The professional skin care industry is undergoing a facelift of its own as new players grab hold of some of this sector’s hottest assets going into 2017. Global beauty marketer L’Oréal was by far the early mover with its 2005 acquisition of the leading medical channel brand SkinCeuticals. Big pharma players Allergan and Valeant entered more recently with their respective purchases of SkinMedica in 2012 and Obagi in 2013.
According to Karen Doskow, Director of Kline’s syndicated Global Professional Skin Care report series, companies like SkinMedica, Obagi, PCA Skin, ZO Skin Health, and others represent potential attractive acquisition targets for companies looking to bring authoritative and differentiated skin care brands to their portfolio. Susan Babinsky, head of Kline’s personal care management consulting practice, echoes Doskow’s point of view,“ Unilever smartly acquired two of the top brands, including Dermalogica, a leading brand in spas and with beauty retailer Ulta, and Murad, one of the founding and best established doctor brands with strong spa and retail distribution (e.g., Sephora, Ulta, and Nordstrom).” Johnson & Johnson also saw the wisdom in taking on a professional brand with its 2016 purchase of NeoStrata, known for its expertise in alpha hydroxy acid technology.
While the professional channel does have unique go-to-market setup requirements, many of the companies have good infrastructures in place to effectively reach this fragmented customer base. Doskow notes that several companies also have a retail presence, which can drive synergies, as well as growth opportunities, depending on the acquirer. Kline expects that more of these physician-dispensed and spa brands will move to new owners who can offer greater strategic value than their present owners —via needed investment and distribution access to drive growth. Brands like SkinMedica and Obagi are among the largest possible opportunities, and with the recent uncertainty and disarray shrouding their respective owners, a more stable and committed future could be offered by other owners. In addition, there is a robust pool of small and mid-sized companies, such as PCA Skin, ZO Skin Health, and others, that can contribute to an attractive rollup.
More details can be found on market size, competition, growth, and trends in Kline’s Global Professional Skin Care syndicated report series, as well as further insights and due diligence offered by our Management Consulting practice.