Originally Published MDDI May 2005

NEWSTRENDS

Maria Fontanazza

While Inamed Corp. (Santa Barbara, CA) is continuing its fight to gain FDA approval of silicone breast implants, the company is also focusing on a $2.8-billion merger with Medicis Pharmaceutical Corp. (Scottsdale, AZ). The deal will establish the company's dominance in breast and facial implants and the treatment of skin conditions.

Inamed has built its 25-year reputation on both silicone and saline breast implants. However, FDA banned the silicone products from the U.S. market in 1992. Last year, the agency rejected Inamed's proposal to bring them back. The company hasn't given up, and its PMA application for a silicone implant is to be reviewed by FDA's General and Plastic Surgery Devices Advisory Panel this year.

While a potential leg of growth will disappear if silicone implants remain banned, the risk-reward ratio of the merger may be worthwhile in the eyes of both companies, says Greg Aurand, senior medical device analyst at Zacks Investment Research Inc. (Chicago). He doesn't see it as an unusual move for either firm.

“You can decide whether or not it's risky, or if it's just good business,” says Aurand. “There's a risk before a large market opportunity like that coming back is actually in the bag. With that being said, the value of Inamed goes up if the silicone implants are allowed on the market.”

The companies expect annual revenues to exceed $700 million after the transaction closes.

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