S05E79 Navigating the Aftermath of Sientra's Chapter 11: The Future of Breast Implants

As Sientra's @sientrainc bankruptcy filing sends ripples through the medical community, Dr. Sam Jejurikar @samjejurikar, Dr. Salvatore Pacella @sandiegoplasticsurgeon, Dr. Lawrence Tong @yorkvilleplasticsurgery, and Dr. Sam Rhee @bergencosmetic dissect the nuances of the market and the future of patient care.

These plastic surgeons lay out the competitive landscape, tackling the pressing issues of warranties, stock values, and the strategic choices facing surgeons and their patients in light of these recent developments.

Navigate the precarious bridge between financial instability and medical innovation with us. As Sientra teeters on the brink, our experts scrutinize the allure it holds for private equity firms ready to pounce on their cohesive gel implants and other cosmetic assets.

They discuss the potential aftermath of manufacturing hiccups, the implications for current patients, and the broader industry's trajectory. Leave equipped with insights into the ongoing saga of implant warranties and how to approach the uncertainty of product availability with informed calm, rather than alarm.

@3plasticsurgerypodcast #podcast #plasticsurgery #cosmeticsurgery #plasticsurgeon #beauty #boardcertified #aesthetic 3plasticsurgeonsandamicrophone ⁠#bergencosmetic ⁠#bestplasticsurgeon #beforeafter #aesthetics #realpatientrealresult #boardcertifiedplasticsurgeon #njplasticsurgeon #njplasticsurgery #nyplasticsurgeon #nyplasticsurgery

00:00:06 Breast Implant Industry Market Analysis

00:11:54 Future of Sientra Breast Implants

00:19:37 Discussion on Sientra Products and Services

S05E79 Navigating the Aftermath of Sientra's Chapter 11: The Future of Breast Implants

TRANSCRIPT

[00:00:00] Dr. Sam Rhee: Hi, welcome to another episode of Three Plastic Surgeons and a Microphone, but we now have four plastic surgeons as our guests. So we have Dr. Sam Jejurikar from Dallas, Texas. We have Dr. Sal Pacella from San Diego, California. And our newest host is Dr. Lawrence Tong from Toronto, Canada. Welcome everyone.

Our first topic today is going to be about Sientra, which is an implant manufacturer. Manufacturing breast implants. They just filed for chapter 11 bankruptcy, and we'll talk about that as our topic today. Uh, but before we do that, let's get into our disclaimer, Dr. Jejurikar.

[00:00:45] Dr. Sam Jejurikar: Morning, everyone. This show is not a substitute for professional medical advice, diagnosis, or treatment. This show is for informational purposes only. Treatment and results may vary based upon the circumstances, situation, and medical judgment after appropriate discussion. Always seek the advice of your surgeon or other qualified health provider with any questions you may have regarding medical care.

And never disregard professional medical advice or delay seeking advice because of something in this show.

[00:01:09] Dr. Sam Rhee: So Sientra is a breast implant manufacturer, and this past week, they just filed for chapter 11 bankruptcy as they pursue a sale of their company. And in a letter to their company, uh, in a letter to their customers, CEO and president. Ron Menezes, can't even pronounce that, said they will continue operations and provide service their products and services.

They said, please be assured we expect to continue operations while this process is ongoing. They 22 million in new money debtor in possession financing from their existing lenders to continue operations while a sale is ongoing. So what do you guys think about Sientra and the fact that they just declared Chapter 11?

Are you all in? Are you buying more implants for your patients at this time?

[00:02:05] Dr. Sam Jejurikar: Um,

go first. sorry, good, um, so you know, it's an interesting question, I think, I think we have to kind of think about the industry in terms of supply and demand, right? And so, let's be honest, do, do the implants from Mentor differ that much from the implants from Allergan or the implants from Sientra?

[00:02:28] Dr. Sal Pacella: a little bit. They have some different values, different structure, but in general, they're kind of a commodity business, right? And so when you're talking about a commodity business You know, I think patients don't necessarily know what type of implant they want. They're going to go by the recommendation of their surgeon, right?

