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The price matters


#1

I have been a lurker for years, I can’t help but comment on the price issue.

Some posters said the price does not matter because supply and demand will justify everything. Well, that’s exactly what I am worried about.

The price matters a lot. Initially Intercytex will have a monopoly with millions and millions of bald men wanting this treatment. Basic supply and demand economics will mean that the price will be sky high and out of reach for the middle class. I will be very bitter if after waiting for so many years this new treatment is only available to the filthy rich.


#2

ok craig, and what?

if you are right (and well you probably are) than the only options are:

  • it will not work and you will not get your hair from it
  • it will work, and be damn expensive, and you will have to wait few years possibly till it gets cheaper.

now realize that there is no other possibility, they are not charity. so the choice is only from the two. which one is better?


#3

» I have been a lurker for years, I can’t help but comment on the price
» issue.
»
» Some posters said the price does not matter because supply and demand will
» justify everything. Well, that’s exactly what I am worried about.
»
» The price matters a lot. Initially Intercytex will have a monopoly with
» millions and millions of bald men wanting this treatment. Basic supply and
» demand economics will mean that the price will be sky high and out of reach
» for the middle class. I will be very bitter if this new treatment is only
» available to the filthy rich.

Look what the pharmaceutical companies did with the AIDS drugs, the protease inhibitors…until they were forced by goverments of other countries, specifically africa with millions dying of the disease, to offer the treatment at reasonable affordable prices…If this govt intervention and public pressure had not been brought to bear on these companies, the price drop would never have happened. And this is not for a cosmetic treatment this was life or death, and still the companies , greedy as they are, would not lower the price, because they did not have to until later in the game.

How much a chance do you think there is of having a reasonable priced procedure for whoever is first to market with HM, considering they would own all the patents

ZERO Chance


#4

yeah hangin, but all you say does not matter, it is ineviteable, the first cure will be expensive, sooner it happens, sooner it will get cheap. there is no other way. They are not charity, they are publicly traded company, and goal of any company is to make the most money possible in the long run.


#5

» yeah hangin, but all you say does not matter, it is ineviteable, the first
» cure will be expensive, sooner it happens, sooner it will get cheap. there
» is no other way. They are not charity, they are publicly traded company,
» and goal of any company is to make the most money possible in the long
» run.

I agree, it is what it is, heck HM is not even here yet, when it comes if it comes we may not even care anymore

I think most of us would be happy to just maintain what hair we have left, at least that is where my mind has settled


#6

nt


#7

» The price matters a lot. Initially Intercytex will have a monopoly with
» millions and millions of bald men wanting this treatment. Basic supply and
» demand economics will mean that the price will be sky high and out of reach
» for the middle class.

I disagree that it is necessarily true HM will be extremely expensive. I think they will try to make it as affordable as possible while still ensuring themselves a nice profit. If I had the monopoly on a product that tens of millions of consumers want and I could produce inexpensively, I wouldn’t charge so much for it that the vast majority of those millions of consumers couldn’t afford it. By doing so I would LOSE a lot more potential money than the rich people could possibly make up for by paying a ridiculous sum for my product. I would rather have fifty million people give me $5000 than ten thousand people give my $50,000.

When competition comes, the market will drive prices down. But, even without competition a service provider must price their service so as to attract as many dollars as possible. That doesn’t always mean charging a ridiculously high price.


#8

It’s not just the price but also the quality of the regrowth. What if they have hair transplant prices but the quality is like Rogaine hair? Remember, most people pay on average $7000-$10,000 for a hair transplant. Will you still get the treatment from Intercytex?


#9

I firmly believe that the pricing/profit sitaution will cause them to want to cheapen HM as much as possible. (Well, at least once they can get the widespread infrastructure rolling, if not in the first 2-4 years.)

HIV drugs are an ugly situation.

That customer base is a pretty small number of people. (At least a small number in the rich, industrialized world anyway. Dirt-poor people don’t count.) These people are absolutely a captive audience with no choice but to pay any price or die. And there is a real possibility that there will be financial help coming from the gov’t & insurers any time the price is out of reach of any potential customers. All these factors build a situation that strongly encourages raising the price to astronomical levels.

