FRANCHISE : MENTOR INC.

PRODUCT : BREAST IMPLANTS

CASE STUDY : Creating a comprehensive marketing plan for Breast implants in India

Ms. Nandini Suri was looking out of the window and gazing at the horizon that looked cluttered with
concrete. She was wondering what it would have been like if it was greener and less cluttered. Nandini
had been working with Johnson & Johnson for the last 5 years across different roles and functions. She
started as a product manager and moved up to head marketing in one of the biggest business units.
Recently she had moved to head a new business unit that Johnson & Johnson had acquired recently
called Mentor Inc. (See Appendix I).

What excited Nandini was it seemed like an entrepreneurial enterprise which needed to start from the
beginning. This meant that she needed good market information as well as a strong and clear direction
for the first six months. She knew her strengths lay in driving business to new frontiers and finding
innovative solutions. However, she was also aware that she had led marketing in established businesses
earlier while she would need to be looking at all aspects of the new business that included market
information, market development and market strategy, pricing, regulatory, operational, compliance,
distribution model, sales as well as recruitment and training.

Nandini was reading the information about Mentor Inc. (See Appendix II).

Product Information

Breast implants are generally used for breast augmentation. Breast augmentation is more for aesthetics
where the size and shape of the breasts need to be changed. Majority of the cases are for breast
augmentation. However they can also be used in breast reconstruction. Breast reconstruction is mainly
done post breast cancer treatment (when the cancer is treated by surgical removal of breast) or due to
breast abnormality.

The surgical procedure needs to be understood but it is not difficult to do. Therefore with some training
these procedures can be done very well.

The Breast implants are available in 2 types: gel or saline filled. The first is Mentor MemoryGel® breast
implants. These implants are filled with Mentor’s proprietary silicone gel that holds together uniformly
while retaining the natural give, and resembles the breast tissue (see Appendix III). Saline breast
implants are filled with a saltwater solution similar to fluid that makes up most of the human body. Each
mentor saline breast implant has a self-sealing valve used to fill the device during surgery (See Appendix
IV). The two types of breast implants are slightly different from one another (See Appendix V). In India
currently the MemoryGel® implants are mostly being used.

MemoryGel® round gel implants were among the first to receive US FDA approval. MemoryGel®
implants are classified according to shape, surface, projection and volume. While surface is chosen basis
the surgeon’s preference, the other parameters are chosen as per the patient’s body dimensions and
the level of breast enhancement the patient desires (see Appendix VI and VII). In India the round
textured high profile implants are mainly being used.

Customer information

Breast surgeries are mainly done by Plastic surgeons (though, some surgeons who are not formally
trained in plastic surgery also do these surgeries). A plastic surgeon’s work can be broadly classified as
either reconstructive or aesthetic. Reconstructive surgeries include burns, traumas, breast
reconstruction etc., while aesthetic surgeries include face lift, nose surgery, liposuction, breast
augmentation etc. Aesthetic surgery is highly profitable compared to reconstructive surgery.

There are approximately 1500 plastic surgeons in the country, of which more than 90% of surgeons
mostly practice reconstructive surgeries. Around 30% of plastic surgeons do a few aesthetic surgeries,
while only a small number (around 2%) do only aesthetic work in their practice. Most of the aesthetic
surgeons consult at their own clinics and operate at major private hospitals that have a high level of
infrastructure and facilities.

Roughly just 150-200 surgeons do Breast implants. This is very low compared to the plastic surgeons
who do breast implants in China – close to 500 and in Japan – close to 600. Given that the number of
procedures in India are low, most surgeons do only about 2 – 3 breast implant surgeries in a month. This
forms a relatively small fraction of the total surgeries they do in a month.

Most plastic surgeons in India are members of the APSI (Association of Plastic Surgeons of India), and
plastic surgeons that practice aesthetic surgery are also members of the IAAPS (Indian Association of
Aesthetic Plastic Surgeons).

