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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Commission file number 1-9741

INAMED CORPORATION
(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
Preferred Stock Purchase Rights

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ý    No o

The aggregate market value of voting stock held by non-affiliates as of June 30, 2003 was $1,097.1 million, based on the closing sales price on the NASDAQ National Market on that date.

On March 10, 2004, there were 35,439,777 shares of the registrant's common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

        The information required by Part III of this Form 10-K is incorporated by reference to the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission not later than 120 days after the conclusion of the registrant's fiscal year ending December 31, 2003 (April 29, 2004) pursuant to Regulation 14A.

INAMED CORPORATION
Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2003

TABLE OF CONTENTS

        This report contains trademarks and trade names that are the property of Inamed Corporation and its subsidiaries, and of other companies, as indicated.

        In this document, the words "we," "our," "ours," "us" and "Inamed" refer only to Inamed Corporation and its subsidiaries, not any other person or entity.

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PART I

        This Annual Report on Form 10-K (including the section regarding Management's Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Annual Report on Form 10-K. Additionally, statements concerning future matters are forward-looking statements.

        Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed under the heading "Risks and Uncertainties" below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made in this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

        We file reports with the Securities and Exchange Commission ("Commission"). We make available on our website (www.inamed.com) free of charge our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such materials with or furnish them to the SEC. You can also read and copy any materials we file with the Commission at its' Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. In addition, the Commission maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission, including us.

ITEM 1. BUSINESS

        Inamed is a global health care company that develops, manufactures, and markets a diverse line of products that enhance the quality of people's lives. These products include breast implants for aesthetic augmentation and reconstructive surgery following a mastectomy, a range of dermal products to correct facial wrinkles, and the BioEnterics® LAP-BAND®System and BIB® systems used to treat severe and morbid obesity.

COMPANY HISTORY

        McGhan Medical Corporation, was incorporated in 1974 and was a manufacturer of silicone products for plastic and reconstructive surgery. In 1977, that business was sold to Minnesota Mining and Manufacturing Company, or 3M. In 1984, a newly formed McGhan Medical Corporation acquired the assets of 3M's silicone implant product line. In 1985, that corporation became a subsidiary of a publicly-held company through a merger with First American Corporation, a Florida corporation. In 1986, First American changed its name to Inamed Corporation. Inamed formed its BioEnterics Corporation subsidiary in 1991, primarily to pursue opportunities in the field of stomach constriction technology. In December 1998, Inamed changed its state of incorporation to Delaware through a reincorporation merger. In September 1999, Inamed completed its acquisition of Collagen

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Aesthetics, Inc., which was then a publicly-held corporation which manufactured and marketed primarily collagen-based dermal fillers and other aesthetics products. In 2001, Inamed renamed its McGhan Medical Corporation subsidiary to Inamed Medical Products Corporation, or IMPC, and simplified its structure by consolidating its U.S. operations into IMPC. BioEnterics Corporation continues to exist as a holder of the rights to the BioEnterics products, and it has agreed with other Inamed subsidiaries such as IMPC for the manufacture, distribution, and other support of the BioEnterics product line.

        On October 30, 2003 the Board approved a three for two stock split of the Company's Common Stock in the form of a 50 percent stock dividend. The stock split was effected on December 15, 2003 for shareholders of record at the close of business on December 1, 2003. A total of 11,727,612 shares of common stock were issued in connection with the stock split. The par value of the shares was not changed from $0.01. All references in the Annual Report on Form 10-K to numbers of shares, per share amounts, stock option data and market prices of the Company's stock have been restated to reflect the stock split.

PRODUCTS AND PRODUCT CANDIDATES

        Inamed has three main product lines—breast aesthetics products and facial aesthetics products marketed under Inamed Aesthetics, and obesity intervention products marketed under Inamed Health. These three lines are considered one segment for financial reporting purposes. See Note 1 of the notes to the consolidated financial statements.

Breast Aesthetics

        We develop, manufacture, and market a diverse line of breast implants, consisting of a variety of shapes, sizes, and textures. Our breast implants consist of a silicone elastomer shell filled with either a saline solution or silicone gel with varying degrees of cohesivity. This shell can consist of either a smooth or textured surface. We market our breast implants under the trade names McGhan® and CUI® and the trademarks BioCell®, MicroCell®, BioDimensional™, Inamed® and Biocurve™. Our breast implants are available in more than 600 variations to meet customers' preferences and needs.

        Saline-Filled Breast Implants.    We sell saline-filled breast implants in the U.S. and internationally for use in breast augmentation for cosmetic reasons and for reconstructive surgery. The U.S. market is the primary consumer of saline-filled breast implants.

        Silicone Gel-Filled Breast Implants.    We sell silicone gel-filled breast implants primarily in Europe, the Middle East, Latin America, Australia, New Zealand and Asia. More than 90% of our breast implant sales outside the U.S. are silicone-gel filled. There are a variety of silicone filled breast implants available in these markets based upon the varying degrees of cohesivity of the silicone gel filler material. Certain of our silicone gel-filled implants are available in the United States under an adjunct study protocol for use in breast reconstruction.

        In the U.S in June 2000, we completed the implantation phase of a core clinical study designed to gain U.S. Food and Drug Administration, or FDA, approval for these silicone gel-filled breast implants. In January 2002 we began submitting the first of several modules to the FDA for the pre-market approval, or PMA, seeking approval of our silicone gel-filled breast implants. The final module and application for the pre-market approval process of our silicone gel filled breast implants, which included the completed two years follow up data requested, was submitted December 30, 2002. In October 2003 the General and Plastic Surgery Advisory Panel of the U.S. Food and Drug Administration (FDA) recommended, with conditions, approval of the Company's pre-market approval (PMA) application to market gel-filled breast implants in the United States. The Panel approval, with conditions, was for all indications—breast augmentation, reconstruction and revision. In January, 2004, we received a "Not Approvable" letter from the U.S. Food and Drug Administration (FDA). The letter

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outlines the additional information that we must provide prior to the FDA's further review of our pre-market approval application (PMA) for silicone gel-filled breast implants. According to the letter, submissions of the requested information and data will place the PMA in approvable form and allow the FDA to conduct further review of Inamed's PMA. Also, in January 2004, the FDA issued draft guidance for saline, silicone gel, and alternative breast implants. The guidance provides non-binding recommendations regarding device description, preclinical, clinical, and labeling information that the FDA recommends be presented in a PMA application for saline, silicone gel, and alternative breast implants.

        Additionally, in September 2000, the FDA approved a feasibility study for our style 410 cohesive silicone gel-filled breast implants. In March 2001, we announced that the FDA had approved the expansion of the study to a full-scale clinical study. Patient enrollment for this study was completed in the first quarter of 2002 and is now in the two year clinical follow up period. After the two year follow up is completed we will compile the data and complete our clinical filing to support the submission of a PMA for the 410 cohesive silicone gel breast implants in the U.S. The cohesive silicone gel filled implants are currently the leading selling breast implants in Europe.

        Tissue Expanders.    We sell a line of tissue expanders for breast reconstruction and as an alternative to skin grafting to cover burn scars and correct birth defects.

Facial Aesthetics

        We develop, manufacture, and market dermal filler products designed to improve facial appearance by smoothing wrinkles and scars and enhancing the definition of facial structure. Our primary facial aesthetics products are Zyderm™ and Zyplast™, Cosmoderm® and Cosmoplast®, and the Hylaform® range of hyaluronic acid-based dermal fillers. In July 2002, we acquired the exclusive rights in the U.S., Canada and Japan to sell Ipsen Ltd.'s botulinum toxin Type A product for all cosmetic indications. In January 2004, we acquired the exclusive rights to sell Juvederm® in the United States, Canada, and Australia, and the non-exclusive rights to sell the product under a different name in various other countries. Juvederm is a non-animal based hyaluronic acid dermal filler that is currently marketed in various European countries, Canada, Latin America, and other countries, but is not currently approved for sale in the United States. We also sell solid silicone facial implants in the U.S. and internationally.

        Zyderm™ and Zyplast™.    Zyderm™ and Zyplast™ implants are injectable formulations of bovine collagen. Zyderm™ implants are formulated especially for people with fine line wrinkles or superficial facial contour defects. These implants are particularly effective in smoothing delicate frown and smile lines and fine creases that develop at the corners of the eyes and above and below the lips and can also help correct certain shallow scars. Zyplast™ implants are designed to treat deeper depressions and can be used for more pronounced contour problems, such as deeper scars, lines and furrows, and for areas upon which more force is exerted, such as the corners of the mouth. The implants take on the texture and appearance of human tissue and are subject to similar stresses and aging processes. Consequently, supplemental treatments are necessary to maintain the desired result. Zyderm™ and Zyplast™ implants require a skin test, with a requisite 30-day period to observe the possibility of allergic reaction in the recipient. Both of these products are formulated with Lidocaine, an anesthetic, to alleviate pain during injection. In the U.S., the FDA approved the PMA for Zyderm™ in 1981 and for Zyplast™ in 1985. Zyderm™ and Zyplast™ were approved for marketing in Europe in 1995.

