Dental supplies market presentation

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Information about Dental supplies market presentation

Published on March 12, 2014

Author: JamesErion


Overview of the U.S. Dental Products Market Major Trends & Outlook March 2014

Organization & Structure • The professional dental products market consists of two segments: dental consumables and dental equipment. • Dental consumables consist of products used in dental procedures such as amalgams and alloys; prosthetic and aesthetic supplies, rotary instruments, orthodontic supplies, endodontic supplies, dental implants and infection control products. • Dental equipment segment is composed of large equipment such as autoclaves, sterilizers, chairs, lasers, communication systems, compressors, dental handpieces and digital imaging equipment. Small equipment, including amalgam removal systems, amalgamators, handpiece cleaners, hand instruments, lab equipment and ultra sonic cleaners also fall into this segment. • The combined professional dental consumables and equipment market reached $8.0 billion in 2011 and will further grow to $8.9 billion by 2016 increasing at a CAGR of 2.1%.

Recent Trends 2009 - 2012 • The economic crisis took its toll on the dental supplies industry as the market experienced a sharp decline in sales during this time frame. • Recession continued to hamper the rapid growth experienced by the replacement, restorative and regenerative dentistry markets prior 2008 as the ensuing period witnessed a decline in patient traffic for dental practices. • Patients deferred or postponed dental treatments, which resulted in fall in purchases of supplies and equipment by dental offices. • Among the procedures that reported a marked decline were the elective procedures such as tooth whitening and cosmetic dentistry. • With eroding patient numbers, some dentists stopped recommending implant procedures and continued with conventional alternative treatments such as tooth-borne crowns and bridges. • Reduced credit access led dental offices and dental laboratories to cancel or postpone investments in capital equipment such as CAD/CAM scanners. • Amid the shrinking demand for dental products and increased competition, manufacturers continued to experience pricing pressures, particularly in the look-alike product categories as most companies reverted to price adjustments in order to maintain sales volumes.

Current Trends 2013/2014 • U.S. dental services demand is highly correlated with consumer confidence. As such, we believe U.S. dental services demand will continue to be highly influenced during this time period by the prevailing economic conditions. • The problem, however, is that in the current economic environment, it is hard to predict consumer outlook and what impact it may have on the demand for dental services this year. • In our opinion, the improving U.S. employment trends combined with rising property values will continue to bolster consumer confidence and will lead to increased demand for dental services and ultimately modest growth (low-to-mid-single-digit range) within the dental product market this year. • On a scale of the least to most consumer discretionary exposed parts of the dental products market, we believe dental implants, cosmetic/tooth whitening procedures, and orthodontics rank near the top of the list (most exposed), with endodontics, basic restorative procedures, and preventative care products ranking closer to the bottom. This has been proven out among our clients over recent years, and has also been easy to see across the dental implant market, where world-wide growth for the entire market has lagged most of the rest of dental for the past few years, trending flat to down in four of the past five years. .

Longer-Term Trends 2015 and Beyond •Demand for dental products and services is expected to grow in the long run driven by the growing awareness about oral healthcare, favorable demographic profile, increase in the number of people opting for cosmetic treatment, and introduction of new products that reduce patient discomfort. •The market continues to witness introduction of procedures and solutions that are making the process of dental surgery less invasive and less time consuming. •Efforts are focused on the prevention of dental ailments, which is in turn driving demand for restorative and repair materials. •New products are aimed at reducing patient discomfort, shorten healing time and provide improved functioning. •Patients and dentists are increasingly adopting dental membrane materials, tissue regeneration and dental bone graft materials as highly advanced versions of these products are being developed. •Further, surgeons are growing more aware of the available biologic products that are designed for orthopedic applications.

Longer-Term Trends 2015 and Beyond The U.S., Europe and Japan are the dominant dental markets, collectively accounting for more than 85% of global revenue. In recentyears, an aging population coupled with rising awareness of the importance of oral health, higher aesthetic standards and improved dental treatments have boosted the growth of this segment. In a recent study, the American Dental Association reported that a person’ssmile outranked eyes, hair and body as the most important physical feature. All of these factors have brought the global dental equipment and consumables market to an estimated size of US$19.7 billion in 2010 This market, driven by technological advancements, isexpected to grow at a CAGR of 7%, reaching an estimated size of $27.6 billion by 2015.Revenue growth in this market is expected to be highest in the U.S. and Europe, where the generation of aging baby boomers can affordhigher quality dental procedures. This is also expected to be a catalyst for the growth and popularity of cosmetic treatments and implants along with the increasing demand for better orthodontic products by adolescents. Recovering from the financial crisis, the dental implant market is also expected to achieve a 5-year sales CAGR of 7%, growing from US$3.6 billion in 2010 to $5.1 billion by 2015. The most important sources of dental implant growth are new dentists being converted from traditional dental procedures. With a 15% penetration rate, there is still considerable scope for dental implant-supported tooth replacements to displace conventional solutions. Also spurring growth is emerging technology, which reduces the overall turnaround time for dental procedures while improving efficiency of the dental practitioner. For example, the introduction of CAD/CAM (computer-aided design and manufacturing) has increased precision and reduced designing time for dental crowns and bridges. Many market participants and industry experts are pointing to this area of the dental products market for the next wave of growth. Demand for customized prosthetics with better quality, higher precision of fit and greater ease of fabrication is increasing rapidly. In 2010, the CAD/CAM dental prosthetics market was already a US$1 billion market, growing at a 5-year CAGR of 15%. Separately, the use of 3D imaging techniques has improved patient diagnosis and procedure planning. According to a recent Morgan Stanley survey, over 60% of North American dentists currently use some form of in-office digital imaging technology, a rate which has been steadily climbing for over 20 years and continues to trend positively.

