Growth in dental sales returned to all regions in late 2020

Jeremy Booth, Dental Tribune International

Thu. 25. February 2021

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BASEL, Switzerland: The SARS-CoV-2 pandemic caused the global dental market to contract in 2020, squeezing the margins of dental practices and manufacturers. According to the Straumann Group, the global dental market was worth some CHF 23 billion (€21 billion) last year—down from an estimated CHF 27–29 billion in 2019. The company said in its annual report, however, that all regions had returned to growth in the fourth quarter of 2020, led by the Asia Pacific (APAC) region.

Straumann finished 2020 with a 5.6% decrease in organic revenue. At CHF 1.42 billion, core revenue was down 10.7%. Its regional performance during the year largely reflected the spread and severity of the COVID-19 pandemic. In the later part of the year, this trend was diffused by buoyant dental markets that returned to growth despite remaining hard hit by the virus. CEO Guillaume Daniellot told analysts in a conference call that 2020 had been a challenging year.

Asia Pacific outperforms

The APAC region was the strongest performer for Straumann. After expected declines in the first half of the year, sequential improvements in organic sales revenue in the third and fourth quarter were 11% and 18%, respectively—largely compensating for the earlier dips. For the full year, total APAC sales amounted to CHF 289 million, which was around 5% lower than those for 2019. The company said that China had shown dynamic growth in the fourth quarter and that sales in Australia, Japan, New Zealand and Taiwan had increased, but that the pandemic continued to have an impact on sales in South Korea and India. In 2020, the APAC region accounted for 20% of total group sales and 2% of Straumann’s total revenue decrease.

North America returns to growth

Straumann began the year with double-digit growth in North America. This lasted until March when, the company said, lockdowns in the region “completely interrupted” this trend. Its business in the region began to recover in June when dental teams across the US and Canada returned to work. Pent-up demand for implant and restorative dental procedures and increased sales of intra-oral scanners and 3D printing equipment helped Straumann to return to organic revenue growth in the region—which reached 5% in the fourth quarter. Total 2020 sales in the region decreased by 10% to CHF 432 million, and North America accounted for 28% of the company’s 2020 revenue decline.

Germany, Russia and Turkey lead Europe, Middle East and Africa region

The Europe, Middle East and Africa (EMEA) region accounted for the bulk (43%) of the Straumann Group, and more than half (51%) of its total revenue decrease, in 2020. The pandemic significantly affected sales in larger EMEA dental markets like Italy, Spain, France and the UK, leading to revenue declines in the region in the first and second quarters. However, the fact that dental practices remained open in Germany throughout the year helped to stabilise EMEA sales. Most major dental markets in the region had returned to growth by the fourth quarter, for which Straumann posted organic sales growth of 5.9%. Daniellot said that this result was driven by sales not only in Germany but also in Russia and Turkey, which were both noted to have performed strongly throughout the year. For the 12-month period, revenue was down 8.3% in the EMEA region.

Latin America growing despite challenges

The Latin America region performed worst among Straumann’s regions in 2020, and Daniellot said that it had suffered the “heaviest and longest” impact from the pandemic. Strongly influenced by sales contractions in Brazil—the region’s largest market for aesthetic dentistry—full-year organic sales were down 15% and total revenue was down 35%. The region returned to growth in the final quarter, when organic sales rose by 3%. Daniellot commented: “We bounced back to strong growth in Brazil, driven by Neodent and digital equipment sales. Argentina and Chile also posted strong increases. Yller, our 3D printing resin business, continued its excellent growth.”

Although Latin America only accounts for 6% of total group sales, it accounted for 19% of the group’s revenue drop for 2020. In the second quarter, revenue in the region plummeted by 70%.

Potential in dental implants and clear aligners, despite the pandemic

Global dental implant sales were worth an estimated CHF 4 billion in 2020, of which Straumann held a 27% share. (Image: Straumann Group)

The Straumann Group is the sixth largest dental manufacturer, and its broad portfolio enables the company to address around half of the total global dental market. Dental implants account for the majority of the company’s sales, and in its 2019 annual report, Straumann estimated that—“barring unforeseen events”—the global market for dental implants would grow by 4–5% in 2020. In fact, the pandemic has so far caused the global implants market to decline. According to the company, the dental implants market may have contracted by as much as 15% “due to the short-term impact of COVID-19”. Total dental implant sales were worth an estimated CHF 4.6 billion in 2019 and CHF 4 billion in 2020, of which Straumann held a share of 26% and 27%, respectively.

Despite contractions in the wider dental market, Daniellot said that the growth drivers behind dentistry remained unchanged, “including the ageing and growing population, increasing prosperity, a higher awareness of oral health and aesthetics, and innovation for more patient-friendly solutions”. He said that clear aligners were currently one of the most attractive segments in dentistry owing to the growth that the category is witnessing and the advantages that they offer compared with conventional wires and brackets.

In July 2020, Straumann invested in DrSmile as an addition to its orthodontics portfolio. The Berlin-based provider of clinician-led direct-to-consumer clear aligners tripled in size in 2020 and is active in Germany, Austria, Spain and France. “We expect growth in orthodontics and implant dentistry to outpace the general dental market,” Daniellot commented, adding that the segments biomaterial digital equipment and custom-made prostheses also presented growth opportunities in the mid-term.

“The world today looks different compared to when the pandemic started”

Daniellot said that 2020 had been a challenging year, but that Straumann was optimistic about the future and the progress that had already been made in fighting the pandemic and shoring up dental practices against its effects. “The world today looks different compared to when the pandemic started, although it’s still influencing our environment. The patient flow came back. And dental practices resuming their activity allowed us to grow again in the second half of 2020,” he said.

According to Daniellot, the global economy will gain momentum over the coming two years, and global GDP is expected to reach pre-pandemic levels by the end of this year. “The projection is that recovery will be uneven across countries, with China growing strongly, as it was the first country which started to recover and is now controlling the pandemic efficiently,” he added.