        Hylaform® Gel.    Hylaform® gel implants are an avian based hyaluronic acid injectable product for the treatment of facial wrinkles and scars. The product, licensed from Genzyme Corporation and sold in Europe since 1996 and in Canada since 1998, does not require a skin test, so patients can be treated immediately.

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        In 2001, two new formulations of Hylaform® gel were developed. The new formulations are Hylaform® FineLine, designed especially for people with fine line wrinkles or superficial facial contour defects, and Hylaform® Plus, formulated for treating deeper depressions and more pronounced contour problems such as deeper scars, lines, and furrows. We launched these new Hylaform® gel products in Europe in September 2001 and we are the only company that sells a range of both hyaluronic acid-based and collagen-based dermal fillers in Europe and certain other countries. In December 2001, Health Canada's Therapeutic Products Programme, or HCTPP, granted Genzyme Corporation a Medical Device License for Hylaform® gel. In January 2002, the HCTPP approved both Hylaform® Plus and Hylaform® FineLine. These approvals allow us to market the entire line of Hylaform® products for cosmetic indications in Canada.

        In January 2001, the FDA granted conditional approval to Genzyme Corporation to begin a limited clinical trial with Hylaform® gel in the U.S. In October 2001, Inamed and Genzyme Corporation jointly announced plans to develop the complete Hylaform® line of products in the U.S. We began clinical studies in the first half of 2002 and completed enrollment of patients at the end of 2002. We completed the submission of the PMA to the Food and Drug Administration on August 1, 2003, and the application was considered by a FDA Advisory Panel on November 21, 2003. The Panel recommended Hylaform® for approval with conditions. Final approval is currently pending FDA's completion of its review.

        CosmoDerm® and CosmoPlast® Implants.     CosmoDerm®™ and CosmoPlast® implants are a line of injectable human skin-cell derived collagen products that Inamed licenses from Smith & Nephew, Inc. We received FDA approval for CosmoDerm® and CosmoPlast® in March 2003 and received approval from Health Canada in December 2002. Cosmoderm® implants are formulated especially for people with fine line wrinkles or superficial facial contour defects. These implants are particularly effective in smoothing delicate frown and smile lines and fine creases that develop at the corners of the eyes and above and below the lips and can also help correct certain shallow scars. Cosmoplast ® implants are designed to treat deeper depressions and can be used for more pronounced contour problems, such as deeper scars, lines and furrows, and for areas upon which more force is exerted, such as the corners of the mouth. The implants take on the texture and appearance of human tissue and are subject to similar stresses and aging processes. Consequently, supplemental treatments are necessary to maintain the desired result. CosmoDerm® and CosmoPlast® implants do not require a skin test pre-treatment. Both of these products are formulated with Lidocaine, an anesthetic, to alleviate pain during injection.

        Botulinum Toxin Type A.    In July 2002, Inamed and Ipsen Limited signed a definitive agreement which provides that Inamed will develop, distribute and market Ipsen Limited's botulinum toxin Type A for all cosmetic indications, including wrinkles, in the United States, Canada, and Japan. The product is a sterile, freeze-dried, purified form of botulinum toxin A and we will be the exclusive distributor of all current and future formulations in the countries noted above. The product is currently marketed under the trade name Dysport® in Europe and elsewhere where it competes with other botulinum toxin products such as Allergan's Botox®. We completed the phase II dosing trial in 2003, during which an optimal dose was selected. Data was presented to, and accepted by, the FDA to initiate the phase III pivotal study using this dose. We anticipate initiating the phase III trial in early to mid 2004 in the United States.

        Juvederm®.    In January 2004, we signed a development and distribution agreement with Corneal Group for the rights to develop, distribute and market the Juvederm® dermal fillers which utilize a non-animal, cross-linked hyaluronic acid technology. These rights also include product line extensions and improvements. This technology is based on the delivery of a homogeneous gel-based hyaluronic acid, as opposed to a particle-gel based hyaluronic acid technology, which is used in other products. Under this agreement, we will have the exclusive rights to develop, market and distribute the Juvederm

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products in the United States, Canada and Australia, and non-exclusive rights in France, Spain, the United Kingdom, Italy, Germany and Switzerland. In the non-exclusive European countries, Inamed will establish a new brand name to promote and market Juvederm. Currently, Juvederm is available in three formulations, JUVEDERM 30, JUVEDERM 24 and JUVEDERM 18, to treat varying severities of wrinkles and soft tissue augmentation. Juvederm products are currently approved or registered in over 36 countries, including all major European markets. In these markets Juvederm does not require a skin test pre-treatment. We expect to file for regulatory approval of Juvederm in Australia shortly and to begin our clinical program in the U.S. in the first half of 2004.

        Discontinued Products.    As part of a strategic refocusing on core products in 2001, we discontinued selling the Refinity™ skin care line and sold our rights and remaining inventory to Cosmederm Technologies. We also relinquished exclusive marketing rights and ceased active marketing of SoftForm® facial implants and the Refinity™ Coblation® skin resurfacing system.

Obesity Intervention

        We develop, manufacture, and market several devices for the treatment of obesity. Our principal product in this market area, the BioEnterics® LAP-BAND® System, is designed to provide minimally invasive long-term treatment of severe obesity and is used as an alternative to gastric bypass surgery or stomach stapling. The BioEnterics® LAP-BAND® System is an adjustable silicone elastomer band which is laparoscopically placed around the upper part of the stomach through a small incision, creating a small pouch at the top of the stomach. This slows down the passage of food and makes the patient feel fuller sooner. The BioEnterics® LAP-BAND® System procedure is adjustable and reversible.

        The BioEnterics® LAP-BAND® System has achieved widespread acceptance in the United States, Europe, Australia, Latin America, the Middle East, and other countries and regions. In June 2001, the BioEnterics® LAP-BAND® System was approved by the FDA for treatment of severe obesity in adults who have failed more conservative weight reduction alternatives. Commercial distribution of the BioEnterics® LAP-BAND® System was initiated in the U.S. in July 2001. Approximately 120,000 units have been sold worldwide since 1993.

        We also market the BioEnterics® Intragastric Balloon, or BIB®, System, which is a short-term therapy designed for patients who must reduce weight in preparation for surgery or for moderately obese patients in conjunction with a long-term comprehensive diet and exercise program. Currently distributed only outside the U.S., the BIB® is a silicone elastomer balloon that is filled with saline after insertion into the patient's stomach.

        We also sell the BioEnterics® Gastric Balloon Suction Catheter, which was introduced in the U.S. in June 2001. It contains a durable silicone balloon used by surgeons to facilitate pouch sizing and provide gastric suction during laparoscopic gastric bypass procedures.

Other Products

        Contigen® is our collagen product used for treatment of urinary incontinence due to intrinsic sphincter deficiency. We obtained approval from the FDA to market Contigen® in September 1993. C. R. Bard, Inc. licensed from us exclusive worldwide marketing and distribution rights to Contigen®. We also provide other collagen products for use by other medical manufacturers.

SALES AND MARKETING

        We sell our products directly and through independent distributors in approximately 70 countries worldwide. We supplement our marketing efforts with appearances at trade shows, advertisements in trade journals, sales brochures, and national media. In addition, we sponsor symposiums and

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educational programs to familiarize surgeons with the leading techniques and methods of using our products.

        Breast Aesthetics.    In the U.S. and Canada, breast aesthetics products are marketed under Inamed Aesthetics primarily to plastic and reconstructive surgeons, out-patient surgery centers, and hospitals through our staff of sales representatives. In Europe, our breast aesthetics products are sold by our European subsidiaries through their staff of sales representatives in the largest European markets. In other European markets, in the Middle East, Latin America, Africa, and the Asia-Pacific region, our breast aesthetics products are sold through a network of distributors.

        Facial Aesthetics.    Our facial aesthetics products are marketed under Inamed Aesthetics to plastic and reconstructive surgeons, hospitals and clinics, as well as to facial and oral surgeons, and dermatologists. The facial aesthetics products are sold in most of the same countries and by the same sales organizations that sell the breast aesthetics products. We have a direct sales force for facial products in Japan and Australia.

