On the Pulse

CAIRO - 16 May 2018: Opting for permanent hair removal through the use of laser is now far from a luxury afforded by a few rich patients in the capital; it has been a growing trend over the past 10 years across varied consumer strata.

From upper-class women who can easily afford a dozen sessions, to women in the poor villages in Upper Egypt and Delta who are saving money or cutting significant shares of their monthly incomes to get the treatments, the practice has become increasingly popular.

The business also attracts men who are seeking the permanent grooming, or who want to remove scars. “We have men coming frequently for laser treatment for acne or burn scars. Some other young men also ask for beard styling or body hair removal to have less hairy chests or backs,” Dr. Mohamed Elazzab, manager of a skin and venereal hospital in Mansoura tells us.

The industry has been evolving at an incredible pace; many young dermatologists and even students at medical faculties have been eyeing this business as one of the most profitable recently.

However, the pound float in November 2016 has killed off their rosy dreams, with prices of laser devices jumping by more than double and triple, leaving many clinics and beauty centers between two choices.

The first is to sacrifice their profit margin to maintain the high turnout given the sharp competition in the market. The second choice is the rather risky decision to reduce
costs by buying cheaper devices and spare parts, depending on technicians rather than dermatologists, and manipulating the cooling systems as well as the pulse width and duration.

Flotation turns dreams into dust

Liberating the exchange rate has dealt a hard blow to Egypt’s laser dermatology business. A device that was sold at LE 500,000 is now priced at
LE 2 million, says Azzab.

When the laser business started in Egypt more than 10 years ago, dermatologists were securing 100% profit margins after deducting all operation costs and taxes, but now the lucky ones who are not deceiving their patients are hardly securing around 20%, and others are achieving net loss, according to Azzab.

“We will not wait until we achieve losses. We can bear the loss for some months, but not forever,” he adds.

Dermatologist Dr. Lamia Elalfy, who is based in El-Mahalla, seconds Azzab. “When we started, the dollar was worth LE 7, and the pulse was priced at LE 5, but now the dollar is above LE 17, while the pulse dropped to LE 1 and LE 1.5.”

Elalfy adds that the cooling cylinders also jumped to LE 1,200 compared to LE 400 prefloat. “The number of patients was limited, but we were making great profits; now the turnout is very high, yet the profits are declining significantly.”

“For some, it would be better to withdraw from the market and deposit their money at banks, securing at least a 15% interest rate without bearing any burdens,” Azzab says.

This was the decision of many investors following the pound float, when interest rates were hiked to approach 20%.

“Many clinics now depend on Korean and Chinese laser devices. Some of these devices are good, but they are 25% the cost of the US and European devices and are not efficient. How can the two players compete; the one using an LE 2 million device against one using a LE 200,000 one?” Elalfy wonders.

Not all lasers are created equal

There are massive price differences between laser hair removal sessions from one clinic or beauty center to another. Factors like the device used, the cooling system that reduces pain and prevents possible burns, as well as the calibre of the person conducting the session, in addition to the location of the clinic or center, all significantly
contribute to the cost incurred by the business.

There are three types of laser used for hair removal: Alexandrite, Diode and ND-Yag
Cairo-based dermatologist Dr. Mohamed Elnazer explains that “the centers or clinics using Diode are making more money, compared to those operating with the Alexandrite,” but affirms the latter is more efficient.

Clinics and centers that care about the maintenance of their devices usually sign contracts with their supplier or agent. The package includes a monthly check-up visit costing about LE 1,000 for each device, in addition to emergency visits when something goes wrong. Others opt out of the package, and send for emergency visits when
something goes wrong, which cost about LE 1,000 to LE 1,2000 a time.

Technicians replacing doctors

One way of cutting costs and sustaining high profit margins has been to get technicians to conduct the sessions as they are paid less than professional
doctors.

“Some places do not tell the patient or the client that the person who is going to [give them] the session is a technician, not a doctor. This could have dangerous side effects, including skin burns as technicians are not usually fully aware of the laser science,” Elnazer warns.