So then what sort of begs the question is, what is implant? And oftentimes that boils down to price. And so the price pressure has really been coming down over the last few years. And the more entry you have into the marketplace, it's It causes a lot of drama in these implant companies to get their prices down.

And you see these, the two big market leaders, Mentor and Allergan, which I like to refer to them as Coke and Pepsi, right? And then you have the, you have Sientra, which is almost like a third, you know, RC Cola. So that, they, they have had, you like that, huh? They have had a, have had a challenging entry into the marketplace like some other secondary implant companies.

So to me, this is not surprising at all.

[00:03:36] Dr. Sam Jejurikar: You know, I, um, would say that, you know, I slightly differ with you. I think Sientra has done a couple of things that made it really appealing to plastic surgeons. One, they only made their implants available to board certified plastic surgeons or board eligible plastic surgeons. They weren't making themselves available to, um, cosmetic surgeons.

So, in some ways, they did induce some brand loyalty from, from plastic surgeons, at least in our marketplace. But they, they hurt themselves in terms of who they could sell their market. This is the second implant manufacturer in the last year to go, um, to go belly up. The first being the Ideal Implant, which we did feature on an earlier episode of this podcast a couple of years ago, which, um, was sort of a nice alternative for people who didn't want silicone implants.

And so now we are basically down to two large providers, you know, Salas, other differences between the implants. I mean, there are differences amongst all the implants when you look at rupture rates, capsular contracture rates, shapes of the implants always vary a little bit slightly. So I think everyone here probably wasn't beholden to just one brand.

At least I wasn't. Um, but Sientra was definitely one of the top two that I used. that I would go to. Your question, Sam, was am I buying up a bunch of Sientra implants? I'm not, because one of the things that made Sientra really attractive to patients was their, you know, their warranty. What do you do if the company's no longer there?

The warranty, specifically in regards to rupture and capsular contracture, goes away. They're saying that they're basically trying to keep operations going until they can be acquired, though you're hearing rumors that, you know. They might be acquired by private equity, but nobody knows what the status, at least I don't know what the status of that is.

[00:05:19] Dr. Sal Pacella: And for our listeners out there, like when you, when you declare bankruptcy, You know, if you're a shareholder in Sientra, the stock price essentially goes down to zero. So, you know, I mean, even though they're continuing operations, what is the overall worth of the company? So that, when the company is not worth that much, you got to sort of understand what that means for people buying it out.

Whether or not they're just going to fold it or whatever, you know.

[00:05:46] Dr. Sam Jejurikar: The writing has been on the wall for a while. I dunno if you guys have been paying attention to the Entra stock, but, but, um, for our listeners, um, when a stock gets, you know, an individual share price becomes less than a dollar, it's in danger of being delisted. So several months ago, Sientra did what's called a, a reverse stock split, where they actually took their shares and made, um.

Each 10 share, um, 10 shares got condensed down to one share because it was less than a dollar. Well, that's slowly dwindled now. And as of, I think yesterday, it's, it's share prices, I think like 25 or 30 cents. So even with that, so the company can be acquired, um, relatively inexpensively by someone who has the resources and the desire to get into the breast implant market.

You know, the other thing that Sientra made was a system that I've been using a lot, um, called the, called the Viality, which is a fat grafting system for the breast.

[00:06:38] Dr. Sal Pacella: Vitality.

[00:06:40] Dr. Sam Jejurikar: No, it's Viality. No, it's not Vitality. There's no yeah, it's Viality.

Yeah. my rep, my rep, my rep has not corrected me, ever.

Yeah, it is Viality, but

[00:06:52] Dr. Sal Pacella: great device. Really great device.

[00:06:56] Dr. Sam Jejurikar: Yes.

[00:06:56] Dr. Lawrence Tong: he knows you're from Buffalo.

