Dental Services Market

Sector: Healthcare Services
Dental Services Market
www.indiabusinessreports.com
Mar 2014
Index
Market Size Medical Data Global Dental Data Corporates in Global Dental business 3 11 15 20
Indian Dental Services Market
Market Size
Indias dental opportunity

Dentist Population -Statewise
30000 25000 20000 15000 10000 5000 0 Karnataka Delhi J&K Goa Uttarakhand Kerala Bihar Haryana Odissha Maharashtra West Bengal Tamil Nadu Himachal Pradesh Uttar Pradesh Madhya Pradesh Andhra Pradesh Jharkhand Rajasthan Manipur Gujarat Punjab Others 4 Assam
105,000 dentists registered with Indian Dental Association. Total practising population believed to be 125K Market size believed to be ~Rs. 5-6000 crore, at an average income of Rs 4-5 lakh/annum or about Rs 40-50K per month
Concentration varies widely

Population Per Dentist
70,000 60,000 50,000 40,000 30,000 20,000 10,000 Haryana Manipur Punjab Bihar Maharashtra Tamil Nadu Uttarakhand Jharkhand Karnataka Gujarat Delhi J&K Rajasthan Goa Kerala Madhya Pradesh West Bengal Andhra Pradesh Himachal Pradesh Uttar Pradesh Odissha 5 Assam
From a low of 1360 persons per dentist for Goa to close to 65k for Odisha All India average is around 9800 persons per dentist
Catchment Income affects dentist population

Catchment versus Per Cap Income
3,50,000 3,00,000 2,50,000 Income (Rs) 2,00,000 1,50,000 1,00,000 50,000 Haryana Punjab Bihar Manipur Maharashtra Tamil Nadu Uttarakhand Jharkhand Gujarat Karnataka J&K Rajasthan Delhi Goa Assam Kerala West Bengal Uttar Pradesh Himachal Pradesh Madhya Pradesh Andhra Pradesh Odissha
Per Cap Income
Pop/Dentist
90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 -10,000
As per capita income doubles, population per dentist falls by half (negative correlation of 0.52)
Data comparison within states
10 states with lowest pop/dentist Average per Capita ncome (Rs/annum) Average pop / dentist Total Income of catchment (Rs cr) Area of catchment (sq km) 1,12,840 7,374 765 17
10 states with Highest pop/dentist Average per Capita Income (Rs/annum) Average pop / dentist Total Income of catchment (Rs cr) Area of catchment (sq km) 52,336 26,594 1,481 115
Top 10 states with highest dentist concentration have: Per capita income 2.2x lowest 10 Average population per dentist around 28% of lowest 10 Catchment area is 15%
Urban areas have high dentist concentration

Select City Data
Dentists 7000 6000 5000 4000 3000 2000 1000 0 Nagpur Pune Chennai Vadodara Mumbai Hyderabad Bangalore Madurai Nashik Coimbature Vijayawada Ahmedabad Rajkot Kochi Surat Pop/Dentist 4500 4000 3500 3000
2500
2000 1500 1000 500 0
Deriving Market Opportunity