Key Industry Drivers • Total expenditures for dental services in the United States increased from $31 billion in 1990 to $104.8 billion in 2010. • We believe that the demand for dental services, equipment and supplies will continue to be influenced by the following factors: – Demographics – Dental Products & Techniques – Natural Teeth are Being Retained Longer – Increased Emphasis on Preventive Care – Demand for Specialty Procedures and Products – Need for Increased Dental Office Productivity – Demand for Infection Control Products – Coverage by Dental Plans

Key Industry Drivers Demographics • Demographic trends indicate that the dental market is growing, as an aging U.S. population is increasingly using dental services and spending more on a per capita basis for dental services. – Between 2012 and 2022, the 45 and older population is expected to grow by approx. 13%. – Between 2012 and 2032, this age group is expected to grow by approx. 26%. – This compares with expected total U.S. population growth rates of approx. 9% between 2012 and 2022 and approx. 18% between 2012 and 2032.

Key Industry Drivers Dental Products & Techniques • Technological developments in dental products continue to contribute to advances in dental techniques and procedures, including cosmetic dentistry and dental implants, e.g. - Invisalign (Align Technology) – system for straightening teeth using a series of clear removable retainers that can replace the need fro braces in mild to moderate cases. - Procera (Nobel Biocare) – system for minimally invasive dental implants.

Key Industry Drivers Successful Campaign to Promote Preventive Care • The dental industry’s continued campaign to promote preventive care is driving a trend for regular visits to the dentist. – More recently the link between gum disease and heart disease – “Oral Systemic Link” – has prompted the ADA to recommend periodontal exams along with regular checkups. • This has been helped by an increasing number of people who are being covered by dental insurance, making regular dental visits more affordable.

Key Industry Drivers Growing Demand for Specialty Procedures and Products • As the dental industry advances, making dental procedures less painful and more aesthetically pleasing, more people – adults, children, and teens – are having their teeth straightened, whitened, and repaired for cosmetic purposes. - According to the American Association of Orthodontists, 4.5 million Americans wore braces or other dental appliances in the mid 2000s - Aesthetics is the fastest growing sector in orthodontics with options for clear brackets and Invisalign preferred by many adults, or a variety of available colors, popular among early teens. - In a recent study, the American Dental Association reported that a person’s smile outranked eyes, hair and body as the most important physical feature.

Key Industry Drivers Need for Increased Dental Office Productivity • Dentists are showing an increased willingness to invest in dental equipment and office infrastructure that can strengthen the productivity of their practices. - The number of dentists per 100,000 persons in the U.S. is forecasted to decline over the next two decades and with it the number of patients per dental practice is expected to rise. - Insurance reimbursement rates are declining at the same time there is an expected increase in dental insurance coverage. • CAD/CAM systems for example, help dentists customize all- ceramic crowns and bridges or veneers from ceramic blanks during one patient visit, reducing the reliance on an outside laboratory.

Key Industry Drivers Demand for Infection Control Products • Greater public awareness as well as regulations and guidelines instituted by OSHA, the American Dental Association and state regulatory authorities have resulted in increased use of infection control (asepsis) products such as protective clothing, gloves, facemasks, and sterilization equipment to prevent the spread of communicable diseases such as AIDS, hepatitis and herpes.

Key Industry Drivers Demand for Infection Control Products • Greater public awareness as well as regulations and guidelines instituted by OSHA, the American Dental Association and state regulatory authorities have resulted in increased use of infection control (asepsis) products such as protective clothing, gloves, facemasks, and sterilization equipment to prevent the spread of communicable diseases such as AIDS, hepatitis and herpes.

Key Industry Drivers Coverage by Dental Plans • An increasing number of dental services are being funded by private dental insurance. In 2009, over 55% of the U.S. population had some form of dental coverage.

As stated by the new market research report on Dental Supplies, the US continues to remain the single largest regional market. Asia-Pacific is set to grow at the fast compounded annual growth rate of 8.9% over the analysis period. The low penetration of the dental market in potential markets such as India presents tremendous potential for growth. Prosthetic Supplies represents the largest segment in the global dental supplies market. Comprising products such as crowns, bridges, and dentures among others, prosthetic supplies represent the conventional form of treatment for majority of the dental ailments. The focus on preventive densistry as well as procedures such as periodontics, endodontics, and orthodontics, which allow patients to retain their natural teeth longer, is also expected to fuel demand for dental products. In the dental bridge and crown restoration segment, introduction of new technologies and materials to be used alongside dental bridges and crowns, and substantial efforts to promote benefits of computer-aided manufacturing/ computer-aided design (CAM/CAD) technology are expected to drive the market. Dental Implants is forecast to grow at the fastest compounded annual rate of 10.6% over the analysis period. Growth in the dental implants market is driven by growing awareness and demand for improved oral aesthetics. In addition, factors such as technological improvements and the growing acceptance of the procedure as a cost effective option relative to alternative treatments is expected to fuel sales of dental implants. Edentulous patients increasingly prefer dental implants as they are easy to use. In addition, advancements in dental implants technology which reduce treatment times considerably are expected to contribute to the growth. The market for dental supplies is fragmented although a handful of players enjoy long presence in several segments. Major players in the marketplace include 3M ESPE, Align Technology Inc., Biomet 3i Inc., Danaher Corporation, Sybron Dental Specialties Inc., Den-Mat Corporation, Dentsply International Inc., DMG Hamburg GmbH, GC Corporation, Heraeus Kulzer GmbH, Ivoclar Vivadent AG, Laboratoire Septodont, Keystone Dental Inc., Nobel Biocare AB, Shofu Inc., Straumann AG, Sure Dent Corporation, VOCO GmbH, and Zimmer Dental Inc.


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