Market_Assessment_Demand_Assessment_O by Sutherland Global Services

Case Study and Sample Slides US: Aesthetic Laser Devices Market

Disclaimer This document is the proprietary and exclusive property of Sutherland Global Services except as otherwise indicated. No part of this document, in whole or in part, may be reproduced, stored, transmitted, or used for design purposes without the prior written permission of Sutherland Global Services. The information contained in this document is subject to change without notice. The information in this document is for information purposes only. Sutherland Global Services® disclaims all warranties, express or limited, including, but not limited, to the implied warranties of merchantability and fitness for a particular purpose, except as provided for in a separate software license agreement. All confidential or proprietary information contained in Sutherland’s response shall at all times be and remain the sole and exclusive property of Sutherland Global Services, Inc.

© 2013 Sutherland Global Services Inc., Sutherland All rights reserved. Privileged information ofand Sutherland Global Services of Inc. www.sutherlandglobal.com © 2010 Global Services Inc.,and All confidential rights reserved. Privileged confidential information Sutherland Global Services Inc.

Disclaimer Disclaimer

The sample contains excerpts from a study conducted by Sutherland Global Services for a client. the sample may not contain all the pages of the original document. THIS sample has been prepared by Sutherland Global Services, Inc. or its associates or affiliates (â&#x20AC;&#x153;Sutherland Global Servicesâ&#x20AC;?) exclusively as an illustrative sample only and is sent to authorized recipients solely for the purpose of evaluating Sutherland Global Services' support service capabilities. THIS sample should not be considered as an offer to sell, a solicitation to buy, or an endorsement or recommendation of any company. Sutherland Global Services does not guarantee the accuracy, completeness or other characteristics of the data / information of the report. This Sample may not be reproduced or distributed (in whole or in part) to any third party without the express prior permission of Sutherland Global Services.

Sutherland Global Services may also have (or have had) arrangements with entities whereby Sutherland Global Services receives or is in receipt of information relating to the subject matter of this Sample that is confidential or proprietary to a third party, and hence may not be utilized. Accordingly, Sutherland Global Services may be in receipt of relevant information that is not reflected in this Sample.

www.sutherlandglobal.com May 15, 2013

Aesthetic Laser Devices Market, USA Business Requirement

Research Approach

• Market assessment of aesthetic laser devices in the US – To understand and analyze the historic and future demand for aesthetic laser devices – To identify trends in consumer uptake of aesthetic laser treatments – To identify alternative treatments, and trends in such treatments – Competitor landscape and market share analysis

• Using the bottom-up approach, the latest and relevant market size of aesthetic laser devices was arrived at – Conducted primary research with top device manufacturers to understand equipment-buying process and financing models • Analyzed trends in demand for various aesthetic laser treatments and typical fees for each of these treatments • Probed drivers and inhibitors of the overall aesthetic treatments and laser treatments • Competitive benchmarking of aesthetic laser device manufacturers – Benchmarking of products across types of treatment and technologies used – Analysis of distribution channels and study of marketing strategies

Sutherland’s Solution • Analyzed the market of medical lasers vs. aesthetic lasers to understand the demand for aesthetic equipment • Derived market share of each of the major aesthetic laser device manufacturers and provided details of their operational/marketing/distribution strategies, product mix, manufacturing base, future plans, along with SWOT analysis • Analyzed drivers of aesthetic treatments, and studied trends in procedure volume as also comparison of prices of laser vs. alternative procedures • Performed a deep-dive assessment of consumer behavior, e.g. preferred aesthetic laser procedures & their alternatives, preferred set-up for treatment – hospital vs. spa, frequency of treatment

www.sutherlandglobal.com May 15, 2013

Aesthetic procedure value is estimated to grow ~50% by 2019; laser treatments account for ~17% of non-surgical cosmetic procedures U.S. Medical Laser Market $400mn

13%

U.S. Aesthetic / Cosmetic Procedures Value (Values in $ million)

$800mn

$15,000

$50 $25

32% 11%

$150

$75 $100 Cardiovascular Lasers

$250

$7,500

Urology Lasers

$9,500

$8,500

13%

Aesthetic Lasers

$200

$375

2004

2009

Ophthalmic Lasers 2008

2009

2010

2019F

Non-Surgical Cosmetic Procedures by Type of Device (Volume in # of procedures)