Total income of catchment half of the low income states. Implies higher propensity to spend in more prosperous states Also implies spend on dental services likely to rise faster than GDP Nominal GDP grew ~13.5% over FY01-13. Dental market can be expected to grow at min 15% over FY13-18 This means the market will atleast double in 5 years Indian Dental Market Opportunity
Dental Clinic Market (Rs Cr) Dental Lab Market (Rs Cr) 12,068
10,494
6,000 6,900 7,935 9,125
900 FY13
1,035 FY14
1,190
1,369
1,574
1,810
FY15
FY16
FY17
FY18
Growing dental education sector suggests underlying demand growth
State Karnataka Maharashtra Uttar Pradesh Andhara Pradesh Tamil Nadu Kerala Punjab Haryana Rajasthan Madhya Pradesh Gujarat
Colleges State 43 28 28 20 17 17 12 11 11 11 9 Bihar Himachal Pradesh Chattisgarh Orissa West Bengal Delhi Uttranchal Jammu & Kashmir Pondicherry Goa Assam
Colleges 7 5 5 4 3 3 2 2 2 1 1
30,570 dentists graduated in 2010; dentist population could be growing @15-20% Skewed geographical distribution of colleges; top 5 states have 56% of the colleges and top 10 states have 82% of colleges
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Medical Data
High Prevalence of dental caries shows growth potential
Age Group 5-6 yrs
Urban (%) 67.23
Rural (%) 46.22
Average 56.72
DMFT* 2.1
12 yrs
15 yrs 30-35 yrs 60-75 yrs
57.94
55.97 45.21 79.40
36.9
43.28 39.27 61.90
47.39
49.59 42.24 70.65
1.6
1.37 1.39 -
Source: National Commission on Macroeconomics & Health; Burden of Disease in India
* DMFT: Delayed, Missing and filled Teeth
Incidence of caries in people above 12 yrs is 55% in Delhi, 78% in Mumbai, and 73% in Bangalore As income increases, treatment rate will increase, creating positive elasticity with GDP growth
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Dental disease prevalence & behaviour

DMFT score for teenagers could be still higher Around 35% teenagers suffer from misaligned teeth and jaws Nearly 70% people suffer from some dental problem As per WHO estimates, incidence of edentulousness (missing teeth) among Indians is over 20% According to National Oral Health Survey (by Dental Council of India), gum diseases (Periodontal diseases) are prevalent in 67.7% of 15 year olds and as much as 89.6% of 35-44 year olds. 60% have never visited a dentist Over 50% not concerned about preventing or curing dental problems Almost 30% do not use any oral care product
13
Key highlights of a dental incidence survey
According to a survey conducted by Synovate (a research agency) and sponsored by Colgate:

74% aware of the prevalence of cavities, but 63% are unconcerned 76% aware of the prevalence of stained teeth, but 66% are unconcerned 78% aware of the prevalence of gum bleeding, but 63% are unconcerned 74% aware of the prevalence of swollen gums, but 66% are unconcerned
Survey also revealed that 24% of consumers suffered from toothache in the past one year; 96% were aware of the problem; only 35% have taken treatment from a dentist
14
Global Dental Data
Dental Clinic business in the US: $167bn by 2015

Size of the US dental industry was $71bn in 2002, and $94bn in 2007, having grown at a CAGR of 5.8%. According to the U.S. Centers for Medicare and Medicaid, the demand for dental services is predicted to increase to $167 billion by 2015 US dental spends are around 4.3% of total medical spends As of 2009, there were 186,084 professionally active dentists, ~1650 patients per dentist, average dentist earnings ~ $570K Percent of children ages 2-17 with a dental visit in the past year: 81.4% (2011) Percent of adults ages 18-64 with a dental visit in the past year: 61.6% (2011) Percent of adults ages 65 and over with a dental visit in the past year: 61.2% (2011) Despite this, more than one in five people had untreated dental caries This shows Indian data, which shows incidence > 60% is correct Indias most developed state Goa has similar dentist concentration
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Dental Clinic business other countries

Germany 83,339 practicing dentists (2008) 1237 patients per dentist Japan 99,426 practicing dentists (2008) 1280 patients per dentist
China Chinas dental services market was believed to be around $5-6bn in 2010 ~175K dentists, implying 7700 persons per dentist
UK 2012 market estimated at 7 billion Growth drivers are historic under provision compared to other European countries and the positive demographics of an ageing population requiring more dental treatment
Chinas dental services market 6-7x larger than India Population per dentist is not vastly different though
17
Global Dental Lab Business: $14.5bn

The world market for dental laboratories is projected to exceed $14.5 billion by the year 2015, according to a report by Global Industry Analysts
US Data The US lab market n 2012 was ~$4.4bn 7,042 dental laboratories in the United States with a payroll in 2012, another 3,000 one man dental laboratories. 33,600 domestic dental technicians Average revenue per lab appears to be $450K. U.S. Food and Drug Administration import trade data shows around $1.6 billion in dental laboratory related sales was fulfilled by foreign dental laboratories in 2012. Some of it is getting directly outsourced, from US dentists, so may not figure in US dental lab data Global Outsourcing opportunity at 2x US number could be around $3.2bn in 2012 numbers, or about 25% of the total market
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US Lab business is consolidating