Market and competitor information

While Mentor was recently acquired by Ethicon, it has had a distributor presence in India since a few
years. There was one distributor who had rights to market nationally. Although the distributor worked
diligently, Mentor’s market share has hovered around 7%, mostly driven by the distributor’s efforts in
the region it was based. The leading competitor is Eurosilicone with a 34% marketshare. In other
countries like Australia Allergan is the main competitor followed by Mentor. Allergan has two types of
implants in India – Inamed and Mcghan. Inamed is US FDA approved and Mcghan is not. US FDA
approval is one of the most difficult approval processes and is testimony to the fact that it has gone
through rigorous clinical outcome process to be approved for sale in the United States. Eurosilicone has
only one type of implant. There are other small players too in the market (see Appendix VIII). Overall the
market is still under USD 1 Million.

Most companies are engaging with the plastic surgeons. However, there are now even some general
surgeons moving to cosmetic surgery. One of our competitors, Silimed also tries to actively engage with
the cosmetic surgeons which is something they do across countries as a strategy. Plastic surgeons
particularly look at breast reconstruction and when breast removal cases come into hospitals and the
patient is willing, the plastic surgeons do breast reconstruction. Plastic surgeons as well as cosmetic
surgeons do breast augmentation.

Switching costs for surgeons are low, as the technique required to use implants from different
companies is essentially the same. While some surgeons do accept that FDA approval for implants is a
necessity, most surgeons do not perceive significant quality difference between the brands. They
generally choose a brand if the company is reputable and if local dealer ensures availability of sizes and
timely delivery.

Distribution model

In the Mentor Inc., she understood that supply chain would be a critical piece. It was imperative that
with the different sizes available, there was a smooth flawless supply of these implants to surgeons.
Criticality of supply chain is availability and response time, as switching costs for surgeons are very low.
It had minimal instruments that were required in the surgery.

The delivery model is a distributor led model currently where the distributor gets a commission for
buying from the company, stocking and selling to the surgeon/hospital. That’s the model most
franchises in India follow. However Australia does have a direct distribution model which seems to be
working well.

Potential patient awareness

The awareness amongst the young and upwardly mobile women regarding this surgical procedure is still
very low, though it is increasing. On the reconstruction side, few women want to get back to looking
how they were before cancer and to regain their self confidence and self esteem even though it is an
important criteria to get their lives back. On the augmentation side, increasingly women are getting
more conscious about how they want to look, with the strong influence from television, Bollywood and
the fashion world. However it is still very low. There is less openness to discussions about this topic and
women shy away from speaking about this topic in public or with friends. Also there is still a veil of
secrecy attached to such surgical procedures.

Surgeons mentioned to Nandini that most women had concerns regarding the safety of the implant.
Questions like whether it would cause cancer, the implant would rupture, the ability to breast feed, scar
formation were common. There was a general fear of undergoing surgery.

Pricing

As Nandini sorted through all the relevant information, it dawned upon her that MemoryGel® Breast
Implants is a business with a low market share in a small market that is relatively nascent in India. All the
major international companies are present in India, but their presence is largely distributor driven. This
unorganized competition is largely trade and pricing driven. She therefore pondered whether the price
of Rs. 36,000, which was done with reference to competitive prices, was the right pricing strategy in a
category which has yet to take off in India. A few Mentor customers (surgeons) that she had interacted
with gave her the following feedback:
“Before, MemoryGel® Implants were priced at Rs. 32,000 per pair, which is significantly higher than
Eurosilicone and McGhan. Now if you increase the price to more that Rs. 36,000, they will be out of reach
for our patients. The total surgery cost to the patients is approximately Rs 1 – 1.5 lacs, and patients do
shop around for surgeons that offer the best price”

While she was cognizant that they could be pricing MemoryGel® Implants out of the market, she was
also concerned whether Rs. 36,000 per pair was an optimal pricing level. At this price point the gross
profitability levels were lower than those needed, in her experience at J&J, to make the necessary sales
& marketing investments for growing a nascent category. Her colleagues in other countries such as the
U.S. and Australia mentioned to her that they had been rather fortuitous with the cultural awareness,
need and acceptance of breast implants in their countries. Therefore, their efforts and strategies have
largely been focused on fighting competition. Moreover, only FDA approved implants were granted
permission to be marketed in the U.S.

