Allergan Buys Zeltiq Aesthetics For Nearly $2.5 Billion
By Jof Enriquez,
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Allergan is buying Zeltiq Aesthetics and its CoolSculpting fat reduction technology in a $2.475 billion, all-cash transaction that’s expected to close in the second half of 2017. The acquisition strengthens Allergan's prospects in the $4 billion body contouring global market.
CoolSculpting is an FDA-approved, non-surgical, precisely-controlled cooling procedure designed to eliminate fat cells through a natural biological process known as apoptosis, with minimal effects to surrounding tissue. Allergan claims millions of CoolSculpting treatments have been performed in over 80 countries worldwide.
"The acquisition of ZELTIQ is highly complementary and strategic to Allergan. By adding the best-in-class body contouring CoolSculpting System to our best-in-class facial aesthetics, plastic surgery and regenerative medicine offerings we are creating a world-class aesthetics business," said Allergan CEO Brent Saunders, in a news release.
"Allergan's world-class medical aesthetics products, global footprint, history and commitment to developing best-in-class aesthetic treatments makes the Company ideally suited to realize the maximum commercial potential of the ZELTIQ controlled-cooling technology platform," added Zeltiq CEO Mark Foley.
According to Reuters, Allergan had been wanting to tap a so-called "cash-pay" businesses like Zeltiq, whose CoolSculpting System generated the majority of the company's more than $350 million sales in 2016. Allergan has been using the same model for its best-selling Botox, which is mostly not reimbursed by insurance companies. Allergan hopes to cross-sell its line of facial injectables to Zeltiq customers to generate future profit.
"Demand for both procedures is high and this is similar to pouring more gas on the fire," Allergan Chief Commercial Officer Bill Meury said on a call with investors, reports the news service.
Allergan already markets Kybella, which is used to destroy fat under the chin, leaving surrounding tissue largely unaffected, notes Fortune.
"Fat reduction, whether you're talking about the face or the body, we're of course involved with the face, is the place to be. Demand for these procedures is very high. I think it's going to continue to get higher. My sense is that this part of the market is where the facial injectable market was 10 years ago," Meury said in a call Feb. 8, according to Seeking Alpha.
This week's Zeltiq acquisition adds body contouring to Allergan's growing medical aesthetics portfolio, which comprised 28 percent of Allergan's net revenue in the quarter ended Dec. 31.
"With CoolSculpting, our offerings to plastic surgeons, dermatologists and aesthetic practitioners will now extend to three of the largest and fastest-growing segments of their practices, putting Allergan in a unique position to provide expanded customer service, and help meet the needs of patients," said Saunders.