The ramifications of the Zimmer-Biomet acquisition on the orthopedic device market will be huge, especially in the large-joint reconstructive implant market: as we've discussed before, this move will catapult the combined company to a leadership position. However, there is another market that is often overlooked in articles discussing this merger: the dental implant market.
Although a much smaller market than the lucrative orthopedic device markets $1 billion in the US in 2014 compared to $7 billion in US large-joint implants alone the dental implant market is nonetheless one that should not be ignored. While the orthopedic device markets are plagued by shady deals, lawsuits, and reduced reimbursement dampening growth, in the dental implant market it's been full steam ahead: even the US market is charging ahead with 10% annual growth, showing no signs of slowing down. Compared to the more paltry 2.5% annual growth seen in the large-joint implant market, it's clear to see how this market holds long-term potential.
Zimmer and Biomet have always comfortably sat among the leading global dental implant manufacturers, leveraging their expertise in orthopedic materials to make effective and not overly expensive dental implants. However, this market was never a huge focus for these companies, only generating about 5 to 10% of their total revenues. While this is unlikely to change under a new combined structure, the ramifications on the competitive landscape of the dental implant market will be significant.
Combined, Zimmer and Biomet should be able to move past DENTSPLY Implants to claim the third-leading spot in the global dental implant market overall. The most significant gains for these companies will be seen in North America, where both companies perform particularly strongly due to their home base in the US. In the large and fast-growing North American market, a combined Zimmer-Biomet dental implant company would compete for the second-leading position and maybe even has a shot at dethroning Nobel Biocare, the longtime market leader in this region.
This paints a very different picture from a few years ago, when Nobel Biocare and Straumann battled it out for the global leadership position in this market virtually uncontested. However, the merger of DENTSPLY Friadent and Astra Tech under DENTSPLY International (rebranded as DENTSPLY Implants) and now Zimmer and Biomet has created two companies that could actually give Straumann and Nobel Biocare a run for their money.
We haven't seen that just yet though, and it's unlikely to happen very soon: DENTSPLY Implants is still going through some growing pains, while Zimmer and Biomet are still waiting for the deal to close, anticipated in Q1 2015. They also have yet to announce their intentions for their dental business units, and they will no doubt focus on merging their larger core orthopedic businesses as first priority. However, after the dust has settled, the Zimmer and Biomet executives may turn to their dental divisions and realize that they're sitting on the third-largest manufacturer in a fast-growing market, and that combined, they have the potential to make it even bigger.