Others

25 million 5% 5% 5% 15%

5 million 5% 15%

2010: 30 million

Microdermabrasion

25% Non-Laser 83%

Chemical Peel

Soft Tissue Fillers

Laser 17%

70% 55%

Botox

Non-Laser Treatments Source: SGS Research, XXX reports

Laser Skin Resurfacing Ablative Laser Treatment of Leg Veins Laser Skin Resurfacing Non-Ablative Laser Hair Removal

Laser Treatments

Note: Dummy data is provided in sample slides

www.sutherlandglobal.com May 15, 2013

Focus on services; consumables and non-core customers are the key themes across laser device manufacturers

Player

Source: SGS Research, XXX reports

Distribution Strategy

# of Patents (US)*

Non-US

Key Focus Areas / Strategy

• Direct sales • Aesthetic devices for home-use are sold through retailers

• Subsidiaries in Spain, Portugal, France, Germany, Italy, the United Kingdom, China, Hong Kong, Japan and Australia

• More acquisitions to expand product portfolio • Increased focus on consumables and service • Innovative physician support programs

XXX

• XXX

XXX

• XXX

XXX

• XXX

• Direct sales (32 employees)

• Direct subsidiaries - France, Spain, the United Kingdom, Germany, Korea, China, Japan and Mexico • Distributors – 78 countries

• Home-based products • Focus on services

XXX

• XXX

Note: Dummy data is provided in sample slides

www.sutherlandglobal.com May 15, 2013

XXX company has been diversifying geographically Key Financials Dec’07

(Values in $ mn) Net Sales

Revenue by Business Segment

Dec’08

Dec’09

Dec’10

141

115

54.7

189.5

81%

74%

65%

47%

EBITDA Margin

18.8%

0.3%

-40.8%

-12.7%

Net Margin

22.2%

4.9%

-43.1%

-13.5%

Total Assets

269.3

281.3

270.3

374.8

Cash & Investable Securities

132.4

122.6

106.9

89.1

0.0

2.7

0.6%

15.5%

34.7%

6.0%

R&D (% to Sales)

13.5%

20.2%

24.1%

S&M**Expenditure

20.2%

26.6%

31.9%

31.4%

0.490

0.356

0.297

0.299

Gross Margin

Debt Capex (% to Sales)

Sales Per Employee

(Values in $ million)

$57 $3

$112

$133

$49 2008

2009

Lasers and other products

2010

Product-related service

Revenue by Geography (Values in $ million)

Key Observations • The company product-related services revenue has seen a surge in 2010 • During the years, the company has diversified geographically with significant revenues now coming from the Europe and Asia-Pacific regions

$17

$1 $11

$33

$53

$11 $58

$60

$28

2008

2009

North America Source: Company filings, XXX reports

$10

Western Europe

$66 2010 Asia-Pacific

Israel

Other

Note: Dummy data is provided in sample slides

www.sutherlandglobal.com May 15, 2013

SWOT Analysis WEAKNESSES

STRENGTHS • Proprietary Technology: Employs proprietary Electro-Optical Synergy (ELOS) technology, which makes use of the synergy between electrical energy and optical energy • Strong Liquidity Position: Financial position with US$ 217mn cash; indicating robustness to meet short-term obligations

• Strategic Acquisitions: M&A assisted in business expansion,

• Legal Proceedings: Patent litigations against the company harm its brand image in the industry and impact product sales • Outsourced Manufacturing: Has outsourced manufacturing of its products to three subcontractors located in Israel. Any issues related to manufacturing process would impact the company directly

including new technologies, additional products, supplementing the company’s core product portfolio and geographic reach

• Business Expansion in Home Aesthetic Medical Devices: Acquired

• Technological Changes: The company must invest and develop new

Pharos to tap the potential available in home-based light therapy for

technologies to counter rapid technological changes, evolving

aesthetic procedures

industry standards, changing market conditions and new product

• Growing Hair Removal Procedure: Growth in acceptance and popularity of laser-based treatments for hair removal provide a large growth opportunity for the company

• Diversification to Emerging Economies: Aesthetic laser treatments are yet to penetrate the emerging markets

introductions and enhancements • Intense Competition: From both competing companies as well as conventional non-energy-based treatments • Stringent Government Regulations: Non-compliance with applicable laws and regulations impacts performance