The hospital price (price at which the hospital buys from the distributor) for MemoryGel® is INR
36000/pair. The price for Inamed is between INR 40-45000/pair. The price for Mcghan is INR 25-
28000/pair. The price for Eurosilicone is INR 25000/pair. This clearly makes MemoryGel® priced higher
than many others. The moot question is how price sensitive is this market. Is higher price perceived as
higher quality or does high price push the customer away. Is there a way to sustain high price by looking
at creating a strong brand differentiation? Nandini was going over these statistics and wondering the
role pricing would play here.

Sharing of information

Online media is quite popular for gaining information amongst potential patients. There were quite
some blogs that Nandini went and looked into. There were lots of discussions where people were
exchanging information and asking questions. These blogs seemed were being tracked by designated
hosts as there were very clear answers given to specific company product queries. It was interesting to
see how such blogs might have a role in helping potential patients/customers form some opinions about
products. (see Appendix IX)

Sales and marketing structure

At this point in time she has a very bright motivated MBA working in marketing who had a few months
back joined the organization. In sales there are 3 sales personnel who have been recruited and need to
be stationed in 3 high potential cities. The plans were to place them in Mumbai, Delhi and Bangalore.
There are some relations that Ethicon does share with plastic surgeons through the suture business.
However, there are no strong relationships with the plastic surgeons as might be required for a product
like breast implants.

Johnson & Johnson Medical in India is a market leader in many of the franchises (See Appendix X). There
are a lot of best practices that are already being done today. Especially when we look at DePuy which
has been a pioneer in surgeon education and patient awareness and is the market leader in joint
replacement. Ethicon franchise has been a market leader through innovation.
 She therefore realized the need to make a detailed marketing plan for breast implants over the next 2 –
3 years. For this, she needed clarity regarding the following questions:

1) What is the potential market for breast implants in India and how will it pan out in the next 2-3
years.

2) What is the value proposition that the customer (Plastic surgeon) is looking for? What is it that
Eurosilicone and Allergan are doing that make them market leaders?

3) What are the triggers and barriers for the patients towards this procedure? How can Mentor
address this to increase the awareness?

4) Should the strategic focus for MemoryGel® Implants be on breast reconstruction, breast
augmentation or both? (Give reasons)

5) Should Mentor continue pricing the implants at Rs. 36,000 per pair? Why or why not?

6) How can Mentor look at growing this market? Within this growing market how can Mentor
increase its surgeon base and loyalty?

Appendix 1
Johnson & Johnson to acquire Mentor

Medical giant to pay $31 a share in cash; Mentor stock soars

Explore related topics

Biotechnology Johnson & Johnson

Story QUOTES COMMENTS SCREENER (4)

Alert Email Print Share

By MarketWatch

WASHINGTON (MarketWatch) - Johnson & Johnson said Monday it would pay $1.07 billion in cash to
buy Mentor Corp., a supplier of breast implants and other cosmetic products.
It's the second deal Johnson & Johnson has announced in the past week. In late November, the company
said it would buy biotechnology company Omrix Biopharmaceuticals Inc. for $438 million as part of a
move to boost its surgical-care business

The latest deal values Mentor at $31 a share, a premium of $14.85, or 92% over its closing price last
Friday of $16.15. Johnson & Johnson will also assume Mentor's debt to put the total value of the
agreement at $1.12 billion.

In late Monday trades, Mentor shares jumped 89% to $30.59.