But a MPB treatment is not this same situation at all.

It’s totally elective for 99.5% of the potential client base. It’s got little chance of causing ANY assistance from outside the customer’s wallet. Not from the gov’t, not from insurers, and not even from a local church charity fund. MPB’s market is not a clear Y/N situation either, but rather a wide gray area of people with varying amounts of the disease at varying times in their lives. The more it costs, the less of it they sell.

So it’ll be a very clear sliding scale. And the bigger potential end of this scale is probably 1/3 of the total adult population over the course of their lifetimes. It doesn’t make sense to permanently price HM astronomically high any more than it would make sense to keep an arthritis treatment astronomically high.

All that is a hell of a lot of incentive to start pointing this treatment at the market with a shotgun, not a sniper rifle.

It only pays to keep the price of HM high as long as they’ve got a big line of very rich men outside the building. But as soon as they can get more buildings up, the price WILL drop far & fast.


#10

cal
All that is a hell of a lot of incentive to start pointing this treatment at the market with a shotgun, not a sniper rifle.
I really like that analogy. A moderately priced treatment won’t require costly, precision marketing to attract customers. Using cars as an example, it’s far easier to market a Toyota Corolla than a Lexus LS.

cal
It only pays to keep the price of HM high as long as they’ve got a big line of very rich men outside the building. But as soon as they can get more buildings up, the price WILL drop far & fast.
I agree completely. Prices will surely drop after the well-connected and wealthy had their fill. The same could be said about anything new, exciting, and limited. People were paying $10,000 over MSRP to be among the first to own a PT Cruiser, and New Beetle. Now those very same autos are sold at a discount.

.


#11

» I firmly believe that the pricing/profit sitaution will cause them to want
» to cheapen HM as much as possible. (Well, at least once they can get the
» widespread infrastructure rolling, if not in the first 2-4 years.)
»
»
»
» HIV drugs are an ugly situation.
»
» That customer base is a pretty small number of people. (At least a small
» number in the rich, industrialized world anyway. Dirt-poor people don’t
» count.) These people are absolutely a captive audience with no choice but
» to pay any price or die. And there is a real possibility that there will
» be financial help coming from the gov’t & insurers any time the price is
» out of reach of any potential customers. All these factors build a
» situation that strongly encourages raising the price to astronomical
» levels.
»
»
»
»
» But a MPB treatment is not this same situation at all.
»
» It’s totally elective for 99.5% of the potential client base. It’s got
» little chance of causing ANY assistance from outside the customer’s
» wallet. Not from the gov’t, not from insurers, and not even from a local
» church charity fund. MPB’s market is not a clear Y/N situation either,
» but rather a wide gray area of people with varying amounts of the disease
» at varying times in their lives. The more it costs, the less of it they
» sell.
»
» So it’ll be a very clear sliding scale. And the bigger potential end of
» this scale is probably 1/3 of the total adult population
» over the course of their lifetimes. It doesn’t make sense to permanently
» price HM astronomically high any more than it would make sense to keep an
» arthritis treatment astronomically high.
»
»
» All that is a hell of a lot of incentive to start pointing this treatment
» at the market with a shotgun, not a sniper rifle.
»
» It only pays to keep the price of HM high as long as they’ve got a big
» line of very rich men outside the building. But as soon as they can get
» more buildings up, the price WILL drop far & fast.

I agree.

In my opinion I think it would be ridiculous and totally unrealistic for Intercytex to charge a price as high as some people on this board are predicting.

I don’t think it will cost more than £10,000 and I really don’t think it will cost that much.

My reason being that I don’t think when TRC comes to market (and I firmly believe it will be available by 2010) it will be a ‘Miracle cure’ that a lot of people are expecting, at least not right away.
I don’t think its going to be making any NW7 into a NW1 as a stand alone procedure.

What I do think is that it will provide enough density to be combined with a large amount of traditional HT grafts for a pretty bald NW5/NW6/NW7 to be happy and not have to worry about any more progression and ultimately being bald. Of course this is just a theory and my hope for the near future based on what evidence I can gather at this moment in time (for example ICX previous results and where hair science and technology is at the moment).