        Obesity Intervention.    Our obesity intervention products are marketed under Inamed Health to general, laparoscopic, and bariatric surgeons, and sold to hospitals. In the U.S. and Canada, obesity intervention products are sold by a sales force of company-employed representatives and managers. In Europe and Australia, our Health products are sold by our subsidiaries through their staff of sales representatives. In other European markets, in the Middle East, Latin America, Africa, and the Asia-Pacific region, our Health products are sold through a network of distributors.

COMPETITION

Breast Aesthetics

        We compete in the U.S. breast implant market with Mentor Corporation. We are aware of several companies conducting clinical studies of breast implant products in the U.S. Internationally, we compete with several manufacturers, including Mentor Corporation, Silimed, Eurosilicone, Poly Implant Prostheses, Nagor, Laboratories Sebbin, and LPI.

        We believe that the principal factors permitting our products to compete effectively are high-quality product consistency, product design, management's knowledge of and sensitivity to market demands, an experienced sales force, plastic surgeons' familiarity with our products and brand names, regional warranty programs, and our ability to identify and develop or license patented products embodying new technologies.

Facial Aesthetics

        Our facial products compete in the dermatology and plastic surgery markets with other hyaluronic acid products, substantially different treatments, such as laser treatments, chemical peels, fat injections, and gelatin- or cadaver-based collagen products. In addition, several companies are engaged in research and development activities examining the use of collagen and other biomaterials for the correction of soft tissue defects. Internationally, we compete with products such as Restylane®, Restylane® Fine Lines, and Perlane™ (all manufactured by Q-Med A.B.). Starting in the first quarter of 2004 we now compete in the U.S. dermal filler market with Restylane® which is distributed by Medicis Corporation.

Obesity Intervention

        No gastric bands other than Inamed's are commercially available in the U.S. and we are currently aware of only one other company conducting U.S.clinical studies of gastric bands at this time. Outside the United States, the LAP-BAND® System competes primarily with the Swedish Adjustable Gastric Band (manufactured by Ethicon Endo Surgery,) and the Heliogast Band (manufactured by Helioscopie, S.A., France). There are at least two other gastric bands on the market internationally. The

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BioEnterics® LAP-BAND® System also competes with surgical obesity procedures, including gastric bypass, vertical banded gastroplasty, and biliopancreatic diversion.

RESEARCH AND DEVELOPMENT

        We have a qualified staff of scientists, engineers, and technicians working on material technology and product design as part of our research and development efforts. Our research and development expense is primarily directed toward supporting the clinical trials of our products. In addition, we are directing our research and development toward new and improved products based on scientific advances in technology and medical knowledge, together with qualified input from the medical profession. We have incurred research and development expenses of $21.5 million, $13.6 million, and $12.2 million for the years ended, December 31, 2003, 2002 and 2001, respectively.

PATENTS, LICENSES, AND RELATED AGREEMENTS

        We currently own or have exclusive license rights to numerous patents, patent applications, trademarks and trademark applications throughout the world relating to our product lines.

        In addition, we are currently engaged in various collaborative ventures for the development, manufacturing, and distribution of current and new products. These projects include the following:

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We are the exclusive distributor and licensee for Genzyme Corporation's Hylaform® products, including Hylaform® Plus and Hylaform® FineLine, everywhere except the U.S., China, and Hong Kong. We purchase the product from Genzyme Corporation and pay a royalty based on sales.



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In September 2002, we entered into an agreement with Genzyme Corporation for exclusive U.S. development and distribution rights for all Hylaform® products. The product supply and royalty provisions are similar to the international agreement and Inamed will fund all development work required to obtain FDA approval.



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In July 2002, we entered into a Development and Distribution Agreement with Ipsen Limited to develop and be the exclusive distributor and licensee for Ipsen Limited's current and any future botulinum toxin A products for all cosmetic indications in the U.S., Canada, and Japan. We are actively pursuing development of this product at this time.



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In January 2004, we entered into a development and distribution agreement with Corneal Industries for exclusive rights to develop and distribute in the U.S., Canada and Australia their resorbable hyaluronic acid-based dermal filler, marketed as Juvederm, as well as non-exclusive distribution rights in other countries.

        We had an agreement with Advanced Tissue Sciences, Inc., or ATS, under which we acquired an exclusive, worldwide license to certain intellectual property for the development and distribution of certain of ATS's human-based, tissue-engineered products for surgical applications. We developed injectable collagen for the correction of facial wrinkles and marketing commenced in early 2003 under the names CosmoDerm® and CosmoPlast® in the U.S. and Canada for which we are paying royalties on sales.

        Due to financial difficulties announced by ATS in the latter half of 2002 and a subsequent decision by the ATS Board to liquidate the company, we have entered into a supply agreement with an affiliate of Smith and Nephew Inc. in March 2003 which will provide us, on a going forward basis, the raw materials previously provided by ATS. Smith and Nephew is also licensing to us the intellectual property previously licensed to us by ATS.

        We are also a party to license agreements allowing other companies to manufacture products using some of our technology in exchange for royalties and other compensation or benefits. Although we

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believe our patents and patent rights are valuable, our technical knowledge with respect to manufacturing processes, materials, and product design are also valuable. As a condition of employment, we require that all employees execute a confidentiality agreement relating to our proprietary information and intellectual property rights.

MANUFACTURING AND RAW MATERIALS

        Our manufacturing facilities are located in Santa Barbara and Fremont, California; San José, Costa Rica; and in Arklow, Ireland. Our Carpinteria, California manufacturing facility was closed at the end of 2002. In the fourth quarter of 2002, we announced the consolidation of our Santa Barbara manufacturing operations into our facilities in Costa Rica and Ireland. See Note 4 of the notes to the consolidated financial statements.

Breast Aesthetics

        Our breast implant and related tissue expander products are manufactured in our facilities in Santa Barbara, California; San José, Costa Rica; and Arklow, Ireland. We manufacture our products in controlled environments utilizing specialized equipment for precision measurement, quality control, packaging, and sterilization.

        Manufacturing facilities producing medical devices intended for distribution in the U.S. are subject to regulation and periodic review by the FDA. All of our facilities are currently approved by the FDA to manufacture medical devices for distribution in the U.S. The quality systems at our facilities in Santa Barbara, California were inspected by the FDA in March, June, and November and Arklow, Ireland, was inspected by the FDA in June of 2003, as part of the FDA's gel-filled breast implant pre-PMA inspection. Both facilities were found to be in substantial compliance with applicable quality system regulations, with no deficiencies identified. The quality system at our Costa Rica facility was inspected by the FDA in February 2003, as part of the FDA's standard surveillance schedule, and was also found to be in substantial compliance with applicable quality system regulations, with no deficiencies identified.

        Manufacturing facilities producing medical devices in the state of California are likewise subject to regulation and review by the California Food and Drug Branch (FDB) of the California Department of Health Services. The Santa Barbara manufacturing facility was inspected by the FDB in March and November 2003, and found to be compliant with applicable state statutes and licensed to manufacture medical devices in the state of California.

        Manufacturing facilities producing medical devices for distribution to markets in the European Economic Community and the European Union are subject to the regulatory requirements of the European Medical Device Directive (MDD) as well as various International (ISO) and European National (EN) standards. All of our facilities which manufacture products for the breast aesthetics market are certified to applicable European and International standards, which require us to be subject to inspection by European notified bodies. These certifications include ISO 9001, ISO 9002, ISO 13485, EN 46001 and EN 46002. All of our facilities were inspected in 2003 and were found to be compliant and subject to continued certification.

        In late 1998, we entered into a strategic alliance with a privately held specialty chemical company, whereby that company has agreed to act as our exclusive supplier of silicone raw materials.

Facial Aesthetics

        Zyderm™ and Zyplast™ implants are manufactured at our Fremont, California facility. We use a patented viral inactivation process for these collagen-based products to ensure both safety and quality. The production processes use readily available chemicals and enzymes and bovine dermis from cows as

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the source of collagen. Since 1987, the hides have been sourced from a U.S.-located closed herd in an effort to prevent contamination of our bovine collagen based products. The closed herd is designed to provide a reliable source of raw material with backup capabilities in case of natural disasters. The bovine collagen-based products have refrigerated shelf lives of 36 months.

        In 2001, we began manufacturing activities for our bioengineered human collagen dermal filler products, CosmoDerm® and CosmoPlast® Originally, raw materials for these products have been obtained in bulk from ATS and further processed and packaged at our Fremont facility. Due to financial difficulties announced by ATS in the latter half of 2002 and a subsequent decision by the ATS Board to liquidate the company, we entered into a supply agreement with an affiliate of Smith & Nephew, Inc. in March 2003 to provide the raw materials previously provided to us by ATS. In January 2003, we signed a development agreement with Immucor Inc., for the production of human collagen mesh, the raw material for CosmoDerm® and CosmoPlast®. We expect to enter into a supply agreement with Immucor in 2004.

