There is no doubt that the economic uncertainties due to a post-pandemic economic and social crisis will be of medium duration. It would be unthinkable to suddenly emerge from this crisis that leaves millions of jobs lost on the battlefield but, just as happened in the five-year period 2009-2013, those who have confidence and vision today will be more likely to thrive in the near future. A not-so-dark future for the dental sector, currently showing negative data, but which already proves to be on the recovery path: this is the time for confidence. From Spain, an example of the trend in the dental sector.
Consumables and equipment: trends 2020
The market for dental products and equipment reflects quite faithfully the performance of the overall dental sector.
In particular, the purchase of consumable products is strongly correlated with the demand for services, while the purchase of equipment and technologies in general represents an investment strongly connected to the professionals’ confidence in the future.
The final results of the research conducted by Key-Stone in Spain on behalf of FENIN (Federación Española de Empresas de Tecnología Sanitaria) are explanatory: the industry and distribution market lost 20%, in particular 18% in consumable products and 27% in sales of equipment.
However, some considerations must be made while looking at these trend data. In fact, an aggregate analysis of this kind, without going into details of the segments making up the two sectors (consumables and equipment) can be misleading. Therefore, let’s now look at the results of this research in greater detail.
The impact of Covid-19
Although the consumables sector is undoubtedly a direct indicator of demand for dental services, during 2020, due to the pandemic, the value of disinfectants and Personal Protective Equipment (PPE) purchases increased disproportionately, thus generating a strong increase in sales -and therefore in costs for clinics- not directly related to the demand for services. Therefore, in order to analyze the value and trends of consumables as a performance indicator of the entire sector, it is necessary to deduct the value of hygiene and disposable products in general.
It should be considered that the sector of consumables, including also implantology and orthodontics (without aligners), had a total value of 605 million (VAT exempt) in 2019, which became little less than 500 in 2020. Among these 500 million, the share related to hygiene and disposable products was approximately 47 million (with a weight of 9%), while it was 30 in 2019 (with a weight of 5%). All this leads us to affirm that these products have undoubtedly positively conditioned the sales of consumable products, but with a limited weight, since the whole Consumables sector not counting the “Covid products” decreased by 21%; a sector trend that we can consider very plausible.
Within the heterogeneity of the consumable product families, implantology shows the strongest decrease, with a trend of -28% (with a third less implants placed), while the contraction of orthodontics is quite limited, with a reduction of 19%. Even products for prostheses faced a reduction of just -17%, but this is due to the fact that, even before last spring’s confinement, there were hundreds of thousands of patients which had undergone implant surgery shortly before, on whom a prosthesis would have been placed in the following months. The long wave of negative effects reflecting on the prosthetics will likely be more evident in these first months of 2021.
The sharp drop in equipment sales, except for some devices strongly related to the health emergency (autoclaves, sanitizers and handpieces), is rather clearly due to strong economic and health uncertainty, which caused a temporary standstill of large part of the investments aiming at the renovation of clinics and technologies.
Negative data already attesting a recovery
The cumulated quarterly data (where Q1 refers to the trends of the first three months of the year, Q2 to those of the first six months, etc.) show a very positive recovery of the market, almost as if to tell us about a sector that traumatically experienced more than two months of total confinement in spring 2020, but which is recovering rather quickly his usual rhythms.
In particular, the recovery trend in equipment sales has a constant rate even though it closed the year 2020 with a very negative sign.
If it is true that the great uncertainty of last spring has led many dentists to suspend their investments, it is equally true that the indispensability of dental care for the population has ensured that dental clinics return to work at full speed. Not only there was a physiological positive rebound in the months from June to August 2020, but also in the period between October and December the activity returned to values only slightly lower than in the same period of 2019.
The competitive advantage of proactive dentists
This new situation of full recovery and a certain optimism when thinking about the phase following the vaccination campaign have led some dentists, certainly the most positive and proactive ones, to reconsider their intentions of renovation and relaunch of the activity, resuming their investments in technologies. Not only digital technologies, but also renovation of clinics, replacement of dental chairs, X-ray equipment, etc.
We must consider that this very serious crisis could change the competitive scenario, as dental clinics financially weaker or run by dentists close to retirement are certainly considering the hypothesis to sell or close the dental practice, while other dentists and entrepreneurs are strongly motivated to invest, in order to make available to citizens more modern, well-equipped and organized clinics.
If it is true that it will be quite normal to see a strong recovery in investments by dentists and technicians in the second half of 2021, it should be also taken into account that those who already lay a certain trust in a coming recovery of the dental activity today and are investing during these current uncertain months, can only achieve a strong competitive advantage over the others.
The article has been published on Gaceta Dental in Spanish.