Formel Skin, a skincare health tech startup based in Berlin, has just landed in Brazil. The company offers an unprecedented digital proposal, from diagnosis to follow-up, to treat acne, melasma, rosacea, and blemishes. Brazil is only the startup’s third market, also operating in Switzerland. The choice of debuting in Latin America’s largest economy in Latin America, despite logistical challenges, has several reasons, according to co-founder Florian Semler.
The most obvious one is the size of the Brazilian beauty and personal care market, the fourth largest in the world, behind the United States, China, and Japan, according to Euromonitor International. But there are more reasons for the German startup to have chosen the country as the primary stop on its internationalization route: “We believe we can treat chronic skin conditions, problems that you can easily treat, but you need engagement. That’s why we are not going to easier markets, such as Europe, but to bigger markets like Brazil, where our platform can be tested, and the system can be improved. Unlike other telemedicine businesses, we focus on paying customers and not on health insurance coverage. In the beginning, many investors told us that no one would pay out of their pockets for medical services [already having medical care], but we said that we would prove that if the service were better, people would be willing to do that. And that was what happened,” said Semler, who before co-founding Formel worked at Boston Consulting, in the U.S., in the healthcare and consumer areas.
Also according to Euromonitor International, consumption of face products and facial treatments grew by 91% during the pandemic. Another survey by the German Institute GfK, carried out in 22 countries, placed Brazil in second place in a ranking of those who spend the most time taking care of their appearance.
Founded by dermatologist Sarah Bechstein, MD, Ph.D., alongside Semler and Anton Kononov in 2019, Formel Skin raised Europe’s largest Series A round for a health tech startup, of €30 million, in December. The funding was led by the Paris-based venture capital firm Singular and German investor Heal Capital. The round was followed by existing investors Cherry Ventures, Heartcore Capital, and Vorwerk Ventures, which led the startup‘s seed round of € 5 million in the previous year.
Health and telemedicine startups are even among those that received the most investment, driven by the digitization of the pandemic. In Europe, companies such as the Swedish Kry, the French Alan, and the Portuguese Sword Health have become unicorns in the health segment. In Brazil, perhaps the health tech closest to reaching such a market value is Alice, after a Series C of US$ 127 million led by SoftBank in December 2021.
The inspiration for creating Formel came from Bernstein’s own experience when she came across the need for a personalized and effective product to treat acne. “The concept was born from a personal motivation: a product that would really work in the long term. Therefore, medical monitoring of the patient through telemedicine is essential. Our goal is to promote skin treatment in a continuous and targeted way for each one at each stage of the process,” said Bernstein in a statement.
How Formel Skin works
The startup brings to the market a new skincare concept and the proposal to be a digital dermatological hospital to treat chronic skin conditions.
Patients who want to use the startup‘s services need to register online, fill out a questionnaire and submit photos of their skin conditions. Subsequently, the platform assigns a doctor to the patient, who will remain dedicated to that patient throughout the treatment. The physician can decide on the treatment needed and adjust procedures and formulas as needed based on the patient’s feedback and results on a monthly basis.
A subscription to Formel Skin in Germany costs €49 per month. In Brazil, it will cost BRL 152 in the first month and then rises to BRL 190 — the startup’s targets, at least at first, are people from the so-called classes B and C in Brazil, that is, people with income between four (BRL 4,848) and twenty minimum wages (BRL 24,240).
The medicines are produced by Formel’s partner compounding pharmacy chains, which are also responsible for sending the products to patients’ homes. In an interview with LABS a few weeks ago, Semler did not want to reveal which are partner pharmacies in the country, and the startup’s website in Brazil does not inform.
In Brazil, Formel Skin also opens up two other possibilities: single assistance plus product for BRL 230; and the option to pay BRL 90 for the service and the prescription, which means that the patient will have to find a compounding pharmacy and bear the costs of the medication.
Despite starting with a focus on large centers, Formel Skin says it will serve all of Brazil.
Formel claims to have provided more than 150,000 treatments to patients in Germany and Switzerland.