[00:06:59] Dr. Sam Jejurikar: He also, he also knows that you're the customer, so the customer is always right.

[00:07:06] Dr. Sam Rhee: You probably got the customer name wrong too. You probably call I stand, probably like I stand corrected.

[00:07:13] Dr. Sam Jejurikar: Yeah, I know you're looking it up as we're talking here, right? So, right. exactly. Yeah, I'm willing to let you fat check me having used, I don't know, at least 50 of those. Those I am buying up. I just placed a large order for those because, um, I have really, uh, thought that my retention rate for fat grafting to the breast has been substantially better with this system than with other systems I've used.

[00:07:39] Dr. Sam Rhee: Larry,

[00:07:40] Dr. Sal Pacella: Viality. is that we do not have Yeah, I know.

[00:07:48] Dr. Lawrence Tong: Excellent. Excellent Sientra is not available in the Canadian market, so, um, my only comment is, you know, exactly what Dr. Jejurikar had mentioned. You know, what happens to patients who have this warranty and if they go out of business and nobody buys them, you know, they're sort of left at a disadvantage. So that's that's sort of unfortunate.

[00:08:14] Dr. Sam Rhee: that's what happened with the Ideal Implant. When they went bankrupt, like they just couldn't get serviced. Uh, it was a real problem. I think for patients who, have them in or, or, um, need to get warranty. Uh, who have warranty issues in terms of leaking or ruptured implants. The other problem is this. I don't see a, I see a very rocky road for Sientra in the future.

Let's suppose they are bought out by someone who wants to make a go of it. As you said, in the implant manufacturing business, I'm not buying these implants. Most surgeons are not going to buy these implants for the reasons you just stated. What happens with the warranty? What happens if there is a problem?

there were a couple of years ago, I it's been maybe 10. I can't remember. There was that French. Implant manufacturer that, um, were, P. I. P. yeah, PIP, they were manufacturing all those defective implants and they caused a lot of problems in the world. And, uh, implant manufacturer, the, the, the manufacturer of implants is not expensive, but the litigation and the potential cost legally around implants is very expensive.

We are not paying for the implants, we're paying for The coverage legally that it costs to make implants and that is why there are all those huge FDA black box warnings on implants that we make patients sign, all of the information that patients have in terms of their, um, uh, safety status and so forth.

And It's not inconceivable that at some point in the future, more litigation will come down the pipeline in terms of implants or findings about implants. Breast implant illness has always been something that we've discussed or talked about. So, if I was a private equity investor, I don't know that I would want to jump into the implant manufacturing business.

will say that when I talk to patients, I will say, A family member wanted breast implants, I would have no problem putting breast implants into a family member. And that's how I feel about it right now, having looked at the research, you know, reviewed the studies, uh, evaluated it. But I do know that as an investor, I don't know if I would want to invest in another company.

It is hard to pull doctors away from companies that they feel Right now, um, personally, I use Natrell and I've always used Natrell. Not because it's so much better, but because I thought that Allergan's service was very good. Um, it was sort of one stop shopping since they had all the other products that I generally use.

And it was Very easy for me to keep using them. You know, they, they had a lot of incentives, their customer service, at least for me and in my area was very positive. So I don't know that I would put the money on Sientra or any other implant manufacturer and, and does it suck? It does suck. Did you ever lower your price to a patient because the implant you got was cheaper?

that you bought from the manufacturer. It was not, you pocketed that money. We all did. That's what we do. We have a set price, generally speaking for what we call, we charge for augmentation and will it suck if let's say the two remaining implant manufacturers start raising prices because now a low cost competitor is out of the market.

Yes. But as surgeons. We're either going to pass that cost along or we're going to eat the, uh, eat the cost one or the other, depending on where we are and how successful we are and what kind of market we're in. So, I mean, I just think it's really hard for anyone to be super successful in this market just solely making implants.