The number of dental laboratories in the United States has been steadily declining since 2008, dropping from approximately 12,000 to 7,050 dental laboratory businesses reporting a payroll in 2013
Whats driving consolidation 48% of laboratory owners are more than 55 years old and nearing retirement age Higher cost of set up; it takes a minimum $200K to setup a lab, from $20K 15-20 years ago. The rise is due to higher dental technology ADA-accredited dental lab technology programs down 62 percent since 1992. Today, there are 18 programs capable of producing only 300 technicians per year Rising trend to regulate amongst US states. Four states have labelled dental prosthesis as Class II medical devices (there was no such classification earlier). More states expected to follow. Higher regulatory pressure will hurt small labs Outsourcing is the way forward; local technician population is shrinking
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Corporates in Global Dental Business
Dental Clinic Chains - USA

Aspen Dental Founded in 1964 as a dental lab, started clinics in 1981. Present in 433 locations Acquired by PE Fund Leonard Green & Partners in 2009 for $500mn from another PE fund Ares Management LLC, which bought Aspen in 2006 for $91mn Smile Brands Group Inc Founded in 1998, now 1,300 in nearly 400 offices Operates under the brands: Bright Now! Dental, Castle Dental and Monarch Dental Has changed hands between PE firms 3 times. Freeman Spogli bought Smile Brands from Gryphon Investors in 2005 for about $340 million. In 2010, Freeman sold to Welsh
Carson Anderson & Stowe
American Dental Partners (ADP) Founded in 1995, is among the largest US chains Was listed on Nasdaq till PE fund JLL Partners acquired 100% in Feb12 for $398 million ADP was affiliated with 27 dental group practices, which have 282 dental facilities and about 2,400 operatories in 21 states at the time of acquisition
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ReachOut Healthcare America (RHA) Started in 1997, specialises in mobile dental services, providing dental care at schools, workplace and military establishments In 2011, coordinated dental care at 8,700 schools and coordinated the processing of 488,000 children in those schools. Handles 1.5 million patients annually Acquired by Sentinel Capital Partners in 2007 (80% for $22mn), sold to Morgan Stanley in 2010 at reported 6-7x gains Kool Smiles Founded in 2002, present in 100+ locations in the USA In 2011, two million patients visited Kool Smiles clinics Acquired by Friedman Fleischer & Lowe in 2004 Midwest Dental 75 clinics in 6 states Acquired by Friedman Fleischer & Lowe in 2011
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Brighter Dental Care Small regional dental chain, with 13 outlets Was acquired by Topspin LBO and AUA Private Equity in May12 Great Expressions Dental Centers 40 year old chain, with over 150 outlets Acquired by PE firm Audax in 2008
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Dental Chains - EU
Integrated Dental Holdings, UK Europes largest dental corporate company Employs more than 2500 dental professionals in 550 dental clinics, caters to 10 million patients Owned by Carlyle and Palamon Capital Partners Oasis Dental Care, UK UKs second largest chain with 202 outlets FY13 revenue was 150 million, EBITDA 19mn Owned by PE fund Bridgepoint, which acquired 100% for 219 million in 2013 Colosseum Dental, Norway Founded in 1986, Colosseum has clinics 26 clinics across Scandinavia Acquired by IK Investment Partners in 2010. In FY09, Colosseum had revenues of NOK 382 million and an EBITDA of NOK 38 million. Swiss Smiles, Switzerland Small Swiss chain started in 2002, also present in UK and India. PE fund EQT invested CHF 44 million in Aug10
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Dental Chains - Asia

