By now, everyone knows the history of silicone-filled breast implants, and their past tendency to rupture and potentially cause massive health problems for women who used them. These worries got silicone-based implants pulled from the market in 1992. But yesterday, plastic surgery product-maker Allergan
Shares of Allergan, best known for its Botox wrinkle treatment, were up nearly 8% on the news yesterday. Still, it's hard to see what all the excitement is about, considering that "breast aesthetics products" are expected to account for roughly 6%, or $180 million-$190 million, of Allergan's expected $3 billion in sales for 2006. That's down sharply from the $231 million the products brought in for Allergan's acquiree, Inamed, in 2005.
There's one potential roadblock for the return of silicone implant sales in the U.S.: the strict FDA-mandated guidelines governing their use. They cannot be used in women younger than 22, and Allergan had to agree to a detailed long-term post-marketing surveillance and monitoring program among women who receive the implants.
The good news for Allergan shareholders is that these strict monitoring requirements by the FDA will make it extremely difficult for any other companies besides Allergan and its competitor Mentor
Don't ask me how I know this, but silicone-based breast implants are generally considered more natural-looking and -feeling than their saline counterparts. Thus, they should expand the market for breast augmentation in the United States, as women who were wary of the aesthetics of saline implants turn to silicone-filled ones. According to the American Society of Plastic Surgeons, there were approximately 360,000 breast augmentations and reconstructions in 2005. It'll be interesting to see how much this market expands thanks to silicone implants, and what portion of this market switches from saline to silicone.
Implants represent one of Allergan's smaller lines of business. By comparison, the company expects Botox sales to be more than five times higher in 2006. Botox sales grew nearly 18% year over year in the most recent quarter, compared to a decline in breast-aesthetics-product sales. For shareholders of such a large and diversified health-care and plastic-surgery products company, the reintroduction of silicone-based implants can be chalked up as a small win, but nothing to get too excited about.