[00:11:53] Dr. Sal Pacella: Well, you know, I think it's, uh, I think, um, stopped predicting what private equity companies will be doing. I bet you they just gobble up Sientra. You know, they're, I think they're very unpredictable and they're usually looking for deals and There's a lot of, there's a lot of switching, baiting, baiting and switching with private equity companies, so I, I will, I'm going to guarantee they're going to be bought.

[00:12:16] Dr. Sam Jejurikar: Yeah, That's guess I, I disagree. I disagree with some of the points you made, Sal. I mean, not Sal, Sam. Um, one, um, I think, you know, just like Allergan was acquired a few years ago by AbbVie, a huge pharmaceutical company, who saw a role for the aesthetics portfolio and what they were doing in the general, you know, medical pharmaceutical space.

I, I think, um, you know, there might be a company out there maybe. Whether it's private equity or a large pharmaceutical company that has some sort of foothold in the aesthetics business where having breast implants might make sense, particularly if it's also selling other cosmetic products. Um, I always thought of Sientra not as a low cost alternative for implants, and I do actually alter my breast augmentation prices based off of the price of the implant.

If it's a relaxed gel versus a gummy bear, if it's a Sientra versus an Allergan, they're definitely. have been differences in pricings for patients based off of that, but I thought it was a high quality implant. Um, I, I never sold it to anyone as a low cost one. I thought that their, their cohesive gel implants were good.

I'm not saying it's the only good implant, but I do think that for someone that wants to be in the aesthetic space who does, uh, who can acquire this portfolio for a relatively inexpensive price, um, It could be a good value. And just to be clear, we brought up the analogy to PIP, but implants, they went off the market, you know, their thing was because of safety.

That's why it went off. I mean, Sientra is strictly a financial Chapter 11 bankruptcy because they're not doing well in the marketplace. It's a company based problem, not an implant based problem.

[00:13:47] Dr. Sam Rhee: I was just looking at their website and they do have other products in their sales line that include, uh, single pore tissue expanders. You would expect that. Dermaspan. Uh. AlloX2 Pro, which is a MRI compatible tissue expander. The Viality, which you mentioned, uh, Simpliderm, a human acellular dermal matrix, and then, uh, Biocornium, which is the scar gel that, uh, they market as well.

I mean, what kind of big pharma would want to acquire this portfolio of products? I don't know if, uh, there's something here that. Screams profit or growth over the next 10 years.

[00:14:37] Dr. Sam Jejurikar: You don't think the breast cancer market, all those tissue expanders you were talking about is something With the aging population that we have in the U. S., right, and the fact that one out of eight or nine women in the U. S. will be developed, will, will acquire breast cancer at some point in their lifetime with diminishing reimbursement for free tissue transfer, the preferred method of reconstruction, or it seems to be more, I mean, there, we, we are just plastic surgeons, you know, we're ultimately not the ones that are looking at market potential, but they're, they're definitely, I mean, I think there could be a company that would be very interested for the right price.

Acquiring those, because I think their products are good.

[00:15:14] Dr. Sam Rhee: what kind of warranty did they have compared to the others? Cause I'm not really that familiar with the Sientra product.

[00:15:20] Dr. Sam Jejurikar: It's like a, like a, I think it was a lifetime, at least implant replacement for ruptures in 10 years where they were covering surgeons fees and, you know, and, and, uh, facility fees and implant costs for rupture. I think capsular contractor was the same too. I don't, it was a good warranty. I don't remember the specifics of it.

[00:15:39] Dr. Sam Rhee: Uh, okay. So at this point, when, what would it take for you to feel comfortable buying Sientra breast implants for your patients? Again,

[00:15:54] Dr. Sam Jejurikar: Um, it would take them being acquired by either a private equity firm or a large Fortune 500 company or even a smaller company that seems to be financially viable. I just want to make sure the company that buys them is solvent. But again, you know, when we talk about warranties and all that we are Placing it in somewhat of a dire situation, like if your company is gone, somehow, if your implant has a problem, you can't go get care for it.