Shares of Johnson & Johnson, which said the purchase will reduce 2009 earnings by 3 cents to 5 cents a
share, slipped 4% to $56.23. Johnson & Johnson (JNJ 62.14, +0.33, +0.53%) is a component of the Dow
Jones Industrial Average.

Analyst Tao Levy of Deutsche Bank said the acquisition will move JNJ "into a market leadership position
in cosmetic surgery," where it now has a smaller presence.

Santa Barbara, Calif.-based Mentor is expected to operate as a stand-alone business reporting through
Ethicon Inc., a unit of the New Brunswick, N.J.-based Johnson & Johnson.

With many healthcare- and biotech -related stocks near steep one-year lows, Johnson & Johnson has
used its deep cash reserves to go shopping. Wall Street analysts expect the large drug company to make
more deals in the coming months.

The boards of both companies have approved the deal. It also requires federal antitrust approval,
though no significant hurdles are expected.

Appendix II
Mentor Inc was Founded in 1969, Mentor Corporation is a leading supplier of medical products for the
global aesthetic medicine market. The Company develops, manufactures and markets innovative,
science-based products for aesthetics markets around the world.

Mentor has made breast implant devices for more than 20 years in the United States. Mentor's breast
implants are for use in both breast augmentation and breast reconstruction are of the highest quality,
and made under strict standards of design and testing. Because of this, Mentor has achieved a
tremendous level of respect in the medical community and is consistently recognized by physicians for
outstanding product integrity.

Mentor Inc. has been acquired by the Ethicon franchise within Johnson & Johnson.

Johnson & Johnson, through its subsidiary Ethicon, Inc., acquired Mentor Corp., a leading supplier of
medical products for the large and fast-growing aesthetic market, in January 2009. Mentor was a natural
fit for Ethicon, a leading provider of suture, mesh and other products for a wide range of surgical
procedures. In combining forces, Ethicon and Mentor aspire to be the trusted global leader in aesthetic
medicine.
“The addition of Mentor expands our capacity to provide innovative, science-based solutions that can
restore patients’ appearance, self-esteem and quality of life,” says Gary Pruden, Company Group
Chairman with responsibility for the Ethicon franchise.

Not all patients know about their reconstructive options. While the number of breast-reconstruction
procedures increased in 2008, a study by the American Society of Plastic Surgeons found that nearly 70
percent of eligible women aren’t told about all their options. “This is an important conversation that
should take place when a woman is diagnosed so she’s informed about choices that can improve her
quality of life,” says Dr. Downey.

Before that conversation can happen, surgeons must know what they can offer. Ethicon has a
distinguished legacy with the broad surgeon community, and Mentor is highly respected among plastic
surgeons. “With our new partnership, we can educate doctors and patients to make a real difference in
the lives of women who face these decisions,” says Delia Cook, Group Product Director, Mentor
Worldwide, LLC.

Appendix III – Mentor’s proprietary Cohesive gel

Memory Gel Breast implant (cut in half)

Appendix IV
Saline Breast implant

Appendix V
MemoryGel Breast Implants Saline Breast Implants

FDA Approved FDA Approved

Filled with Mentor’s proprietary silicone gel that Filled with a saltwater solution that is similar to
holds together uniformly while retaining the the fluid that makes up most of the human body,
natural give that resembles breast tissue slightly firmer feel

Set fill volume Flexible fill volume, allowing the surgeon to adjust
the volume during the procedure

Three projection options: Moderate, Moderate Three projections: Moderate, Moderate Plus, High
Plus, High Profile profile

Two shell surfaces available : Smooth and textured Two shell surfaces available : Smooth and textured

Slightly larger incision size with various options for Smaller incision size with various options for
incision placement incision placement
Appendix VI (Types of MemoryGel® Implants)

Appendix VII (Sizing chart for High Profile round gel implants, and dimensional comparison
for a 350cc implant)
Appendix VIII (India - Breast Implants market share by value)

