Aesthetic dermatology solutions developer PhotoMedex Inc. (Nasdaq: PHMD; TASE: PHMD), through its subsidiary Radiancy, Inc., has acquired Brazilian distributor LK Technology Importaçăo E Exportaçăo LTDA, and plans to begin marketing and selling its no!no! products in Brazil as early as the third quarter of 2013. Radiancy will pay $100,000 plus profits from LK’s legacy activity during a transition period.
LK was founded in 2003 and is based in Sao Paulo. It has been selling Radiancy’s professional line of products in Brazil for several years. The local manager of LK will remain in his position.
"We are very excited to bring no!no! products to Brazil, which marks our ninth country with direct sales,” PhotoMedex CEO Dr. Dolev Rafaeli. “Management of LK has a demonstrated ability to grow sales of medical and aesthetic products. With a rapidly-growing middle class and a strong interest in aesthetic products, Brazil holds exceptional promise for no!no! direct-to-consumer and retail sales. We are on track to begin sales this year and are finalizing our marketing message and media strategy to enter this high-growth market as soon as possible."
The Brazilian aesthetic products market is growing rapidly, and was the third largest market behind the US and Japan, with total sales of $24 billion, in 2011, 47% more than in 2010 across the aesthetic category, according to research performed for PhotoMedex by Fess’Kobbi, a Brazilian advertising agency. In addition, according to the Brazilian Chamber of E-Commerce, Brazil’s e-commerce market, the largest in Latin America, is also growing rapidly at 25% a year; electronic appliances is the largest category.
Maxim Group has given PhotoMedex a "Buy" recommendation, with a target price of $19, a 21% premium over the market price, following its acquisition of LK. It believes that the entry into the Brazilian market could be a "game changer" for PhotoMedex and its no!no! products from the geographical expansion. It adds that 75-80 million of Brazil's 193 million people have C+ to A+ socioeconomic status (similar to the US), constituting a major opportunity for the company.
Maxim Group notesPhotoMedex's competitive edge in Brazil. Brazil levies high duties on aesthetic products imported from the US, but since the company will export its products from Israel, it will have a competitive advantage both in price and profit margins.
Published by Globes [online], Israel business news - www.globes-online.com - on July 21, 2013
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