Cellmid Limited (ASX:CDY) is one of the more diversified ASX-listed biopharmaceutical groups with prominent products in the health and well-being sectors as well as traditional clinical markets.
Recent developments in relation to its foray into anti-ageing skincare products are likely to bring its broader range of health, skin and hair care products under the microscope.
While the company has a strong portfolio of clinical products at various stages, some of which are generating revenue streams, Proactive Investors focuses on the health and well-being side of its business in this report.
A household name in evolis® leads the way
One of the company’s best-known consumer lines is its evolis® range of hair care products.
Manufacture of the evolis® Professional range was completed in June 2017, which allowed the company to sign its first retail partnership with Neiman Marcus.
This is only the beginning of the group’s US market approach with retailers and management expects to secure a number of similar relationships in North America.
Strong sales growth in Japan and Australia
Japan has also been an important market for the company with sales increasing by 39% in fiscal 2017 to about $3 million.
In Australia, consumer health sales increased 81% to reach nearly $1.5 million in fiscal 2017.
While the pharmacy segment remained the most significant channel, website sales have also increased significantly.
Management has responded to this trend by establishing a dedicated digital marketing team which it anticipates will grow sales in the e-commerce channel.
Concept store being established in Japan
Such is the strength of the company’s product acceptance in Japan that management has established its first concept store in Ginza, one of Tokyo’s premium shopping districts.
The launch of the Advangen Hair Biology store is expected in the second half of 2017.
Initially stocked with the Japanese products, especially Jo-Ju®, the store will take advantage of the brand awareness built through two years of television shopping channel presence.
The global évolis® Professional branded shampoos, conditioner and activators are expected to become available in the concept store in late 2018.
Advangen continues to be a strong revenue driver
Since the acquisition of Advangen Inc some five years ago the company has generated strong revenue growth.
Sales of the consumer health products increased almost four-fold in four years and management is looking to this division to drive future earnings growth.
With new import permits now in place for Lexilis® and Jo-Ju®, Advangen commenced shipping again in FY2018, helping maintain the group’s strong revenue trajectory.
Anti-ageing hair care is fastest growing market
Anti-ageing hair care is the fastest growing segment in the hair care category and, predictably, competition is intensifying.
Advangen is leading the field with its first FGF5 inhibitor products range, a position that will be exploited to expeditiously achieve maximum market penetration.
The recognition of Advangen as a market leader in clinically validated topical hair loss treatments was further strengthened in 2017.
Publication of the first FGF5 inhibitor clinical study and more recently the company’s highly encouraging US consumer study have elevated the product’s profile even further.
Diversification into adjacent areas has been a strategic focus for Cellmid, and the distribution agreement just negotiated regarding the anti-ageing Fillerina® treatment is an important development.
Haircare and skincare come together
Cellmid has entered into an agreement with Labo International S.r.l regarding the exclusive distribution of Fillerina® in Australia and New Zealand for an initial period of up to five years.
The product is a market-leading Swiss anti-ageing skincare brand and management expects that it will be a robust profit driver, as well as being an ideal fit with Advangen.
It has been scientifically proven to reduce facial wrinkles, deliver measurable filling effects, increase facial volumes and decrease the clinical signs of skin ageing.
Fillerina® is the first non-invasive filler treatment with clinical study results published in a peer-reviewed article.
First in class, best in class
Management noted that it is a market leader in innovative, high-performance skincare within the fast-growing, anti-ageing cosmetics space globally.
Cellmid chief executive officer Maria Halasz said: “Our growth strategy for Advangen is focused on first in class, best in class, clinically validated anti-ageing products for hair, skin and body.
“Having built a successful distribution network for our FGF5 inhibitor hair products, Fillerina® is an exciting addition to our consumer health business.”
This is reflected in the record sales growth being achieved by the FGF5 product.
Cellmid’s addressable market continues to experience exceptional growth.
Anti-ageing cosmetics market to grow 24% by 2021
The anti-ageing cosmetics market is experiencing strong growth, and according to Euromonitor 2017, it is predicted to expand a further 24% by 2021 in Australia.
Fillerina® is complementary to the company’s evolis® haircare range with its innovative, patented technology.
Importantly, the Fillerina® distribution agreement will generate efficiencies for Cellmid through increased utilisation of the company’s existing evolis® national sales and digital marketing team.