J&J entering the breast implant business
Johnson & Johnson continues to expand beyond its commonly known consumer goods lines by purchasing breast implant maker Mentor Corp for $1.07 billion.
Mentor shareholders will earn $31 a share, nearly double last week’s close, in a deal that today pushed the stock within cents of the offer price.
Johnson & Johnson is fairly new to the high-dollar cosmetic surgery arena. Earlier this year, the cosmetic-focused OrthoNeutrogena division just launched its first injectable filler product -- the injectable wrinkle filler Evolence.
The acquisition was greeted with a mixed set of reactions by Mentor customers and plastic surgeons.
“The acquisition of Mentor should speed up the process for cohesive gel products being available to the US market," stated Chicago area plastic surgeon Dr. David Dreyfuss. "Not unlike the Allergan acquisition of Inamed, it changed the FDA focus away from a breast implant company to a pharmaceutical company. This provides an 'inside track' for approval of new products. This should allow Mentor to compete on a level playing field with Allergan,” said Dreyfuss.
In contrast, Orange County plastic surgeon Dr. Steven Teitelbaum predicts no impact on the product approval process, pointing out that "product choices are determined by the FDA, and no company, no matter how large, can get the FDA to move any faster than the pace it sets for itself."
Dr. Teitelbaum sees the Mentor acquisition as having little impact on other aesthetic industry players like Allergan. Rather than feeling new competitive pressure, "to the contrary, acquisition by a giant should give relief to competitors. When Sientra finally gets FDA approval, its outstanding management team will leverage upon being the only independent breast implant company. For Allergan, this acquisition just means that Mentor will be mired in big company politics. While Allergan has Botox and Juvederm, J&J doesn’t have a portfolio of other products that are of equivalent interest to patients and plastic surgeons, so I can’t see how this will create any pressure on Allergan; I’d suspect just the opposite.“
Not all surgeons share Dr. Teitelbaum's opinion. Dr. Sirish Maddali, a San Francisco plastic surgeon, foresees Mentor products getting a boost from Johnson & Johnson's marketing strength. “Mentor has been unable to grow into the skin care market and injectable market, unlike its main competitor, Allergan. I believe that J&J's wealth of knowledge will help Mentor introduce newer injectable treatments into the market more effectively.”
Dr. Maddali predicts Allergan, which is the main rival to Mentor, “will certainly feel some extra pressures due to the added marketing abilities of J&J."
In a market where access to doctors is critical to the sales process, consolidation in the aesthetics industry could threaten smaller medical equipment or pharmaceutical firms that cannot match the offering of a company like J&J or Allergan. Dr. Daniel Mills, a plastic surgeon in Laguna Beach, foresees that companies like J&J+Mentor "will really hit the uni dimensional company that wants to have a range of products--they wont be able to get the face time with the Physician as well-- and they can't do pricing based on volume as the larger companies." Dr. Mills points to Medicis as one such firm likely to see an impact. "This is very bad for Medicis as they do not have a full range of products for the plastic surgeon."
Yvette Moynier (longtime practice manager for Dr. Lee Daniel, a plastic surgeon in Eugene, Oregon) hopes that Johnson & Johnson's marketing clout can lead to improvements in Mentor’s customer service. "There does not seem to be a lot of accountability when problems arise,” stated Moynier.
Allergan Inc., the only other United States company offering silicone breast implants, dropped as much as 8.9 percent on the prospect of competing with Johnson & Johnson, the world’s largest health-care company.
Mentor, based in California, is the world’s leading seller of breast implants.
Eva Sheie for Real Beauty News
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