The company has reported lower year-on-year fourth quarter profits, strengthening the possibility that a confirmed €700m bid offer from L’Oreal-Nestle joint venture company Galderma will be accepted by the executive board.
The maker of anti-wrinkle skin care and filler brand Restylane reported fourth quarter pre-tax earnings down from SEK67m (€7.60m) in the fourth quarter ending December 2009, to SEK41m in the corresponding quarter for 2010.
In conjunction with the results, the company announced that it would have to up marketing efforts for the Restylane portfolio of products to remain competitive in a market where the number one rival is Allergen’s Botox brand.
Increasing competition in Latin America and Europe
Although the company underlined that it is experiencing significant growth in the Asia-Pacific markets, it also stressed that it was witnessing increased competition in both the Latin American and European markets.
“The increasing competition is natural. More players are attracted to this still relatively young and growing market as there are opportunities for profitable growth,” the Q Med executive board said in the official statement.
Efforts to maintain its market growth in the European and Latin American markets are expected to lead to a significant ramp up in its Restylane product line, combined with increased marketing expenses in an effort to maintain market share growth.
Competition means higher costs
“This will result in higher costs for marketing, sales organization and product development relative to Q-Med's sales. Consequently, these efforts will negatively affect the profitability within product area Esthetics in the next few years,” the statement added.
The issue of increasing future costs is likely to lend impetus to the Galderma bid, as Q-Med would be able to take advantage of the synergies in marketing and research and development that would come about from being part of a lager group.
Currently 47.5 per cent of shareholders have already said yes to the Galderma bid, while the remaining shareholders have until February 7 to make their decision on whether or not to accept.