Naglaa Mohamed, 32, tells Business Today Egypt that she decided to stop going to a certain clinic after she found out that her last hair removal session was done by a technician not a doctor. “Thank God I had no burns, but I cannot trust this place anymore.”

Worldwide, there are technicians conducting laser sessions, but a doctor must be supervising the session, and the patient should be informed and should give
his consent, says Elnazer.

Manipulating efficiency

Pulse widths range from 12 millimeters (mm), 15 mm, 16 mm, 18 mm, 20 mm, 22 mm and up to 24 mm. The larger the size of the pulse, the higher power it consumes,
and thus the cost becomes greater.

Some centers trick patients who pay by pulse count instead of fixed packages. “They can use the small size pulse of 15 mm instead of 20 mm, for example, to count a
bigger number of pulses,” Elnazer says.

The patient ends up paying more money for the session as smaller sizes require more numbers of pulses for the same efficiency, and so the center will secure higher profit.

Determining the pulse size is one of the factors that distinguishes professional doctors and dermatologists from technicians. Another possible way of securing more revenue
is asking patients to come in for the following hair removal session after one month,
although if the session is done efficiently, the patient should only go every two or three months, Elnazer explains.

“A perfect session every two months is better and much more economic than
a monthly, less efficient one.”

A mess of a market

“Messy,” is how Azzab describes the laser dermatology
market in Egypt. “The competition is becoming very difficult, given the variety of laser
devices invading the market without censorship.”

To use laser for dermatology, the doctors and technicians, the devices and the clinic or the beauty center must be licensed. These licenses usually cost around LE 100,000; LE 25,000 for the Egyptian Medical Syndicate (EMS), LE 10,000 for the National Institute for Laser, and LE 5,000 for each device. The Ministry of Health is also paid a share
of this.

While this market is not expected to reach saturation as demand will never stop, the coming period is likely to see many doctors and dermatologists suspending laser removal treatments, which is now open for anyone, according to Elalfy. “Hairdressers
are [giving] hair laser removal [sessions], and providing Botox injections and fillers.”

The regulator should give those players a three-year notice period for compliance to sell their devices or hire doctors to supervise their clinics or
centers, Azzab suggests.

Calling for a reconsidering of the pulse price, Azzab says that the “fair price for the pulse is not less than LE 3 to maintain a reasonable profit margin.”

Finally, Azzab wants to see tighter control from the Ministry of Health, the National Institute for Laser and the Customs Authority to regulate the market and combat inefficient, cheap devices. “An Italian laser device costs around €120,000, while
a Chinese one costs only €5,000: There must be a commitment from the Customs Authority to ensure that both conform to standard specifications,” Azzab argues.

Types of Laser Devices

There are three device types available in Egypt. The first is Alexandrite laser, a solid state laser-755 nanometers (nm) that is considered a high-cost technology using
power equivalent to five air conditioners. Alexandrite’s price ranges between $100,000 to $120,000.

This type of laser needs ongoing maintenance to replace the laser head and flash lamps that are only sufficient for 1 million pulses.

Diode (808 nm) is a cheaper laser which depends on a semi-conductor laser with power consumption similar to any home appliance. This device does not need spare parts, but has to be replaced after 8 million pulses. The price of this laser device ranges between $20,000 to $60,000.

ND-Yag (1064 nm) is the safest technology. Intensive pulsed light (IPL) is another technology used for hair removal, but it is not laser.

When it comes to the devices used, they also vary drastically in terms of cost, efficiency and safety. The most common and efficient type of laser Alexandrite is used in various brands, with the American brand Candila being the top on the market, followed by Cynosure and Deka.

Candila uses dynamic cooling devices (DCD), which is a very cold liquid gas filled in cylinders, while Deka or Cynasure devices depend on other separate (not embedded)
air cooling systems.

The Candila cooling cylinders, for instance cost around LE 1,500, up from LE 200 prefloat, and are changed frequently, pushing some places to refill old cylinders instead of buying new ones. This hurts the efficiency of the cooling system, warns Dr. Mohamed Elnazer.