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Allergan Eyes Boost for Breast Implants in Europe

Allergan Inc. is starting a European advertising campaign aimed at boosting sales of its breast implants in the wake of a now-defunct rival’s troubles.

Douglas Ingram, president of the Irvine-based drug maker’s Europe, Africa and Middle East region, told the Financial Times in London earlier this month that Allergan would start a campaign in women’s magazines urging consumers to opt for quality in their choice of breast implants.

“It’s a risk—it’s bold, it’s never been done before,” Ingram said. “We need to use quality as a differentiator and help the consumer by speaking out about how to support products backed by research and development and data. It really is a very reputable industry.”

It could prove to be a controversial tactic, because there is both growing regulatory scrutiny and political criticism of advertising for aesthetic surgery overseas.

Members of Britain’s Parliament last month stepped up calls for tighter advertising controls for private cosmetic clinics. That followed an outcry over what were deemed to be substandard implants made by France-based Poly Implant Prothese, which was closed by authorities there in 2010.

The shutdown followed media reports that Poly Implant Prothese’s implants had an abnormally high rupture rate.

Allergan Chief Executive David Pyott had predicted in an earlier interview that “we’ll see some share shifts in Europe” as a result of the Poly Implant Prothese closure. He indicated that the longstanding approval of Allergan’s breast implants by the Food and Drug Administration for U.S. sales should help the company’s marketing in Europe.

The Food and Drug Administration “is held in high regard in Europe, and there are only two companies that sell implants on the U.S. market, Allergan and (Johnson & Johnson)” that also are selling there, Pyott said.

Allergan and New Jersey-based Johnson & Johnson sell breast implants in Europe, where the market is estimated at about 300,000 units annually, according to market tracker Millennium Research Group in Toronto.

Breast implants are a relatively small part of Allergan’s $5 billion in annual sales. The company projects that they will account for $360 million to $380 million in revenue this year, up from $349 million in 2011. Even with that, they get attention from Wall Street because they are part of the drug maker’s cash-pay business, which represents about a third of its total revenue.

• Headquarters: Irvine

• Business: Drug maker

• Founded: 1948

• Ticker symbol: AGN (NYSE)

• Market value: about $29 billion

• Notable: New ad campaign aims to boost breast implant sales in Europe, where French-based rival recently closed

Distance

Allergan has taken steps to distance itself from the Poly Implant Prothese matter as it looks to fill the void left by the company’s closure.

Allergan late last year issued a press release stating that its Natrelle, McGhan and CUI breast implants weren’t part of any probe by European regulators.

“It’s important to (recognize) that there are a number of different breast implant manufacturers around the world,” Allergan said. “The health authorities are specifically concerned about breast implants made by” Poly Implant Prothese.

The British government’s Health Select Committee said in a hearing that attempts to communicate with women about the implants had been “inadequate” in the immediate aftermath of Poly Implant Prothese troubles.

Ingram told the Financial Times that he supported regulations for implants and other cosmetic medical devices. He said, however, that tougher controls couldn’t prevent fraud, and that the “empowerment” of consumers to opt for products backed by strong testing and monitoring data would be a more effective approach.

Prior to the economic downturn, easy access to credit made it possible for more people to splurge on cosmetic medical procedures, especially breast implants.

Allergan does not disclose how much credit its customers use, but last year, Collins Stewart Hawkpoint analyst Louise Chen estimated in a Wall Street Journal article that about 50% of Allergan’s breast implant revenue came on credit. She said she now estimates between 30% and 40% of patients use credit to pay for their implants.

Inamed Buy

Allergan got into the breast implant business in 2006, when it bought Inamed Corp., a Santa Barbara company. Shortly after that happened, the Food and Drug Administration returned silicone breast implants to the market after a 14-year period when only saline-filled implants were available.

The FDA pulled silicone breast implants from the market in 1992 after saying manufacturers failed to provide data showing their safety and effectiveness. During that time there were also concerns about implants’ connection to various diseases, including cancer and lupus, as well as cases of implant rupture in some patients.

Dow Corning Corp. of Michigan spent nine years in bankruptcy as a result of thousands of lawsuits stemming from silicone breast implants.

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