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Unformatted text preview: DOW CORNING AND THE SILICONE BREAST IMPLANT CONTROVERSY On May 15, 1995, after years of controversy surrounding silicone breast implants and in the face of thousands of individual lawsuits, Dow Corning Corporation (DCC)—a 50-50 joint venture of Dow Chemical Company and Corning Inc.—filed for Chapter 11 bankruptcy protection. Richard Hazelton, the CEO of DCC, explained the decision, ―It became clear to Dow Corning that to continue our current course ultimately would make it impossible to either resolve this controversy responsibly or remain a healthy company. A Chapter 11 reorganization will bring closure and preserve underlying business.‖ Background: Market Opportunities, Competitive Pressures, Internal Company Questions Dow Corning Corporation was a start-up venture between Dow Chemical Company and Corning Inc. in 1943. As an incubator, the goal of DCC was to create and market a new material—silicone. Although the company later proved successful, with almost 10,000 employees and revenues in excess of $2 billion, it did so with the support of Dow Chemical and Corning, both looking for promising profits from the new venture. The first silicone gel breast implant took place in 1964. Between that time and the mid-1990s, ―about two million women nationwide have received breast implants, most of them for cosmetic reasons.‖ Although the majority of these women were satisfied with the implants, ―a small minority of recipients in both Canada and the United States have complained that the implants have ruptured, allowing gel to leak into the breast cavity and migrate to other parts of the body. Some women maintain that implant problems cause pain in the chest, arms, and back, as well as debilitating autoimmune diseases such as rheumatoid arthritis. Some also complain that scar tissue formed around the implants, causing a hardening of the breasts.‖ Although the silicone gel breast implants were believed by scientists at DCC to be safe for humans, internal memos suggest that DCC succumbed to competitive pressures, did not pay attention to some animal tests, and ignored employees‘ complaints about safety issues. By 1975 competitors had already cut DCC‘s market share in this area by a third. To counter the competition, DCC wanted to rush its new product—Flo-gel—to market by June 15, 1975. Projected annual sales were 50,000 units. An internal memo pertaining to market urgency, dated January 31, 1975, stated, ―17 weeks, 121 days, 2,904 hours, 174,240 minutes.‖ The Flo-gel product suffered from ―gel-bleed‖—the seepage of silicone molecules through the plastic container that housed the liquid gel. Because of gel-bleed, the implants had a noticeably greasy, even oily, sensation when handled. In an internal memo dated May 2, 1975, sales managers stated that the implants on display at a trade show ―were bleeding on the velvet in the showcase.‖ Even members of a task force that had been established by Dow Corning in January 1975 expressed concern that gel-bleed might cause...
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- Spring '11