        As noted above, medical devices manufactured at our Fremont facility, and intended for distribution in the U.S. and internationally, are subject to regulation and periodic review by the FDA and the requirements of the EEC MDD regulations, various international and European standards, and review by European notified bodies. Our Fremont manufacturing facilities were inspected by the FDB in February 2003, and by the FDA in August 2003, and found to be substantially compliant with applicable regulations. In addition, these facilities were inspected by TUV Product Services GMBH (a European notified body) in March 2003 and were re-certified as being in compliance with applicable international and European standards.

        In addition to the foregoing we sell facial injectable implants which are manufactured by third parties. These parties are subject to the same governmental inspection and regulation as noted above.

Obesity Intervention

        Our obesity intervention products are manufactured at our facilities in San Jose, Costa Rica and Santa Barbara, California. The FDA and TUV GMBH inspections and subsequent approvals previously discussed apply to our obesity intervention products as well.

Other Products

        We produce other collagen products at our Fremont, California facility for use by other medical manufacturers. Contigen® is manufactured for C. R. Bard, Inc., CoStasis® for Cohesion Technologies, Inc. and Collagraft® and Collagraft® intermediates are manufactured for NeuColl Inc.

Environmental Compliance

        Our manufacturing facilities in the U.S. are regulated by federal, state, and local laws. We believe that our operations are in full compliance with all applicable laws and we received no citations or notices of violations in 2003. In 2004, we do not expect to incur any material expense to maintain our compliance level.

        Our manufacturing facility in Arklow, Ireland, is regulated by the Irish Environmental Protection Agency, or EPA. The Irish EPA carries out regular checks and monitors compliance with the requirements of the Integrated Pollution Control License. We received no citations or notices of violations in 2003. In 2004, we do not expect to incur any material expense to maintain our compliance level.

        Our manufacturing facility in Costa Rica is operated under the jurisdiction of the office of Human Environmental Control within the Ministry of Health. Inamed Costa Rica was granted a working permit or license for industrial facilities in August 2000. The permit 0194-2000 has a validity of five years. We received no citations or notices of violations from the Costa Rican authorities in 2003. We do not expect to incur any material expense to maintain this compliance level during 2004.

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GOVERNMENT REGULATION

        Medical devices and biologics are subject to regulation by the U. S. Food and Drug Administration (FDA), state agencies and, in varying degrees, by foreign government health agencies. These regulations, as well as various U.S. federal and state laws, govern the development, clinical testing, manufacturing, labeling, record keeping, and marketing of these products. The majority of our product candidates must undergo rigorous testing and an extensive government regulatory approval process prior to sale in the U.S. and other countries. The lengthy process of seeking required approvals and the continuing need for compliance with applicable laws and regulations require the expenditure of substantial resources. Regulatory approval, when and if obtained, may be limited in scope, and may significantly limit the indicated uses for which a product may be marketed. Approved products and their manufacturers are subject to ongoing review, and discovery of previously unknown problems with products may result in restrictions on their manufacture, sale, or use or their withdrawal from the market.

Regulation of Medical Devices

        All of our current products are medical devices intended for human use and are subject to regulation by FDA in the U.S. Unless an exemption applies, each medical device we market in the U.S. must have a 510(k) clearance (a demonstration that the new device is "substantially equivalent" to a device already on the market) or a Premarket Approval Application (PMA) in accordance with the Federal Food, Drug, and Cosmetic Act, as amended. FDA regulations generally require reasonable assurance of safety and effectiveness prior to marketing, including safety data obtained under approved clinical protocols and require compliance with "good manufacturing practices" (GMPs), as verified by detailed FDA inspections of manufacturing facilities. These regulations also require reporting of alleged product defects to the FDA. FDA regulations divide medical devices into three classes. Class I devices are subject to general controls that require compliance with device establishment registration, product listing, labeling, GMPs and other general requirements. Class II devices are subject to special controls in addition to general controls. Class III devices are subject to the most extensive regulation and in most cases require submission to the FDA of a PMA application that includes data supporting the safety and effectiveness of the device. Periodic reports must be submitted to the FDA, including any descriptions of any adverse events reported. The majority of our products are regulated as Class III medical devices.

        Products marketed in the European Community must comply with the requirements of the European Medical Device Directive (MDD) and must be CE-marked. Medical device laws and regulations similar to those described above are also in effect in many of the other countries to which we export our products. These range from comprehensive device approval requirements for some or all of our medical device products to requests for product data or certifications. Failure to comply with these domestic and international regulatory requirements could affect our ability to market and sell our products in these countries. The current regulatory status of our products is discussed in the "Products and Product Candidates" section above.

Regulation of Biologics

        Although we do not currently market any biologic products, we expect to seek approval to market biologic products in the future, including botulinum toxin Type A. The FDA approval process for biologic products is a complex process with a number of discrete phases, beginning with laboratory analysis and pre-clinical testing in animals. To begin human testing, an investigational new drug application is filed with the FDA. Human clinical testing typically involves three phases. In Phase 1, small clinical trials are conducted to determine the safety of the product and the acceptable dose. In Phase 2, expanded clinical trials are conducted to determine optimal dose and to assess safety of the product. In Phase 3, still larger clinical trials are conducted to provide sufficient data to assess safety

11

and efficacy at the optimal dose. After completing all three phases of human testing, a Biologic License Application (BLA) is submitted to the FDA for approval. If the FDA approves the BLA, the product becomes available for marketing. Periodic reports must be submitted to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional studies to evaluate long-term effects. Side effects or adverse events that are reported during clinical trials can delay, impede, or prevent marketing approval. Similarly, adverse events that are reported after marketing approval can result in additional limitations being placed on the product's use and, potentially, withdrawal of the product from the market.

Regulation of Manufacturing

        As a manufacturer of medical devices, our manufacturing processes and facilities are subject to continuing review by the FDA and various state and international agencies. These agencies inspect our quality systems and facilities from time to time to determine whether we are in compliance with various regulations relating to manufacturing practices and other requirements. In the U.S., our facilities must comply with the FDA's Quality System Regulation requirements for Good Manufacturing Practices. For products sold in Europe, we must demonstrate compliance with the ISO 9000 and EN 46000 international quality system standards. The regulatory status of our manufacturing facilities is discussed under "Manufacturing and Raw Materials" above.

Other Regulations

        We are subject to federal, state, local and foreign environmental laws and regulations, including the U.S. Occupational Safety and Health Act, the U.S. Toxic Substances Control Act, the U.S. Resource Conservation and Recovery Act, and other current and potential future federal, state, or local regulations. Our manufacturing and research and development activities involve the controlled use of hazardous materials, chemicals, and biological materials, which require compliance with various laws and regulations regarding the use, storage, and disposal of such materials.

        We are also subject to various federal and state laws pertaining to health care information and privacy and "fraud and abuse," including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal to solicit, offer, receive, or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular product. The U.S. federal government has published regulations that identify "safe harbors" or exemptions for certain payment arrangements that do not violate the anti-kickback statutes. We seek to comply with the safe harbors where possible. Due to the breadth of the statutory provisions and the absence of guidance in the form of regulations or court decisions addressing some of our practices, it is possible that our practices might be challenged under anti-kickback or similar laws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment to third party payors (including Medicare and Medicaid) claims for reimbursed products or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Our activities relating to the sale and marketing of our products may be subject to scrutiny under these laws. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and civil monetary penalties, as well as the possibility of exclusion from federal health care programs (including Medicare and Medicaid).

        Our present and future business has been and will continue to be subject to various other laws and regulations.

Foreign Corrupt Practices Act

        The U.S. Foreign Corrupt Practices Act, to which we are subject, prohibits corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person

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working in an official capacity. It is illegal to pay, offer to pay, or authorize the payment of anything of value to any foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.

THIRD PARTY COVERAGE AND REIMBURSEMENT

        Purchases of breast aesthetics products for augmentation and facial aesthetics products are generally not reimbursed by government or private insurance carriers. However, since 1998, U.S. federal law has mandated nationwide insurance coverage of reconstructive surgery following a mastectomy, which includes coverage for breast implants. Outside the U.S., reimbursement for breast implants used in reconstructive surgery following a mastectomy may be available, but the programs vary on a country-by-country basis.