I think Intercytex are aiming for a release in the next 2 years and they will release even if it just provides moderate regrowth, after all some is better than nothing! There will be plenty of people happy to just get a percentage of their hair back and ICX will still be making a profit off that.

Intercytex have even stated that it is possible that their first generation HM may need to be combined with a HT for better results, I.E acceptable density.


#12

» » The price matters a lot. Initially Intercytex will have a monopoly with
» » millions and millions of bald men wanting this treatment. Basic supply
» and
» » demand economics will mean that the price will be sky high and out of
» reach
» » for the middle class.
»
» I disagree that it is necessarily true HM will be extremely expensive. I
» think they will try to make it as affordable as possible while still
» ensuring themselves a nice profit. If I had the monopoly on a product that
» tens of millions of consumers want and I could produce inexpensively, I
» wouldn’t charge so much for it that the vast majority of those millions of
» consumers couldn’t afford it. By doing so I would LOSE a lot more potential
» money than the rich people could possibly make up for by paying a
» ridiculous sum for my product. I would rather have fifty million people
» give me $5000 than ten thousand people give my $50,000.
»
» When competition comes, the market will drive prices down. But, even
» without competition a service provider must price their service so as to
» attract as many dollars as possible. That doesn’t always mean charging a
» ridiculously high price.

The flaw with this type of thinking is that you will not have the ability to service 50 million people right out of the gate. You can only service how much the initial infrastructure can manage. And if the supply is low, and the demand is high, the price will be very high.

If I had a business, and a monopoly at that, and I could only service 10,000 people a year to start off with (because that’s all my infrastructure would allow initially), and the line was 50 million people long, would I accept the 10,000 people willing to pay $100,000? Or would I feel like a generous guy and just charge 10,000 random people $10,000? Which would make me more money?

Only when the infrastructure expands to accommodate the demand will the price start dropping (or competition from another vendor). But it will drop, probably to the price range you are talking about. But without the infrastructure to handle the demand, they would be losing money by charging lower prices (if they are a monopoly. Competition obviously changes the equation). Only in the long term when supply is built out will charging less for more clients make financial sense.

As others have pointed out though, the initial release may not work that well. And if not, the price will not be high, because the demand will not be high. If it’s just slightly better than rogaine or proscar or a normal HT, who cares? Yeah, it’s progress, and that’s great and all. But it doesn’t really solve the problem yet. So the demand will not be there, even if there is short supply. So the price will not be that great.

If I can only go from a NW4 to a NW3, with no possibility of further improvement, that’s not worth $100,000. Perhaps it’s worth $5,000. But if I can get one treatment, and each treatment bumps me up just a 1/2 NW, and all it takes is for me to keep getting further treatments to eliminate my hairloss, then each treatment is suddenly worth $10,000 (or more), because the demand will then be much higher. And after 6-8 treatments ($60K-$80K), I have all my hair back. And if it does work this well, there has to be a way for me to ensure that I can get back in line without waiting. I don’t want to wait for them to open up new facilities and train more people. That could take years. And the only way to ensure that I have access to the limited supply available is $$$$.

Again, it all boils down to supply and demand.


#13

Hello,

I agree with your view point. Manufacturing and infrastructure are two factors that will greatly determine price assuming excellent results. I’m more concerned about manufacturing rather than infrastructure; however. The infrastructure is there. There are hundreds/thousands of hair specialists that will be able to perform this procedure. For instance, this technology is assumed to put HT specialists out of work; but, I think they’ll be busier than ever in trying to accommodate the huge demand once they embrace the technology. Additionally, keep in mind, this technology will be able to increase productivity of these specialists anywhere from 3X to 10X. Manufacturing will on the other hand takes time to scale up. The robotics ICX is working on isn’t outstanding but its the first step in building a platform for large scale production.

So what does this all mean for pricing? Initially it will be high of course. Since multiple sessions may be needed - I’m thinking $10,000 per session seems reasonable - again assuming good to excellent results. This will be out of the price range of many but still will create a long waiting list. At this point, the company may feel comfortable in taking out large amounts of debt to further invest in manufacturing and increasing its sales force and training programs. Keep in mind that this technology is not their only product in their pipeline, so decisions will be made in concert with the timetables of their other products.

