners to do for us. It includes a photo, links and even video: Paula’s Good Example

If writing a good press release including videos and back links is not your forte, then it’s worth it to farm it out. Just writing a good press release is half the battle. Submitting it to the right press release agencies that will index it effectively for you is the other half.

Social Media Sites

Social Media sites such as Facebook, Twitter, Flickr and YouTube work very well by providing quality and relevant back links to your site that all the major search engines love.

So, this is back linking in a nutshell and we can really go deeper into the categories, but I fear you will become bored or even glassy-eyed if you’re not a geek like me. So if you don’t have someone out there performing these activities for you and you really are serious about your web presence, you really might want to take a look at FrontDesk SEO and see what it can do for you. Just remember, building links doesn’t increase your website’s internet presence overnight. It does take some time, like my good friend Jeff keeps reminding me! In a world of available “instant results”, it’s hard to be patient sometimes! 

I wanted to post a quick update about how our Select Partner Program works since we’ve got a number of new Partners that are about to launch.

Medical Spa MD allows premier technology, product, and service providers who sell to the cosmetic medical industry to partner with Medspa MD and provide discounts or special marketing opportunities to our Members. Select Members are able to list their product or service on this site as well as making it available directly to Medical Spa MD Members by including it in our direct to member newsletter and promotions. Members receive tremendous savings and exceptional support, backed up by Medical Spa MD and access to our active community forums.

This program has been so succesfull that we’ve had a great deal of trouble keeping up with the number of companies who would like to be included. But we’re trying. In fact there will be a number of new companies launching in addition to our current Partners. Before that happens I wanted to outline how our Select Partner Program works and encourage everyone who’s not yet given one of our Partners a try, to do so.

We’ve also changed the main navitation above to give easier access to our Partners, so Members can access current and special offers easier.

Here are some of our current Partners. We’ll be announcing more Select Partners and deals for our Members in the next few weeks that include Sciton, Healthy Aging Magazine, Freelance MD and others. I’ll be going through this in detail with each Partner but I wanted to provide this quick overview.

MedicalSpaRx.com is a leading international wholesaler of pharmaceuticals and medical devices that supplies lower pricing to its clients than they would receive from their local distributor. Medical Spa RX is able to offer these products to Medical Spa MD members worldwide by leveraging the power of this incredible community.

Frontdesk SEO software makes anyone an expert. Our simple step by step search engine marketing work flow and processes let anyone run your entire internet marketing website’s visibility campaign and build your in just 5 minutes a day. Or outsource it to our experts. Run a FREE SEO website report here!

Shine Teeth Whitening gives every aesthetic practice a way to participate in revenue and profit of the burgeoning $300M teeth whitening industry with no training and no equipment required. Shine is an outsourced lab that provides custom teeth whitening kits and professional strength whitening products.

Only Medical Spa MD Select Partners
are allowed to display this badge.

IPL & laser technology companies, service providers, publications, content providers and other businesses that sell to cosmetic medical practices and medical spas are partnering with Medical Spa MD to gain access to the tremendous buying power of our physician community. And our Members get special pricing and the trust that comes from the fact that Medical Spa MD stands behind every Select Member.

What makes a Medical Spa MD Select Partner?

• Amazing Products & Services our Members want: To be included as a Medical Spa MD Select Partner, there has to be real value available to our world-wide community.
• Exclusive Member Pricing: All Select Partners offer reduced, exclusive pricing to Members. In some cases our Select Members will build out entire new websites to keep this pricing from their existing clients.
• Fantastic Customer Service: Select Partners must provide exceptional customer service to Members. Medical Spa MD is an active community and Members can complain directly to us.
• Transparency: While we consider our Select Partners as just that, partners, our reputation comes first. When our Members buy from a Select Partner they know that we’re standing behind that business.

Become a Medical Spa MD Select Partner.

If you meet the above criteria, let Medical Spa MD help you make the most of your marketing efforts. Consider joining the Medical Spa MD Select Partner Program — a way for you to access our incredible physician community. Or propose your own creative plan for partnering with Medical Spa MD. Apply here.