        In the U.S., purchases of the BioEnterics® LAP-BAND® System to treat severe obesity are reimbursed in some regions by Medicare. Private insurance coverage currently varies by carrier and geographic location. At the end of 2003, Inamed had established reimbursement coverage through insurers in the U.S. that covered approximately 80 million lives. The Company is pursuing reimbursement with many major carriers and hopes to achieve broader reimbursement coverage for the product in 2004. The older, more established, surgical procedures for obesity treatment, including gastric bypass, are generally reimbursed.

        Outside the U.S., reimbursement programs vary on a country-by-country basis. In some countries, both the procedure and product are fully reimbursed by the government healthcare systems for all citizens who need it, and there is no limit on the number of procedures that can be performed. In other countries, there is complete reimbursement but the number of procedures that can be performed at each hospital is limited either by the hospital's overall budget or by the budget for the type of product.

PRODUCT REPLACEMENT PROGRAMS

        We conduct our product development, manufacturing, marketing, and service and support activities with careful regard for the consequences to patients. As with any medical device manufacturer, however, we receive communications from surgeons or patients with respect to various products claiming the products were defective, lost volume, or have resulted in injury to patients. In the event of a deflation of our saline-filled breast implant products sold and implanted in the U.S., in most cases our ConfidencePlus™ program provides product replacement and some financial assistance for surgical procedures required within ten years of implantation. Breast implants sold and implanted elsewhere are subject to a similar program, although no surgical expenses are covered. We do not warrant any level of aesthetic result and, as required by government regulation, make extensive disclosure concerning the risks of our products and implantation surgery.

FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

        The majority of our sales and long-lived assets are primarily in the U.S. and Canada. See Note 16 of the notes to the consolidated financial statements.

WORKING CAPITAL

        We maintain significant breast aesthetics consignment inventories, consistent with industry practice. Since a doctor may not be sure of the exact size of breast implant required for implantation and cannot be sure that no accidental damage will occur to an implant, the doctor is likely to order extra quantities and sizes beyond the quantity and size ultimately used in surgery. By carrying a consignment inventory

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of typical sizes at certain hospitals and other medical offices, we reduce the level of product return subsequent to surgery.

        Otherwise, inventories are managed to a level that permits good customer service. Additionally, there are inventory builds prior to launching new products.

        Our accounts receivable payment terms are consistent with normal industry practices, which varies by customer class and geographic location.

EMPLOYEES

        As of December 31, 2003, we had approximately 1,200 employees in active service, of which approximately 700 were in the U.S., Canada, and Costa Rica and approximately 500 were at other international operations. Except for employees at our manufacturing facility in Arklow, Ireland, none of our employees are represented by a labor union.

        We recognize the importance of environmental responsibility and the need to provide a safe and healthy workplace for our employees by complying with all federal, state, and local laws, rules, and regulations. During the past fiscal year, we have received no citations, notices of violations or other censures from public agencies regulating environmental compliance or our employees' health and safety. We do not expect any significant capital expenditures to comply with environmental, health, or safety regulations in 2004. We believe that our current systems and processes are adequate for current needs.

RISKS AND UNCERTAINTIES

        Certain statements contained in this Annual Report on Form 10-K, and other written and oral statements made from time to time by us, do not relate strictly to historical facts. These statements are considered "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "possible," "project," and "should," or similar words or expressions, are intended to identify forward looking statements. This forward looking information involves important risks and uncertainties that could materially alter results in the future from those expressed in any forward looking statements made by, or on behalf of, us. We caution you that such forward-looking statements are only predictions and that actual events or results may differ materially. In evaluating such statements, you should specifically consider the various factors that could cause actual events or results to differ materially, including those factors described below. It is not possible to foresee or identify all factors affecting our forward-looking statements and you should not consider any list of such factors to be exhaustive. We are under no duty to update any forward-looking statements.

IF WE ARE UNABLE TO AVOID SIGNIFICANT PRODUCT LIABILITY CLAIMS OR PRODUCT RECALLS, WE MAY BE FORCED TO PAY SUBSTANTIAL DAMAGE AWARDS AND OTHER EXPENSES THAT COULD EXCEED OUR ACCRUALS AND INSURANCE COVERAGE.

        We have in the past been, currently are, and may in the future be subject to product liability claims alleging that the use of our technology or products has resulted in adverse health effects. These claims may be brought even with respect to products that have received, or in the future may receive, regulatory approval for commercial sale. In particular, the manufacture and sale of breast implant products entails significant risk of product liability claims due to potential allegations of possible disease causation, transmission and other health factors, rupture or other product failure. Other breast implant manufacturers that suffered such claims in the past have been forced to cease operations or even to declare bankruptcy. We also face a substantial risk of product liability claims from our obesity

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intervention products and our facial aesthetics products. In addition to product liability claims, we may in the future need to recall or issue field corrections related to our products due to manufacturing deficiencies, labeling errors, or other safety or regulatory reasons.

        At present, we have no third-party liability insurance to protect us from the costs of claims for damages due to the use or recall of our products under certain circumstances and for specific amounts. Product liability claims or recall orders could result in material losses in excess of our accruals.

        Also at present, we are actively engaged in efforts to seek product-liability coverage. However, to date, the Company and its brokers have not identified any carriers that are willing to sell us risk-shifting liability insurance on terms and conditions which are acceptable to the Company. While we continue to explore the feasibility of purchasing risk-shifting product liability insurance coverage from a third-party carrier or carriers, we cannot assure you that we will be successful in these efforts.

        In addition, we continue to incur substantial costs and expenses as a result of our liabilities related to the Trilucent implant. Our Trilucent costs and expenses derive in part from the program announced by us on June 6, 2000, and include, among other things, continuing expenses of our explantation program, regulatory compliance, scientific and other investigative studies, bodily injury and financial loss claims, and related legal and defense costs. While we have insurance for some of these expenses and have also established accruals for them in addition to our insurance program, it is possible that the combined amount of our insurance and accruals may be insufficient to cover all our future Trilucent-related liabilities. In 2002, we came to final settlements with each of our two insurers for product liability claims arising from the Trilucent implant. Under one settlement, with MEDMARC Casualty Insurance Company, MEDMARC paid $6.0 million in cash to us in January 2003, $1.5 million cash to us in May 2003, and, effective November 16, 2002, agreed to make a policy with a limit of $10.0 million available to us for defense and indemnification of Trilucent-related bodily injury claims worldwide. The policy does not cover claims filed against us after November 7, 2005. There was approximately $9.6 million remaining on the policy commitment at December 31, 2002 and $3.3 million remaining on the policy commitment at December 31, 2003. Under the second settlement, AISLIC, an AIG company, agreed to make an excess policy with a limit of $10.0 million available to us for the indemnification of non-U.S. Trilucent claims. There was $7.9 million remaining under this commitment at December 31, 2002 and approximately $6.2 million remaining at December 31, 2003. In addition, under the settlement with AIG subject to certain conditions, we are required to pay up to $1.5 million to AIG on or before November 2005.

        In addition, at December 31, 2003, we had an accrual for future Trilucent claims, costs, and expenses of approximately $12.2 million, net of insurance. Thus, as of December 31, 2003, we had approximately $21.7 million in accruals and insurance to cover our future Trilucent-related liabilities. While we currently believe this amount is adequate, it is possible that our future Trilucent-related liabilities could exceed this amount. This could occur, for example, if additional scientific research discloses one or more Trilucent-related health risks which are not sufficiently understood today, resulting in new legal claims and regulatory obligations. Further, the existing insurance coverage is subject to a number of conditions, notably, it does not apply to any claims which may be filed against us after November 7, 2005. Thus, our accruals and liability insurance coverage under the foregoing insurance policies may be inadequate to cover our future Trilucent-related liabilities, including our Trilucent-related bodily injury claims and other contingent liabilities.

        Under the program announced on June 6, 2000, we have, through our AEI Inc. subsidiary, undertaken a comprehensive program of support and assistance for women who received Trilucent breast implants, under which we are covering medical expenses associated with the removal and replacement of those implants for the approximately 8,500 women who received them. To date, we believe that more than 90% of the United Kingdom residents and more than two-thirds of the women in the rest of the world, who had these implants have had them removed. The product was not sold

15

commercially in the United States. To date, an insurance company has honored its commitment under an insurance policy to reimburse us for most of the medical expenses incurred in connection with this explantation program and is obligated under the same policy to cover 75% of these expenses in the future. We are currently engaged in efforts to explant the remainder of the Trilucent patients prior to the expiration of this policy in February 2005. However, there can be no assurance that we will be able to complete this program prior to February 2005 and hence it is possible that we will incur material liabilities for Trilucent-related explantation expenses after that date, for which we would not have insurance coverage.