My suggestion is if you want to be put on that Waiting List buy $10,000 of ICX stock. The price has bottomed out. Also, to put things into perspective a little math

Within the next 5 years, if you believe the company has the possibility of making $50 million in net profit, 15% margin on $335 million in revenues, with a P/E ratio of 30 (typical of more mature growth stocks) – the market cap could be 50x30 = $1.5 billion
Current market Cap = $82 million
Return = 18.29 times or 1829%
$10,000 year 2008 - $182,900 year 2013
This is a very rough estimate - (figures I’ve pulled out of thin air) but it does serve as an illustration and if the technology is sound, these figures could be much better.

There’s risks obviously, so do your homework and dont invest anything your not willing to lose.

The company has incentive to reduce pricing to an affordable range $1000 to $2000 per session. Not only will this broaden their customer base, increasing profits but also increase the barriers to entry. - that’s the sweet spot.

I would like to see ICX comment on the regulatory status of this product at the March 18th update. Vavelta’s status was clarified around the same time two years ago and only now has the product hit the market. Vavelta on the other hand was in Phase I trials at the time while ICX-TRC’s is currently in phase two trials so its still possible to get a commercial release sometime soon.


#14

The big thing missing from the infrastructure however is “trained” people. There currently are only a handful of people who know how this procedure will be administered. It may not be difficult, but it will still take time to train hundreds of people with the correct method. It’s not going to require an advanced degree obviously, but I doubt it’s going to be a 4 hour afternoon workshop either. Again, it will happen, with time.


#15

cal i hope you are right but we already have a real life example which suggests otherwise, take fue / bht as an example, about 5 years ago dr. woods was the only one in the world who offered it, a whopping $8000 for 600 grafts , i forgot whether it was $8000 or $6000 but somewhere around there, that is ridiculous for only 600 grafts! did he ever lower the price? hell no. now we have many doctors doing fue and the prices are coming down slightly. so what i am trying to say is that if intercytex is the only one offering hair multiplication, there is little chance they will make it affordable for most people.


#16

if they make it unaffordable no one will buy it so how will they make money


#17

» if they make it unaffordable no one will buy it so how will they make money

Do you have any idea how big the hair loss market is? Even if they just focus on treating the celebrities at $50,000 per treatment, they will be busy for years. Why bother with little guys like us? I hope I am wrong though


#18

Well I did my conservative Discounted cash flow analysis, and if the company was earning 50 million a year and didn’t grow at all, their price would be 2.31.

considering that they are in a stage when they burn several tenths of millions a year, their price is more than fair Id say.

I’m not buying before it is evident that they will be able to generate money in a near future

I’d say the stock has potential though, but not 18 times … perhaps in the next few years it could go up 4 times or 8 times.

The question for me is, when are they going to start making some profits finally?


#19

» Well I did my conservative Discounted cash flow analysis, and if the
» company was earning 50 million a year and didn’t grow at all, their price
» would be 2.31.
»
» considering that they are in a stage when they burn several tenths of
» millions a year, their price is more than fair Id say.
»
» I’m not buying before it is evident that they will be able to generate
» money in a near future
»
» I’d say the stock has potential though, but not 18 times … perhaps in
» the next few years it could go up 4 times or 8 times.
»
» The question for me is, when are they going to start making some profits
» finally?

Hey, do you know how much cash or sales they generated on other products? That would serve as a good indicator.

BTW, for those who are arguing about pricing, why not take a look at how much their other products are being sold for now?


#20

You guys are assuming that just because ICX owns the patent when HM comes to market, that they can charge whatever they want for it

people are not stupid…if the procedure offers marginal cosmetic benefits that have to even be combined with a hair transplant to be visually appealing, that would be not that marketable, would you buy it?

that means you must get a hair transplant, many guys would never get a hair transplant, myself included, they are notoriously unpredictable, have a ton of potential drawbacks and complications, .

I think most guys, well a large percentage, would prefer to avoid ht, what if the hair transplant causes shockloss or some reaction with the injections, there are a myriad of complications that I do not think many have considered.

If the initial HM requires combining it with a hair transplant, Personally i think the market potential is extremely limited. Assuming they can charge …a …the sky is the limit …price. is unfounded.

imo