In the first deal of its kind for the Est??e Lauder Cos. Inc., the firm's Clinique brand has inked an agreement with Allergan that will result in a specialized line of Clinique-branded products to be sold only in doctors' offices.
An official announcement is expected today.
Under the terms of the deal, the two will produce skin care products to complement in-office aesthetic procedures, such as laser peels and microdermabrasion. Clinique will formulate, develop and manufacture the line, and Allergan will handle consumer and professional marketing and distribution and record sales to physicians. The line will be sold by Allergan's sales force, which is expected to add staff as a result of this agreement.
The first products are expected for fall 2008, and current plans are to launch six products in the initial collection.
Allergan, the Irvine, Calif.-based global specialty pharmaceutical giant, which also manufactures Botox and dermal filler Juvederm, clearly sees the prestige beauty market as a major growth opportunity. The Clinique deal marks the second time in the last few years that the company has reached out to a leading department store beauty brand.
In 2005, the pharmaceutical firm signed a partnership deal with Elizabeth Arden which has resulted in Arden selling a department store version of Prevage, Allergan's high-end idebenone antiaging product. Allergan still sells a physician-strength version to dermatologists for exclusive use in that market. As well, Allergan manufactures M.D. Fort??, a glycolic acid-based skin care regimen, and Vivit??, a luxury antiaging line, both sold only in physicians' offices.
According to Allergan, nonsurgical aesthetic procedures have increased nearly 750 percent over the last decade, with consumers in the U.S. spending more than $12 billion on cosmetic procedures in 2006.
For Lauder, the partnership takes one of its core brands into a market that builds on its heritage. Clinique, which was created in 1968, has always positioned itself as a skin care authority, aiming to offer allergy-tested, fragrance-free products vetted by dermatologists; the brand also established the Clinique Skin Wellness Center — intended to advance clinical and research programs at Manhattan's Weill Cornell Medical Center — in 2006.
According to industry sources, Clinique's annual retail sales topped $1.2 billion in the U.S. last year."Beauty is changing so much and evolving so much," said Lynne Greene, global president of Clinique. "Consumers can look in the mirror Tuesday, notice a wrinkle, and have it gone by Wednesday with a clinical procedure. This new world is being developed by Allergan, which has a strong relationship with physicians. It's time to go to a new place. By being present in doctors' offices pre- and post-procedure, we also feel we're enhancing our dermatological credibility in department stores. We are doing this deal for strategic reasons and for the long term."
As a retail brand, Clinique is in about 2,200 U.S. department stores. The medical line's door count has not been determined, said Greene. There are thought to be at least 10,000 doctors for whom the line could work, although sources say it is unlikely that it will be with all of them.
Clinique and Allergan declined to discuss sales projections, and industry sources emphasized that this channel of distribution is still in its infancy and therefore largely uncharted. Still, sources said that a line such as this one could do in excess of $5 million at retail in its first year.
"In collaboration with Clinique, our goal is to establish a leadership position in physician-dispensed skin care by offering a one-stop approach to specialized skin care products under a brand name that is trusted by consumers and backed by science on which physicians can rely," said David E.I. Pyott, Allergan's chairman of the board and chief executive officer, in a statement. "The collaboration combines Allergan's leadership in medical aesthetics and our deep understanding of the physician channel based on our Total Facial Rejuvenation portfolio — including Botox Cosmetic, Juvederm and our skin care product line — with Clinique's history of formulating leading consumer skin care products guided by dermatologists. Together with our complementary strengths, we expect Clinique and Allergan to grow this market."
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