        Recipients of the Trilucent implants have also asserted claims and brought legal proceedings against the Company, AEI (an affiliate of the Company), other affiliated and unaffiliated entities, and persons alleging bodily injury and financial loss as a result of the implantation and explantation of their Trilucent implants. To date, we have been able to resolve these claims within our accruals and with insurance proceeds. In the United Kingdom and Spain, we have entered into protocols under which women who have had their Trilucent implants removed since June 6, 2000 may apply for certain fixed levels of compensation, or may obtain an independent, binding determination of their damages, without proof of defect or legal causation. In the United Kingdom, while we have been successful in settling the vast majority of claims, numerous women have applied for a binding determination of their damages and we also face a group action on behalf of approximately 250 women who were explanted prior to June 6, 2000. See Part I, Item 3 Legal Proceedings. In Spain, although approximately 310 women have accepted our protocol, approximately 50 have commenced individual legal proceedings and a Spanish consumer union has commenced a single action in which it alleges that it represents approximately 40 Spanish Trilucent explantees. More than 790 Spanish women were explanted and hence more than 300 have yet to make claims for bodily injury or financial loss (although we have already paid for their explants). The claims of many of these women may now be time-barred under Spanish law. We are also facing Trilucent related claims and legal proceedings in Germany, Belgium, Italy and other countries. In Germany, where as many as 1,500 to 2,000 women are believed to have been implanted with Trilucent, approximately 950 have been explanted, but only approximately 120 have made claims for bodily injury or financial loss (although we have already paid for their explants). By reason of adverse publicity concerning Trilucent in 2003 and the announced closure as of December 31, 2003 of our explantantion program, the rate of filing of new Trilucent related bodily injury claims by women in Germany, Belgium, Italy and other European countries may increase in 2004 or in the following years.

        In addition, under U.K. and Spanish law, the release granted to us under our settlement protocol is necessarily provisional, and each participating claimant reserves the right to pursue a future claim should she develop cancer or reproductive abnormalities. Under agreements with the United Kingdom Medical Devices Agency (MDA), we are also continuing to fund Trilucent-related scientific research. The scientific research now being conducted at MDA's request by the Trilucent Scientific Advisory Panel, or future research performed by this or another panel, could reveal that the risk to human health of the Trilucent implant is greater than was previously believed. As a result of that research, the Panel could recommend that the remaining unexplanted Trilucent recipients have their implants removed, an announcement that would affect a maximum of approximately 1,000 women. We could also be obligated to fund scientific or epidemiologic research, or incur expenses for medical monitoring, that are in excess of the levels which are currently forecast. As a result of these and other factors, the total amount of accruals and insurance available to address our future Trilucent-related liabilities may be insufficient and we may need to make additional provisions for Trilucent related liabilities in the future.

IF WE SUFFER NEGATIVE PUBLICITY CONCERNING THE SAFETY OF OUR PRODUCTS, OUR SALES MAY BE HARMED AND WE MAY BE FORCED TO WITHDRAW PRODUCTS.

        Physicians and potential and existing patients may have a number of concerns about the safety of our products, including our breast implants, obesity intervention products and facial dermal fillers,

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whether such concerns have a basis in generally accepted science or peer-reviewed scientific research or not. Negative publicity—whether accurate or inaccurate—about our products, based on, for example, news about breast implant litigation or regulatory activities, new government regulation, or bovine spongiform encephalopathy (BSE) or Creutzfeldt-Jacob, or "mad cow" disease, could materially reduce market acceptance of our products and could result in product withdrawals. In addition, significant negative publicity could result in an increased number of product liability claims, whether or not these claims have a basis in scientific fact.

OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SUBSTANTIAL FLUCTUATIONS AND ANY FAILURE TO MEET FINANCIAL EXPECTATIONS FOR ANY FISCAL QUARTER MAY DISAPPOINT SECURITIES ANALYSTS AND INVESTORS AND COULD CAUSE OUR STOCK PRICE TO DECLINE.

        Our quarterly operating results have fluctuated in the past and may vary significantly in the future due to a combination of factors, many of which are beyond our control. These factors include:

•

changes in demand for our products;



•

our ability to meet the demand for our products;



•

on-going and increased competition;



•

the number, timing, pricing and significance of new products and product introductions and enhancements by us and our competitors;



•

our ability to develop, introduce and market new and enhanced versions of our products on a timely basis;



•

changes in pricing policies by us and our competitors;



•

the timing of significant orders and shipments;



•

regulatory approvals or other regulatory action affecting new or existing products;



•

litigation with respect to product liability and other claims or product recalls and any insurance covering such claims or recalls; and



•

general economic factors, such as foreign exchange rates.

        Q-Med's facial aesthetic product Restylane® was approved for the U.S. facial aesthetics market by the FDA in December 2003. This product has experienced positive acceptance in Europe and other markets, in part because it does not require a pre-procedure skin test. Sales of such product may adversely affect our U.S. market position in facial aesthetics.

        As a result, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and you should not rely upon these comparisons as indications of future performance. These factors may cause our operating results to be below securities analysts' expectations in some future quarters, which could cause the market price of our stock to decline.

IF CHANGES IN THE ECONOMY AND CONSUMER SPENDING REDUCE CONSUMER DEMAND FOR OUR PRODUCTS, OUR SALES AND PROFITABILITY WILL SUFFER.

        Breast augmentation and reconstruction, facial dermal fillers, and obesity intervention are elective procedures. Other than U.S. federally mandated insurance reimbursement for post-mastectomy reconstructive surgery, breast augmentations and other cosmetic procedures are not typically covered by insurance. Adverse changes in the economy may cause consumers to reassess their spending choices and reduce the demand for cosmetic surgery. This shift could have an adverse effect on our sales and profitability.

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        Reimbursement for obesity surgery, including use of our products, is available to various degrees in most of our international markets. In the United States, reimbursements by insurance plans are increasing, but reimbursement is not widely available to all insured patients at this time. Adverse changes in the economy could have an adverse effect on consumer spending and governmental health care resources. This shift could have an adverse effect on the sales and profitability of our obesity intervention business.

IF WE ARE UNABLE TO CONTINUE TO DEVELOP AND MARKET NEW PRODUCTS AND TECHNOLOGIES, WE MAY EXPERIENCE A DECREASE IN DEMAND FOR OUR PRODUCTS OR OUR PRODUCTS COULD BECOME OBSOLETE.

        The medical device industry is highly competitive and is subject to significant and rapid technological change. We believe that our ability to respond quickly to consumer needs or advances in medical technologies, without compromising product quality, is crucial to our success. We are continually engaged in product development and improvement programs to maintain and improve our competitive position. We cannot, however, guarantee that we will be successful in enhancing existing products or developing new products or technologies that will timely achieve regulatory approval or receive market acceptance.

        There is also a risk that our products may not gain market acceptance among physicians, patients and the medical community generally. The degree of market acceptance of any medical device or other product that we develop will depend on a number of factors, including demonstrated clinical efficacy and safety, cost-effectiveness, potential advantages over alternative products, and our marketing and distribution capabilities. Physicians will not recommend our products until clinical data or other factors demonstrate their safety and efficacy compared to other competing products. Even if the clinical safety and efficacy of using our products is established, physicians may elect not to recommend using them for any number of other reasons, including whether our products best meet the particular needs of the individual patient.

        Our products compete with a number of other products manufactured by major medical device companies, and may also compete with new products currently under development by others. If our new products do not achieve significant market acceptance, or if our current products are not able to continue competing successfully in the changing market, our revenue and earnings may not grow as much as expected or may even decline.

IF CLINICAL TRIALS FOR OUR PRODUCTS ARE UNSUCCESSFUL OR DELAYED, WE WILL BE UNABLE TO MEET OUR ANTICIPATED DEVELOPMENT AND COMMERCIALIZATION TIMELINES, WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE.

        Before obtaining regulatory approvals for the commercial sale of any products, we must demonstrate through pre-clinical testing and clinical trials that our products are safe and effective for use in humans. Conducting clinical trials is a lengthy, time-consuming and expensive process.

        Completion of clinical trials may take several years or more. Our commencement and rate of completion of clinical trials may be delayed by many factors, including:

•

lack of efficacy during the clinical trials;



•

unforeseen safety issues;



•

slower than expected patient recruitment; and



•

government or regulatory delays.

        The results from pre-clinical testing and early clinical trials are often not predictive of results obtained in later clinical trials. A number of new products have shown promising results in clinical

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trials, but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals. Data obtained from pre-clinical and clinical activities are susceptible to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, regulatory delays or rejections may be encountered as a result of many factors, including perceived defects in the design of the clinical trials and changes in regulatory policy during the period of product development. Any delays in, or termination of, our clinical trials will materially and adversely affect our development and commercialization timelines, which would cause our stock price to decline.

