What distinguishes the dental device market from other medical device markets? Primarily, it’s the fact that most dental procedures are elective – this means that patients usually pay out-of-pocket or receive finance from private insurance to receive dental care from providers. This lack of reimbursement serves to cultivate an environment where patients are typically more heavily involved in the dental care they receive than in their other general health care needs– in effect, patients adopt consumer roles in the dental space.
What does patient consumerism mean for dental device manufacturers? Well, given that dental procedure costs are rising, it means that patients will typically shop around for low-cost services from dental care providers. This applies pressure on dentists to offer cost-effective procedures in order to remain competitive – and one of the ways they can cut down on costs is to purchase value-based dental devices. As a consequence, this trend is cascading into the dental device world, where manufacturers are expanding their dental offerings to accommodate cost-conscious demands of patients and physicians.
This is particularly true in the dental implant market, given that dental implants are highly commoditized and easily manufactured, which has allowed many value players to flourish in this space by offering dental implants at a lower price.
In fact, many of the acquisitions and partnerships that have taken place over the past year in the dental implant space have been driven by this trend. For example, Straumann, a globally recognized premium implant provider, acquired Neodent—a value-based implant manufacturer with large shares in Latin America—in 2015. In addition, earlier this year Straumann acquired a 30% stake in Anthogyr, a French value-based implant manufacturer with growing shares in the Chinese dental implant market. More recently, Straumann acquired Equinox, a value-segment implant manufacturer in India, and finally, last month Straumann gained a controlling stake in MegaGen, a value-segment implant company based in Korea.
Other examples of takeovers driven by this trend include Zimmer’s merger with Biomet 3i—a value-segment dental device provider—in 2015, and Dentsply Sirona’s 2016 acquisition of MIS Technologies, an Israel-based value-segment implant manufacturer.
In most of these deals, the companies offering value-based implants will continue operations as standalone manufacturers; as such, these premium implant companies have effectively entered the quickly growing value segment, while being able to maintain their reputations as a premium dental implant manufacturers.
As for the future, I expect this value-centered focus to continue. I know that we’ll see more of these types of mergers and acquisitions as the costs for dental procedures increase—this will fuel demand for value-based dental devices from patients and physicians, and companies will need to continue to expand their value offerings in order to meet these demands and to compete effectively in the dental device space.
DRG is publishing a report covering the North American Dental Implant Market. It provides qualitative and quantitative insights on the value-and premium-based implant markets. The competitive landscape in the dental device area is rapidly changing to meet low-cost demands; let us help your company navigate the way forward. Follow Lucy on twitter @lucyfedericoDRG for more insights into the dental markets.
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