Analysts at Jefferies are predicting breast implant maker Establishment Labs will triple the size of its addressable market by 2023.
In a note to investors published Thursday, the analysts predict entering China in 2020 and the U.S. by 2023 will open up markets worth close to $1 billion to Establishment.
If Establishment can repeat the success it has achieved in its existing markets, the analysts think it can grow annual revenues from less than $90 million today to $400 million in 2025.
Establishment is positioned to benefit from the turmoil engulfing rival breast implant manufacturers such as Allergan. As a manufacturer of smooth, rather than textured, breast implants, Establishment looks to be distanced from the safety signals that have led regulators and rival companies to pull products from the market.
Costa Rica-based Establishment is yet to reap the potential benefits of that differentiator, with Brazil, a key market, taking limited action against textured implants and the transition to smooth devices in other regions being slowed by the lack of surgeon experience with the products.
Despite that, Establishment has already claimed 17% of the Brazilian market and between 40% and 60% of the Japanese, Korean and Scandinavian markets, according to the Jefferies analysts. Overall, Establishment has a 25% share of the markets in which it is active.
The ongoing pressure on textured breast implants, many models of which were recently pulled from Australia, creates an opportunity for Establishment to increase its share of existing markets in the coming years. However, the analysts think the bigger opportunities lie in new markets, namely China and the U.S.
By the analysts' calculations, China and the U.S. account for almost two-thirds of the $1.5 billion global breast implant market. Establishment is due to enter China, a $150 million market, toward the end of next year. The FDA will want to see three-year data on the implant, Motiva, before clearing it for sale, meaning Establishment may have to wait until 2023 to start sales in the U.S.
The Jefferies analysts expect Establishment to claim 15% of the $800 million U.S. market, a forecast that is central to their belief the company can grow revenues to $400 million by 2025.
A lot can change in five years, creating the risk that unforeseen factors will stop Establishment from living up to that prediction. But the Jefferies analysts think a competitor is unlikely to match the quality of Motiva "in the foreseeable future," emboldening them to talk up Establishment's mid-term prospects.