Q & M, Singapore Established in1996, now the largest private dental healthcare group in Singapore, with 2012 revenue of around Rs 2.80bn, net profit margin of 9%. 3 year CAGR of 24% for revenues Listed, current market cap around Rs 9.35bn, PE of 33x , and Price/Sales of 3.3x 52 clinics, 4 Dental Centres in Singapore, Malaysia. Starting to build business in China. Has 10 clinics spread over Beijing, Nanjing and Shanghai Formed JVs with two Chinese Labs: He Cheng Yiwu and Shenzhen New Perfect. Will invest S$25mn in these. Plans 50 dental clinics and 20 dental laboratories in China by 2015.
Tokushinkai & World Lab Inc, Japan Operates in 10 countries worldwide, including 41 dental clinics and 13 technical centers, employs approximately 2,500 people Owns World Lab Inc, a dental lab. World Lab has 7 centres 4 in Japan, 2 in US, and 1 in China.
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Dental Clinic Chains - ANZ

Dental Corporation Holdings Largest chain of Australia and New Zealand 190 dental offices with more than 450 dentists Revenues of A$339 million (US$357.3 million) in 2012 Fortis sold 64% stake in DCH to BUPA at an estimated A$270 million in Dec12, valuing the company at ~1.25x sales 1300 Smiles Ltd - Australia Listed on the Australian Stock Exchange since 2005 Australias 4th largest dental chain with 25 units Revenues of A$35m and net profit of A$6.4mn in FY13 Market cap ~ $164mn, quotes at
25x PE (trailing) and around 21x one year forward Over 4.5x trailing sales, and 4x likely forward sales
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Dental Clinic Chains - ANZ

Abano Healthcare New Zealand Listed on New Zealand Stock Exchange Started in 1999, first as a diagnostics business, entered dental in 2003 Entered Australian dental market in 2008, now the second largest there 138 dental clinics, 75 in Australia Revenue of $207mn, EBITDA $28mn and net profit $4.5mn in FY13 Market cap of $115mn. Quotes at
Trailing PE of 25x EV/EBITDA of 7x
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Global Dental Labs

Modern Dental Laboratory, China Claims it is the largest Dental Laboratory in the world and houses the largest dental technology school in the world. Started in 1976, from Hong Kong. Key production facility now in Shenzhen, China, over 3000 technicians Has four distribution centres in US: Chicago, Los Angeles, Seattle and Boston. Glidewell Dental Laboratory Established in 1970, based in California, USA Invests in R&D, has patented products like BruxZir (zirconia crowns) which are globally popular Has more than 1000 employees Veden Dental Laboratory Australian Company 36 years in operation, 1300 technicians, has production in Gaungdong, China
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Global Dental Labs

National Dentex Corporation, USA Founded in 1982, claims to be USAs largest dental lab business Believes having local labs is a better idea than a large centralised facility. Has ~40 labs spread through USA, built largely through acquisitions Went public in 1993 on Nasdaq, went private in 2010, when it got acquired by GDC Holdings Inc (in turn owned by PE fund Welsh, Carson, Anderson & Stowe) for $100mn In 2010, had annual revenues of ~$160mn Elysee Dental Founded in 2001, Elysee Dental operates in four European countries (Netherlands, Belgium, Denmark and Spain). One of the largest dental laboratories in the world with approximately 2,500 employees Has a parter lab in Asia where it outsources for cheaper production PE fund Synergia Capital Partners invested in 2009 The Dental Services Group or Sentage Corporation, USA Founded in 1989, acquired by PE fund Bolder Capital, LLC in 2005 Has 26 labs in United States, Canada and Mexico Serves 10,000 dentists with 800 technicians
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Global Dental Labs

Flemming Dental GMBH, Germany
Founded in 1996, 1600 employees operating in 50 locations in Germany Had a turnover of over 70m in 2009 Acquired by PE fund Auctus Capital Advisors AG in 2011
Swift Dental Group, UK
Founded in 1984. Operates from 6 sites in the UK Has done 6 acquisitions over the years
New Perfect Dental Lab, China
13 laboratories in major cities with over 1,000 college certified technicians Q&M of Singapore bought 49% in 2010 for S$19.2 million
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Global Dental Labs

