Historical Analysis of a New Category:
Contraception
Sarah Feldner
October 2016
What do we mean by contraception?
Broadly speaking, the contraception category includes 4 main sub-categories of
technology
Barrier methods
Hormonal
methods
• These technologies work
• Hormonal contraception
by preventing sperm from
works by either
reaching the egg
preventing an egg from
being released every
• This is the oldest form of
month or preventing a
contraceptive, and
fertilized egg from
includes condoms,
implanting into the
diaphragms, cervical
uterus
caps, and sponges
• Includes the pill, the
ring, the patch,
contraceptive injections,
and emergency
contraception
Semi-permanent
devices
• These devices are
implanted (in the arm or
cervix) by a doctor and
can last up to 10 years;
depending in the device,
it prevents pregnancy
through the use of
hormones or copper ions
• Includes plastic and
copper inter-uterine
devices (IUDs) and the
contraceptive implant
Permanent
solutions
• Sterilization—available
to both men and
women—works by
blocking the
reproductive function
• These options include
vasectomies (an outpatient procedure) for
men and tubal litigation
(surgical) or nonsurgical sterilization for
women
Sources: Wikipedia, DrEd.com, Google images
MGMT731_Feldner
2
Effective contraception is available due to significant
investment, but there’s opportunity to increase usage
Contraception with
effectiveness upwards of
99% has been available
since 1970. However,
once we take into
account consumer
preferences (e.g.
desire for less invasive
or permanent options)
and factors that
prevent perfect use
(e.g. forgetfulness or
impact to pleasure),
effectiveness drops
dramatically. Current
investment & research is
focused on overcoming
these factors.
$1M
Early
1900s
$5-10M
$100M
1950-1970
$1B
~$10B
Today
Cumulative Investment
Approximate Timing
Note: Includes all contraceptives; Effectiveness is calculated as the percent of couples who do not experience a pregnancy over the course of a year using a respective type of
contraceptive; Typical use weighting customer preference was calculated by using the relative percentages of US population age 15-44 using each type of contraceptive
multiplied by that method’s “typical” effectiveness as defined by the CDC
Sources: PBS, Guttmacher, Wikipedia, NCBI, CDC, Options for Sexual Health
MGMT731_Feldner
3
Although the mix of contraceptive use has changed,
roughly 40% of Americans have still not adopted
Note: Other includes spermicides, other barrier methods, non-oral hormonal methods, and both male and female sterilization
Sources: PBS, Guttmacher, Wikipedia, NCBI, CDC
MGMT731_Feldner
4
Deep Dive: Condoms in the United States
• The remainder of this report will focus on the condom category,
primarily in the United States.
• Given the level of regulation on pharmaceuticals, the evolution
of the market for contraceptives like the Pill look very different
from that of a typical new technology category
• While condoms are now considered a Class II medical device
and regulated by the FDA, this occurred nearly a century after
production began, so this sub-category more closely mirrors
the technology categories we discussed in class
MGMT731_Feldner
5
Much of the condom category growth was driven by
legislation and regulation by the US government
Limited precise data for firms’ entry and exit in the industry was available, so I’ve provided an
illustrative view of the competitive landscape over time below
Number of firms
Following the VD crisis during WWI,
Congress legalized condoms in
1918, clearing the way for mass
entry into the market
First produced in
1855, condoms’
rapid growth was
curbed by 1873
legislation preventing
their sale. Sales went
underground and
were led by mom &
pop businesses that
could fly under the
radar
Initial Growth
1855
WWI
In 1937, the FDA
began regulating
condoms and
standardizing the
testing process. These
new requirements
forced many smaller
businesses to close
their doors
Regulation
1937-1950s
A dominant design, the
lubricated latex condom,
emerged in the late 1950s
and consolidation began.
There were only 6 major
producers remaining by
1993, and only 3 major
producers in the US today.