IF OUR COLLABORATIVE PARTNERS DO NOT PERFORM, WE WILL BE UNABLE TO DEVELOP PRODUCTS AS ANTICIPATED.

        We have entered into collaborative arrangements with third parties to develop certain products. We cannot assure you that these collaborations will produce successful products. If we fail to maintain our existing collaborative arrangements or fail to enter into additional collaborative arrangements, the number of products from which we could receive future revenues would decline.

        Our dependence on collaborative arrangements with third parties subjects us to a number of risks. These collaborative arrangements may not be on terms favorable to us. Agreements with collaborative partners typically allow partners significant discretion in electing whether or not to pursue any of the planned activities. We cannot control the amount and timing of resources our collaborative partners may devote to products based on the collaboration, and our partners may choose to pursue alternative products. Our partners may not perform their obligations as expected. Business combinations, significant changes in a collaborative partner's business strategy, or its access to financial resources may adversely affect a partner's willingness or ability to complete its obligations under the arrangement. Moreover, we could become involved in disputes with our partners, which could lead to delays or termination of the collaborations and time-consuming and expensive litigation or arbitration. Even if we fulfill our obligations under a collaborative agreement, our partner can terminate the agreement under certain circumstances. If any collaborative partner were to terminate or breach our agreement with it, or otherwise fail to complete its obligations in a timely manner, our chances of successfully commercializing products would be materially and adversely affected.

OUR FAILURE TO ATTRACT AND RETAIN KEY MANAGERIAL, TECHNICAL, SELLING AND MARKETING PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS

        Our success depends upon our retention of key managerial, technical, selling and marketing personnel. The loss of the services of key personnel might significantly delay or prevent the achievement of our development and strategic objectives. We do not maintain key person life insurance on any of our employees, and none of our employees is under any obligation to continue providing services to Inamed.

        We must continue to attract, train and retain managerial, technical, selling and marketing personnel. Competition for such highly skilled employees in our industry is high, and we cannot be certain that we will be successful in recruiting or retaining such personnel. We also believe that our success depends to a significant extent on the ability of our key personnel to operate effectively, both individually and as a group. If we are unable to identify, hire and integrate new employees in a timely and cost-effective manner, our operating results may suffer.

IF OUR INTELLECTUAL PROPERTY RIGHTS DO NOT ADEQUATELY PROTECT OUR PRODUCTS OR TECHNOLOGIES, OTHERS COULD COMPETE AGAINST US MORE DIRECTLY, WHICH WOULD HURT OUR PROFITABILITY.

        Our success depends in part on our ability to obtain patents or rights to patents, protect trade secrets, operate without infringing upon the proprietary rights of others, and prevent others from infringing on our patents, trademarks and other intellectual property rights. We will be able to protect our intellectual property from unauthorized use by third parties only to the extent that it is covered by

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valid and enforceable patents, trademarks and licenses. Patent protection generally involves complex legal and factual questions and, therefore, enforceability of patent rights cannot be predicted with certainty. Patents, if issued, may be challenged, invalidated or circumvented. Thus, any patents that we own or license from others may not provide adequate protection against competitors. In addition, our pending and future patent applications may fail to result in patents being issued. Also, those patents that are issued may not provide us with adequate proprietary protection or competitive advantages against competitors with similar technologies. Moreover, the laws of certain foreign countries do not protect our intellectual property rights to the same extent as do the laws of the United States.

        In addition to patents and trademarks, we rely on trade secrets and proprietary know-how. We seek protection of these rights, in part, through confidentiality and proprietary information agreements. These agreements may not provide meaningful protection or adequate remedies for violation of our rights in the event of unauthorized use or disclosure of confidential and proprietary information. Failure to protect our proprietary rights could seriously impair our competitive position.

IF THIRD PARTIES CLAIM WE ARE INFRINGING THEIR INTELLECTUAL PROPERTY RIGHTS, WE COULD SUFFER SIGNIFICANT LITIGATION OR LICENSING EXPENSES OR BE PREVENTED FROM MARKETING OUR PRODUCTS.

        Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of others. However, regardless of our intent, our technologies may infringe the patents or violate other proprietary rights of third parties. In the event of such infringement or violation, we may face litigation, become subject to damages, and may be prevented from selling existing products and pursuing product development or commercialization. At present, we are a party in two such matters. See Part I, Item 3. Legal Proceedings, Patents and License Litigation, Kuzmak Matter and Manders Matter.

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR CERTAIN PRODUCTS AND RAW MATERIALS AND THE LOSS OF ANY SUPPLIER COULD ADVERSELY AFFECT OUR ABILITY TO MANUFACTURE MANY OF OUR PRODUCTS.

        We currently rely on a single supplier for silicone raw materials used in many of our products. Although we have an agreement with this supplier to transfer the necessary formulations to us in the event that it cannot meet our requirements, we cannot guarantee that we would be able to produce a sufficient amount of quality silicone raw materials in a timely manner. We also depend on third party manufacturers for silicone molded components, Hylaform® (gelfacial injectable implants, raw materials derived from human sources, and silicone facial implants. In addition, we currently rely on Smith and Nephew for the supply of human collagen mesh.

        If there is any disruption in the supply of these materials, our sales and profitability for the affected products would be adversely affected.

OUR ABILITY TO SELL BOVINE COLLAGEN-BASED PRODUCTS COULD BE ADVERSELY AFFECTED IF WE EXPERIENCE PROBLEMS WITH THE CLOSED HERD OF DOMESTIC CATTLE FROM WHICH WE DERIVE THESE PRODUCTS.

        We rely on two closed herds of domestic cattle that are kept apart from all other cattle for the production of our bovine collagen-based products. If these herds suffered a significant reduction or became unavailable to us, we would have a limited ability to access a supply of acceptable bovine collagen from a similarly segregated source. A significant reduction in the supply of bovine collagen could have a material adverse effect on our ability to sell bovine collagen-based products.

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OUR INTERNATIONAL BUSINESS EXPOSES US TO A NUMBER OF RISKS.

        More than one-third of our sales are derived from international operations. Accordingly, any material decrease in foreign sales would have a material adverse effect on our overall sales and profitability. Most of our international sales are denominated in U.S. dollars, euros, or yen. Depreciation or devaluation of the local currencies of countries where we sell our products may result in our products becoming more expensive in local currency terms, thus reducing demand. In addition, we manufacture some of our breast implant products in Ireland and in Costa Rica. Commencing in November 2002 and through the beginning of 2004, we are transitioning our Santa Barbara-based manufacturing to Ireland and Costa Rica as well. Therefore, an increasing percentage of our operating expenses will be denominated in currencies other than the U.S. dollar. We cannot guarantee that we will not experience unfavorable currency fluctuation effects in future periods, which could have an adverse effect on our operating results. Our operations and financial results also may be significantly affected by other international factors, including:

•

foreign government regulation of medical devices;



•

product liability, intellectual property and other claims;



•

new export license requirements;



•

political or economic instability in our target markets;



•

trade restrictions;



•

changes in tax laws and tariffs;



•

inadequate protection of intellectual property rights in some countries;



•

managing foreign distributors, manufacturers and staffing;



•

managing foreign branch offices; and



•

competition.

        If these risks actually materialize, our sales to international customers, as well as those U.S. customers that use products manufactured abroad, may decrease.

WE ARE SUBJECT TO SUBSTANTIAL GOVERNMENT REGULATION, WHICH COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS.

        The production and marketing of our products and our ongoing research and development, pre-clinical testing and clinical trial activities are subject to extensive regulation and review by numerous governmental authorities both in the U.S. and abroad. Most of the medical devices we develop must undergo rigorous pre-clinical and clinical testing and an extensive regulatory approval process before they can be marketed. This process makes it longer, harder and more costly to bring our products to market, and we cannot guarantee that any of our products will be approved, or, once approved, not recalled. The pre-marketing approval process can be particularly expensive, uncertain and lengthy, and a number of devices for which FDA approval has been sought by other companies have never been approved for marketing. In addition to testing and approval procedures, extensive regulations also govern marketing, manufacturing, distribution, labeling, and record-keeping procedures. If we do not comply with applicable regulatory requirements, such violations could result in warning letters, non-approval, suspensions of regulatory approvals, civil penalties and criminal fines, product seizures and recalls, operating restrictions, injunctions, and criminal prosecution.

