Medical device maker Inamed
To be sure, breast implants are big business. Between 1992 and 2001, the number of operations increased by 533%, and doctors performed 236,888 breast enlargement operations in 2002 alone.
Prior to 1992, when silicone implants were outlawed, they were manufactured by Baxter
Complications arose, and all four companies fell victim to multiple lawsuits. In March 1994, they agreed to a $4.25 billion settlement -- the largest class action settlement at that time.
Unfortunately, a safer saline product proved inferior to the softer, more natural feel of silicone gel, as evidenced by the fact that, in Europe, women select silicone 9 to 1 over saline. By being first to market with the new silicone, Inamed expects to steal share from leader Mentor
Should Inamed shareholders be concerned about silicone? Yes! The company acknowledges that in-place implants can rupture or simply leak. The company's latest quarterly filing acknowledges that it has not found a carrier willing to provide "risk-shifting liability insurance on terms and conditions which are acceptable to the Company."
Then there's always the risk the FDA will not green-light its advisory panel's recommendation. High-profile women's groups and others are still trying to prevent approval.
A full 55% of Inamed's sales are derived from breast implant products. So, yes, the company's top-line growth of 14.5% will accelerate if FDA approval is granted. But even with the increased sales -- and one other interesting product for obesity -- at 46 times earnings, Inamed's uninsured risks are a bit too much.
W.D. Crotty can be reached at HawaiiFool@hawaii.com.