Consolidation
1980s
Today
Sources: Collectors Weekly, Case Western, NCBI
MGMT731_Feldner
6
The category has undergone substantial consolidation
over the course of a century
Given how substantially fragmented the market was during its early days, I’ve chosen to highlight the entry and
exit of a subset of major players
Young’s Rubber
• Founded Trojan brand in
1916
Ansell Rubber
Company
• Spun out of Dunlop Tyre
in 1905
London Rubber
Company
• Founded 1915, created
Durex in 1932
Julius Schmid, Inc.
Attempted sale to
Ansell in 1985
blocked by courts
Sold to Carter Wallace instead
Carter
Wallace
Bought by
Church &
Dwight in
2000
Anti-trust
intervention
Remains Ansell-Americas today
LRC bought
Schmid in 1962,
merged to
become London
Intn’l Co. in
1980s
London
International
Company
Seton Scholl
Limited
Today’s Major Players
Church & Dwight
(Trojan)– 69% market
share today
Ansell
(Lifestyles)– 12%
share
Reckitt Benckiser
(Durex)– 15% share
Merged with Dr.
Scholl’s in 1990s
• Founded late 1800s
Okamoto
Was at one time the 4th largest player in the US but lost traction
• Founded 1934 in Japan
Aronab Products
Forced to exit after FDA judgment of faulty product in 1964
• Founded early 1900s
Source: Bloomberg, Packaged Facts, The Humble Little Condom: A History, Collector’s Weekly, FDA records
Still the #1 producer in
Japan today
This is the fate that was met by the
vast majority of condom producers
when FDA regulation began midcentury
MGMT731_Feldner
7
Dominant Design: Lubricated latex condoms
KEY FEATURES OF DOMINANT DESIGN
• The use of latex, an emulsion of tiny rubber
particles in water, emerged in the 1920s.
These condoms were easier to produce,
stronger & thinner, and had a longer
shelf-life than their rubber
predecessors, so they quickly became the
category norm
- The first lubricated latex condom was released
by Durex in 1957, and remains the dominant
design to this day
- Account for ~95% of US sales
• While slight variations in size, shape, tip,
and texture exist—they are all largely based
on the dominant design depicted at left
• Rolled for commercial packaging and ease of
use
Source: Wikipedia, Madehow.com, Amazon.com
MGMT731_Feldner
8
New disruptions to the category are likely to emerge
in the next decade
• The earliest evidence of condom use dates back to the Ancient Egyptians, and was first
documented in 16th century Italy in the use of soaked linen cloth
Animal Skin
• “Skin” condoms made from animal product grew in rapid popularity in the 1700s due to
their lower cost and greater comfort compared to linen
- Mass-produced lambskin condoms are still used today, making up ~5% of the US market
Rubber
• The discovery of rubber vulcanization in 1839 led to the production of the first rubber
condom in 1855. However, they were initially more expensive and offered less sensitivity
to skin condoms, so they did not become the dominant design until late in the 19th
century
- Their reusability ultimately gave them an economical advantage in the long-run
• Developed in the 1920s by Young’s Rubber Company, latex quickly emerged as, and
remains, the dominant design
Latex
Next
Generation
- Latex was favored because it is less labor intensive and reduces the fire hazard during production,
is stronger and thinner resulting in greater effectiveness and comfort, and it’s shelf life is 2
years longer than rubber
• Recently, there has been a surge of funding in search of a better condom from
nonprofits like the Bill & Melinda Gates foundation and crowdsourcing—the goal is to
improve comfort in order to increase consistent usage. While there is not a new
dominant design yet, a few of the emerging designs include:
- A form of carbon that’s a single atom thick
- A silicon condom that’s designed to “be pulled on like a mitten”
- A wrapping condom made of polyethylene, a type of plastic used in packaging
• With continued investment and a clearly interested public audience, a new dominant
design could be on the horizon
Source: Wikipedia, Slate
MGMT731_Feldner
9