7%
17%

MENTOR
23%
ALLERGAN
12% NAGOR
EUROSILICONE
SILIMED
7% OTHERS

34%
Source : Company estimates based on third party market research reports and market feedback

Appendix IX
Few of the sites Nandini went through are given below:

http://www.breasthealthonline.com/cgi-bin/mwf/topic_show.pl?tid=123286

http://www.loveryourlook.com

http://www.yourbreastoptions.com

http://www.mentorwwllc.com/
Appendix X

JOHNSON & JOHNSON MEDICAL

ETHICON (Mentor Inc.) CORDIS

DEPUY ASP

LIFESCAN ETHICON ENDO

SURGERY

Cordis

Since its establishment in 1959, Cordis Corporation has been a pioneer in circulatory disease
management. Dedicated to helping physicians and other healthcare professionals enhance the lives of
patients suffering from cardio vascular disease, Cordis is driven to transform the future of vascular care
through its commitment to R&D.

In India, Cordis has four specializations: Cardiology, Endovascular, Neurovascular and Electrophysiology.

DePuy

Over one in ten people above the age of 55 suffer from Arthritis. DePuy aims to empower sufferers by
increasing awareness about arthritis and its management on the one hand and training surgeons to
increase the specialist pool on the other. DePuy Orthopaedics Inc., a subsidiary of Johnson & Johnson, is
a company that designs, manufactures and distributes orthopedic devices and supplies including hip,
knee, extremity, trauma, orthobiologics, and operating room products.

A market leader in the joint replacement sector through excellence in professional education and
patient awareness. With this, DePuy aims to serve patient needs and restore the joy of motion.
Ethicon

Innovation is a key factor that drives business at Ethicon, one of the world’s most respected brands in
surgical and health care. Today Ethicon has a range of over a thousand products in the area of wound
closure, women’s health and urology and cardiovascular solutions. On an average Ethicon products
touch the lives of 11 million patients in a year making it one of the largest surgical product brands across
product categories. It has recently acquired Mentor Inc. which is aesthetic devices to make life more
beautiful.

Ethicon Endo-Surgery

Minimally invasive surgery is the way of the future. Ethicon Endo-Surgery markets advanced medical
devices for minimally invasive and open surgical procedures. Focusing on procedure-enabling devices for
the interventional diagnosis and treatment of conditions in general and bariatric surgery, as well as
gastrointestinal, gynaecology and surgical oncology.

Lifescan

Dedicated to improving the quality of life for people with diabetes by developing, manufacturing and
marketing a wide range of glucose monitoring systems and software for use by people with diabetes and
by health care providers, Lifescan, Inc. The ONETOUCH® Brand of consumer and institutional products
includes portable electronic meters and disposable reagent test strips to provide accurate, less painful
glucose readings and the software tools to transform this information into actionable health care
decisions.
Breast Implants - Information for use
Contraindications

Breast implant surgery should not be performed in:

• Women with existing cancer or pre-cancer of their breast who have not received adequate treatment
for those conditions

• Women with active infection anywhere in their body

• Women who are currently pregnant or nursing.

1.4. Important Factors You Should Consider When

Choosing Silicone Gel-Filled Implants.

• You should be aware that there are many factors that will affect the outcome and timing of your
reconstruction with breast implants, such as the stage of your disease, the type and extent of cancer
removal surgery you have had, the amount of skin and soft tissue available for the reconstruction, and
additional treatments such as chemotherapy and radiation, which you may require.

• Breast implants are not lifetime devices, and breast implantation is likely not a one-time surgery. You
will likely need additional unplanned surgeries on your reconstructed and/or contralateral augmented
breasts because of complications or unacceptable cosmetic outcomes. These additional surgeries can
include implant removal with or without replacement, or they can include other surgical procedures.
When you have your implants replaced (revision-reconstruction), your risk of future complications
increases compared to first time (primary) reconstruction surgery, so you should review the
complication rates for revision-reconstruction patients to see what future risks you may experience.

