Dive Brief:

• Following the removal of Allergan's CE mark for its textured breast implants and France's compulsory recall request of its products this week, the company has suspended sales for its product throughout Europe.
• Wall Street sell-side analysts downplayed the news. A research note from Raymond James argued "reaction is overdone." A Cowen note agreed, arguing that the safety issues with the textured breast implants were already well known, with only $60 million in revenue potentially impacted for Allergan. But Cowen acknowledged the obvious concern moving forward "is not the potential for lost revenues in this product line, but rather for potential liabilities."
• FDA in September defended its regulation of breast implants, pointing to a 2011 Safety Update that found that approved silicone gel-filled implants from Allergan and Mentor had a "reasonable assurance of safety and effectiveness when used as labeled," and that there is "insufficient information to show an association between silicone gel-filled breast implants and connective tissue disease, breast cancer or reproductive problems."

Dive Insight:

Despite the 2011 report, FDA plans to hold an advisory committee meeting in 2019 on breast implant safety as it "monitors the known risks associated with breast implants, such as capsular contracture, implant rupture and breast implant-associated anaplastic large cell lymphoma."

In September, the agency launched the National Breast Implant Registry, with an aim of evaluating real-world data on the safety of breast implants.

"While the FDA does not have evidence suggesting breast implants are associated with these conditions, information from NBIR may help us identify risk factors for complications, such as a patient's own medical history, the specific type of operation, the type of implant used, and concomitant use of other medical devices," FDA Commissioner Scott Gottlieb and device center chief Jeff Shuren said in a November statement.

One analyst wrote in a research note the regulatory action against Allergan will benefit Establishment Labs Holdings, a device manufacturer of smoother breast implants. Regulatory action opens up the 40% of the market controlled by Allergan in the EU, two-thirds of which is textured, Jefferies' Raj Denhoy wrote.

"Given ESTA's momentum with Motiva in several EU territories, 10-20% incremental share capture ($10-$20mn) seems achievable over time (and possibly conservative when we consider ESTA's 30-40% share in some markets)." 

"Against a $60mn forecast for 2018, any share capture should be meaningful and support continued upside in numbers and the stock price," he continued.

Raymond James' Elliot Wilbur noted smooth implants account for 90% of the U.S. market, potentially limiting domestic sales impact.

But analysts at Credit Suisse wrote that despite the small sales impact, "we think the outsized stock reaction reflects continued concerns on the company's base business and increasing questions on the company's outlook for 2019."

Allergan says it plans to appeal the CE mark decision for its textured breast implants and continues to work towards renewal. The company pointed out in its press release that its CE mark for smooth implants was renewed.

"Allergan stands behind the benefit/risk profile of our breast implant products. The [French] ANSM request, and this action, is not based on any new scientific evidence regarding these products," the company wrote.