        Delays in or rejection of FDA or other government entity approval of our new products may also adversely affect our business. Such delays or rejection may be encountered due to, among other reasons, government or regulatory delays, lack of efficacy during clinical trials, unforeseen safety issues,

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slower than expected rate of patient recruitment for clinical trials, inability to follow patients after treatment in clinical trials, inconsistencies between early clinical trial results and results obtained in later clinical trials, varying interpretations of data generated by clinical trials, or changes in regulatory policy during the period of product development in the U.S. and abroad. In the U.S., there has been a continuing trend of more stringent FDA oversight in product clearance and enforcement activities, causing medical device manufacturers to experience longer approval cycles, more uncertainty, greater risk, and higher expenses. Internationally, there is a risk that we may not be successful in meeting the quality standards or other certification requirements. Even if regulatory approval of a product is granted, this approval may entail limitations on uses for which the product may be labeled and promoted. It is possible, for example, that we may not receive FDA approval to market our current products for broader or different applications or to market updated products that represent extensions of our basic technology. In addition, we may not receive FDA export approval to export our products in the future, and countries to which products are to be exported may not approve them for import. See Government Regulation section within Item 1 for additional information about the FDA approval process

        Our manufacturing facilities also are subject to continual governmental review and inspection. The FDA has stated publicly that compliance with manufacturing regulations will be scrutinized more strictly. A governmental authority may challenge our compliance with applicable federal, state and foreign regulations. In addition, any discovery of previously unknown problems with one of our products or facilities may result in restrictions on the product or the facility, including withdrawal of the product from the market or other enforcement actions.

        From time to time, legislative or regulatory proposals are introduced that could alter the review and approval process relating to medical devices. It is possible that the FDA or other governmental authorities will issue additional regulations further restricting the sale of our present or proposed products. Any change in legislation or regulations that govern the review and approval process relating to our current and future products could make it more difficult and costly to obtain approval for new products, or to produce, market, and distribute existing products.

HEALTHCARE REFORM LEGISLATION COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS.

        If any national healthcare reform or other legislation or regulations are passed that imposes limits on the number or type of medical procedures that may be performed or that has the effect of restricting a physician's ability to select specific products for use in patient procedures, such changes could have a material adverse effect on the demand for our products. In the U.S., there have been, and we expect that there will continue to be, a number of federal and state legislative and regulatory proposals to implement greater governmental control over the healthcare industry. These proposals create uncertainty as to the future of our industry and may have a material adverse effect on our ability to raise capital or to form collaborations. In a number of foreign markets, the pricing and profitability of healthcare products are subject to governmental influence or control. In addition, legislation or regulations that impose restrictions on the price that may be charged for healthcare products or medical devices may adversely affect our sales and profitability.

IF OUR USE OF HAZARDOUS MATERIALS RESULTS IN CONTAMINATION OR INJURY, WE COULD SUFFER SIGNIFICANT FINANCIAL LOSS.

        Our manufacturing and research activities involve the controlled use of hazardous materials. We cannot eliminate the risk of accidental contamination or injury from these materials. In the event of an accident or environmental discharge, we may be held liable for any resulting damages, which may exceed our financial resources.

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OUR STOCK PRICE HAS BEEN VOLATILE AND OUR TRADING VOLUME HAS HISTORICALLY BEEN LOWER THAN THAT OF MANY NASDAQ LISTED STOCKS.

        The trading price of our common stock has been, and may be, subject to wide fluctuations in response to a number of factors, many of which are beyond our control. These factors include:

•

quarter-to-quarter variations in our operating results;



•

the results of testing, technological innovations, or new commercial products by us or our competitors;



•

governmental actions, regulations, rules, and orders;



•

general conditions in the healthcare, medical device, or plastic surgery industries;



•

changes in earnings estimates by securities analysts;



•

developments and litigation concerning patents or other intellectual property rights;



•

litigation or public concern about the safety of our products; and



•

resignation of senior officers.

        Historically, the daily trading volume of our common stock has been relatively low to that of many other NASDAQ listed stocks. We cannot guarantee that an active public market for our common stock will be sustained or that the average trading volume will remain at present levels or increase. In addition, especially in and since 2000 the stock market in general and the NASDAQ National Market in particular have experienced significant price and volume fluctuations. Volatility in the market price for particular companies has often been unrelated or disproportionate to the operating performance of those companies. Broad market factors may seriously harm the market price of our common stock, regardless of our operating performance. In addition, securities class action litigation has often been initiated following periods of volatility in the market price of a company's securities. A securities class action suit against us could result in substantial costs, potential liabilities, and the diversion of management's attention and resources.

RISK RELATING TO ARTHUR ANDERSEN LLP'S LACK OF CONSENT

        Arthur Andersen LLP were the independent accountants for Inamed Corporation until July 19, 2002. Representatives of Arthur Andersen LLP are not available to provide the consent required for the incorporation by reference of their report on the consolidated financial statements of Inamed Corporation appearing in this Annual Report on Form 10-K into registration statements filed by Inamed Corporation with the Securities and Exchange Commission and currently effective under the Securities Act of 1933, and we can not comply with the requirement to file their consent in reliance upon rule 437a under the Securities Act of 1933. Because Arthur Andersen LLP have not consented to the incorporation by reference of their report, investors will not be able to recover against Arthur Andersen LLP under Section 11 of the Securities Act of 1933 for any untrue statements of a material fact contained in the consolidated financial statements audited by Arthur Andersen LLP that are included in this report or any omissions to state a material fact required to be stated therein.

FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.

        The market price of our common stock could decline as a result of sales of our common stock in private placements or in the public market, or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of common stock. As of March 10, 2004, there were 35,439,777 shares of our common stock outstanding, with another 2.1 million shares of common stock issuable upon exercise of options granted under our stock option plans or under certain agreements with our senior officers. All of the stock underlying these options have been registered for resale with the Securities Exchange Commission.

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FUTURE CHANGES IN FINANCIAL ACCOUNTING STANDARDS MAY CAUSE ADVERSE UNEXPECTED REVENUE OR EXPENSE FLUCTUATIONS AND AFFECT OUR REPORTED RESULTS OF OPERATIONS.

        A change in accounting standards could have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. Any changes requiring that we record compensation expense in the statement of operations for employee stock options as an example using the fair value method could have a significant negative effect on our reported results. New pronouncements and varying interpretations of pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial results of the way we conduct our business.

LITIGATION MAY HARM OUR BUSINESS OR OTHERWISE DISTRACT OUR MANAGEMENT.

        Substantial, complex or extended litigation could cause us to incur large expenditures and distract our management. For example, lawsuits by employees, stockholders or customers could be very costly and substantially disrupt our business. Disputes from time to time with such companies or individuals are not uncommon, and we cannot assure you that that we will always be able to resolve such disputes out of court or on terms favorable to us.

ITEM 2. PROPERTIES

        We lease all of our office, manufacturing, and distribution facilities which are as follows: Fremont, California; Santa Barbara, California; Arklow, Ireland; and San José, Costa Rica.

        We lease office and warehouse space ranging from 1,500 square feet to 4,000 square feet for international sales offices, located in Canada, Australia, France, Germany, Italy, Japan, Spain, and the United Kingdom. We believe our facilities are generally adequate for our needs for the foreseeable future. In the fourth quarter of 2002, we announced the consolidation of the Santa Barbara manufacturing facility into our facilities in Costa Rica and Ireland. See Note 4 to the notes to the consolidated financial statements.

ITEM 3. LEGAL PROCEEDINGS

BREAST IMPLANT LITIGATION

Trilucent Breast Implant Matters

        When we purchased Collagen in September 1999, we assumed certain liabilities relating to the Trilucent breast implant, a soybean oil-filled breast implant, which had been manufactured and distributed by various subsidiaries of Collagen between 1995 and November 1998. In November 1998, Collagen announced the sale of its LipoMatrix, Inc. subsidiary, manufacturer of the Trilucent implant, to Sierra Medical Technologies, Inc. Collagen retained certain liabilities for Trilucent implants sold prior to November 1998.

        In March 1999, the United Kingdom Medical Devices Agency, or MDA, announced the voluntary suspension of marketing and withdrawal of the Trilucent implant in the U.K. The MDA stated that its actions were taken as a precautionary measure and did not identify any immediate hazard associated with the use of the product. The MDA further stated that it sought the withdrawal because it had received "reports of local complications in a small number of women" who had received those implants, involving localized swelling. The same notice stated that there "has been no evidence of permanent injury or harm to general health" as a result of these implants. In March 1999, Collagen agreed with the U.K. National Health Service that, for a period of time, it would perform certain product surveillance with respect to U.K. patients implanted with the Trilucent implant and pay for

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explants for any U.K. women with confirmed Trilucent implant ruptures. Subsequently, LipoMatrix's notified body in Europe suspended the product's CE Mark pending further assessment o