It just means some of the costs associated with the surgery are gone, but I think the implants are safe. There hasn't been any demonstrable problem with the implants, so. I would feel comfortable after an acquisition.

[00:16:31] Dr. Sam Rhee: do you, what do you think about manufacturing costs? Don't you think that like one of the strategies PE always does, right, is lower costs and, uh, So they're going to increase prices generally, and then they're also going to try to cut costs wherever they can, which means letting off people or decreasing the manufacturing costs.

So if historically they were really great in terms of manufacturing, wouldn't they want to find areas in which they could. Reduce that cost.

[00:17:01] Dr. Sam Jejurikar: Well, historically, they haven't been great. If you remember, they had the fire in Brazil. Like,

[00:17:06] Dr. Sal Pacella: I was like all the I was just going to say Yes. way to, the best way to get your company going is to set your factory on fire.

[00:17:13] Dr. Sam Jejurikar: Right. So, so historically, if you remember, if you remember the history for for For, our viewers, uh, they sientra used to make their, uh, implants in Brazil when they first were brought in the u uh, into the US market. And they, uh, they had a giant fire. Their plant went down and they weren't available for nine months or a year, and they started resourcing all their manufacturing to the us.

And I think, you know, clearly it was a much more expensive process for them to get their implants manufactured in the U. S. I don't know what the expertise they brought to, you know, the cost structure of implant manufacturing in the U. S. I'm not even, I mean, based off the way their company is doing, I wouldn't be surprised if someone could do it for cheaper and still maintain a high quality product.

It's not my area of expertise. But that doesn't really necessarily make me take pause, particularly if it's a large company that already, you know, has large factories and has the ability to manufacture things. I just don't know who's going to acquire them. Honestly, you know, let's say it's a major fortune 500 company that, that makes, um, you know, that, that makes pharmaceuticals to the scale of a billion, billions of dollars.

I mean, I, I would, you would, we would all probably believe they could do it more efficiently

[00:18:23] Dr. Lawrence Tong: Do you guys think there's a possibility that one of the other major Preston plant manufacturers might take them over? So

[00:18:30] Dr. Sal Pacella: I don't think only if they,

it's, unless they can like market it as some sort of sub brand, but know, it seems, it seems cannibalistic. I don't know.

[00:18:41] Dr. Sam Jejurikar: I feel like they could acquire, um. To eliminate them, to eliminate that source of competition, right? I mean, it's so, if it is truly cheap to acquire the company that that could definitely happen.

[00:18:54] Dr. Sal Pacella: and I would see that would come from Abby V, or Allergan, more than J& J. J& J traditionally has not, uh, has not been an aggressive company in the marketplace. They've been kind of a, uh, strong, uh, a stalwart. They, they sort of react more than they act, I think, so.

[00:19:16] Dr. Sam Rhee: available to you, Larry, in, uh, in Canada, in terms of implant manufacturers,

[00:19:20] Dr. Lawrence Tong: it, it, it is allergen and, um, and mentor. And so those are the only two. Ideal was available for a while, um, it never really caught on. So basically it's those two.

[00:19:34] Dr. Sam Rhee: well, I guess we'll just have to wait and see what happens. That's really interesting. I learned a lot about Sientra today. I just, I didn't know a whole lot about it. I didn't know about the plant factory fire or, or even their products very much. So, uh, That's a good stuff. I hope that, uh, if they do provide more services, that something better for patients comes along with that.

Uh, any other last thoughts about Sientra?

[00:19:58] Dr. Sam Jejurikar: The only thing I would say to patients that are watching this, who may have scientry implants in, do not worry. Like you're not in some sort of vast trouble. You don't need to go out and get your implants immediately replaced. It's still a high quality product. It just may not be available to you in the future when you need additional surgery, but this is not meant to induce any sort of panic for patients that have those implants.

[00:20:18] Dr. Sam Rhee: Really good point. All Wise words. much, gentlemen. Have a great day. Talk to you later.

[00:20:24] Dr. Lawrence Tong: Take it easy boys.