Microdental Laboratories, USA / Canada Claims to be the fourth largest dental laboratory in the world. Began as Total Management Services Inc. (TMSI) in Alberta, Canada in 1994 Changed name to Dental Technologies Inc. (DTI), went public on the Canadian Venture Stock Exchange in July, 1999 Acquired by PE fund HealthpointCapital LLC in 2006 Serves 6,500 dentists in 50 states and six countries. 15 sites and 700 employees throughout North America Novadent Inc, USA 9 labs and 350 technicians Owned by PE fund Birch Hill Equity Partners
Dental Lab Holdings, LLC
Holding company formed by PE fund Beacon Bay Holdings to acquire dental labs Has done 2 acquisitions: daVinci Dental Studios, a nationally branded highly aesthetic dental lab leader, and NuLIfe, a leading dental lab in the New York metro area with implant expertise
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PE owned/invested dental clinics chains

Dental Clinic Chain Aspen Dental, USA Smile Brands Group Inc American Dental Partners (ADP), USA Fund Leonard Green & Partners Welsh Carson Anderson & Stowe JLL Partners
ReachOut Healthcare America (RHA) , USA Morgan Stanley PE
Kool Smiles, USA

Midwest Dental, USA Great Expressions Dental Centers, USA Brighter Dental Care, USA
Friedman Fleischer & Lowe

Friedman Fleischer & Lowe Audax Topspin LBO and AUA Private Equity
Integrated Dental Holdings, UK

Oasis Dental Care, UK Colosseum Dental, Norway Swiss Smiles, Switzerland
Carlyle and Palamon Capital Partners

Bridge Point IK Investment Partners EQT
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PE owned/invested dental labs
Dental Lab
Fund
Elysee Dental , Netherlands

Sentage Corporation, USA Flemming Dental GMBH, Germany Microdental Laboratories, USA / Canada Novadent Inc, USA Dental Lab Holdings, LLC, USA
Synergia Capital Partners

Bolder Capital, LLC Auctus Capital Advisors HealthpointCapital LLC Birch Hill Equity Partners Beacon Bay Holdings
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Dental Services Market

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Sector: Healthcare Services

Dental Services Market

Indian Dental Services Market

Indian Dental Services Market

Indias dental opportunity

Indian Dental Services Market

Concentration varies widely

Indian Dental Services Market

Catchment Income affects dentist population

Per Cap Income

Indian Dental Services Market

Data comparison within states

Indian Dental Services Market

Urban areas have high dentist concentration

Indian Dental Services Market

Deriving Market Opportunity

Indian Dental Services Market

Growing dental education sector suggests underlying demand growth

Indian Dental Services Market

Indian Dental Services Market

High Prevalence of dental caries shows growth potential

Age Group 5-6 yrs

Urban (%) 67.23

Rural (%) 46.22

Source: National Commission on Macroeconomics & Health; Burden of Disease in India

* DMFT: Delayed, Missing and filled Teeth

Indian Dental Services Market

Dental disease prevalence & behaviour

Indian Dental Services Market

Key highlights of a dental incidence survey

According to a survey conducted by Synovate (a research agency) and sponsored by Colgate:

Indian Dental Services Market

Global Dental Data

Indian Dental Services Market

Dental Clinic business in the US: $167bn by 2015

Indian Dental Services Market

Dental Clinic business other countries

Indian Dental Services Market

Global Dental Lab Business: $14.5bn

Indian Dental Services Market

US Lab business is consolidating

Indian Dental Services Market

Corporates in Global Dental Business

Indian Dental Services Market

Dental Clinic Chains - USA

Indian Dental Services Market

Dental Clinic Chains - USA

Indian Dental Services Market

Dental Clinic Chains - USA

Indian Dental Services Market

Indian Dental Services Market

Dental Chains - Asia

Indian Dental Services Market

Dental Clinic Chains - ANZ

Indian Dental Services Market

Dental Clinic Chains - ANZ

Indian Dental Services Market

Global Dental Labs

Indian Dental Services Market

Global Dental Labs

Indian Dental Services Market

Global Dental Labs

Swift Dental Group, UK

New Perfect Dental Lab, China