• Many of the changes to your breast and chest wall following preparation and implantation are
irreversible (cannot be undone). If you later choose to have your implant(s) removed and not replaced,
you may experience unacceptable dimpling, puckering, wrinkling, or other cosmetic changes of the
breast.

• If you undergo a mastectomy, removal of the breast tissue eliminates the ability to breast feed with
the removed breast. In addition, contralateral breast augmentation may affect your ability to breast
feed, either by reducing or eliminating milk production.

• Rupture of a silicone gel-filled breast implant is most often silent. This means that neither you nor your
surgeon will know that your implants have a rupture most of the time. In fact, the ability of a physical
examination by a plastic surgeon who is familiar with breast implants to detect silicone breast implant

rupture is 30%1 compared to 89% for MRI.2 You will need to have regular screening MRI examinations
over your lifetime in order to determine if silent rupture is present. You should have your first MRI at 3
years after your initial implant surgery and then every 2 years, thereafter. The cost of MRI screening
may exceed the cost of your initial surgery over your lifetime. This cost, which may not be covered by
your insurance, should be considered in making your decision.

• If implant rupture is noted on by MRI, you should have the implant removed, with or without
replacement.

• With breast implants, routine screening mammography for breast cancer will be more difficult. You
should continue to undergo routine mammography screening as recommended by your primary care
physician. The implant may interfere with finding breast cancer during mammography. Because the
breast and implant are squeezed during mammography, an implant may rupture during the procedure.
More x-ray views are necessary for women with breast implants; therefore, you will receive more
exposure to radiation. However, the benefit of having the mammogram to find cancer outweighs the
risk of the additional x-rays. Be sure to inform the mammography technologist that you have implants.

• You should perform an examination of your breasts every month for cancer screening; however, this
may be more difficult with implants. You should ask your surgeon to help you distinguish the implant
from your breast tissue.

• You should perform an examination of your breasts for the presence of lumps, persistent pain,
swelling, hardening, or change in implant shape, which may be signs of symptomatic rupture of the
implant. These should be reported to your surgeon and possibly evaluated with an MRI to screen for
rupture.

• The timing for any revision following reconstruction surgery should be discussed with your surgeon so
that all issues such as the potential effects of radiation, chemotherapy, and additional cancer surgery or
treatments can be fully discussed.

• After undergoing cancer treatment and/or reconstructive breast surgery (either primary or revision),
your health insurance premiums may increase, your insurance coverage may be dropped, and/or future
coverage may be denied. Treatment of complications may not be covered as well. You should discuss 16

the complete extent of your insurance coverage with your insurance company before undergoing
reconstructive surgery with breast implants.

• You should inform any other doctor who treats you of the presence of your implants to minimize the
risk of damage to the implants.
 Rules for Submission
Your launch plan can be submitted in a word document (not exceeding 10 pages)

Please submit a 5-6 slide Powerpoint presentation capturing the essential points of your Launch plan
along with your Word document

Though there is no maximum limit to the number of words or slides special credits will go to the
strategists for clear, concise communication

For Round 1 Selections:

Criteria of evaluation

Ability to arrive at answers for all the 6 questions

Ability to provide comprehensive and logical solutions

Creativity in arriving at solution

Ability to understand the market through information provided or

research if required

Clarity of thinking and connecting the pieces

Transparency of the process followed to arrive at the answers

For Final Presentation:

Criteria of evaluation

Verbal & Written Presentation skills

Answering questions that exhibit sound analysis and clear thinking

Any decisions pertaining to the judging of the competitors by the panel of judges from Johnson &
Johnson will be held final. It can’t be contested on any account.

© "The information stated in this case study is proprietary and unauthorized dissemination is not
permitted. The information stated herein may be used only for the purpose of the case study and
creating a marketing plan. Copyright 2010 Johnson & Johnson Ltd".