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January 2010 | dlpmagazine.com
Forward Trends

Dentistry without borders

How emerging technologies and new business models can connect you to a global market.

by Richard Palmer

Photo: Comstock/Getty Images

It is a small world after all.

And getting smaller every day, in a variety of ways that assuredly will affect U.S. dental laboratory owners. A few thought leaders within (and outside) the dental industry see unlimited potential for growth in a Pangean economy; some view automated digital technologies as a practical means to replace a shrinking workforce and streamline or expand workflow; others see the international predominance U.S. laboratories hold in the field of cosmetic dentistry as providing  an edge on foreign labs. However, the scenario unfolds, the consensus points toward the coming end to the traditional ways of doing business.

Moving in

As the world becomes not hundreds of disjointed economies but a single interconnected market, business owners in the United States need to rethink the way they historically have viewed the competition. Chuck Yenkner, President of Business Development Associates and DLP “Business Strategies” columnist, believes that most U.S. labs have several disadvantages against their overseas counterparts. “If you look at the U.S. lab population, about 80% of the labs have five technicians or fewer, basically small businesses,” he said. If you look at international export labs, they’re big companies. And they’ve been doing international business since their inception.”

The concept of the large, centralized, full-service lab is as foreign to the U.S. lab industry—traditionally comprised of small, independent operations—as the idea of high-end cosmetic dentistry is to foreign labs. Glidewell Laboratories and Trident Dental Laboratories pioneered the industrial model of the dental laboratory in the United States and have shown that this type of lab—which is more the norm in Europe and Asia—can work here. Well-known lecturer and educator Lee Culp, CDT, Vice-President of Digital Technologies at D4D Technologies, predicts that smaller labs will fade away and eventually will be replaced by “huge industrial factories creating teeth.”

Another common business model in the United States and Canada is the gradual buildup of a chain of labs (e.g., NDX, DTI, or DSG) into a connected network. Yet, a trend is emerging centered on consolidating and networking of independent small-to-mid-sized laboratories through mergers and acquisitions coming from investment firms—some outside the dental industry and increasingly others outside the United States. These outsider investors, such as Bolder Capital and Healthpoint Capital, see the growth potential in dentistry as well as the industry-wide fragmentation of the small-business landscape and have established footholds in the U.S. dental market through the purchase of individual labs or lab groups to create or expand a network.

“Big business is looking at dentistry right now,” Culp said. “Large corporations are coming in because they see the fragmentation and they see the growth in dentistry. Even though we’re in a bad economy now, that will go away.” He related an occasion where he was approached after one of his presentations with forward-looking questions about laboratory workflow and business processes. At first, Culp said he thought the woman was a lab owner or otherwise connected with the dental profession, but she introduced herself as the head financial analyst for medical devices from Deutsche Bank in London who was at the dental meeting gathering information to advise clients on investing in dental businesses. “She told me, ‘We now feel that there is money to be made in dentistry,’” Culp said.

In addition to investment firms eyeing the fragmented U.S. dental lab industry for consolidation, European-based laboratories also have taken an interest in moving into the American market.

Biodenta, a Swiss company, has taken a growing interest in the dental market in the United States and is moving ahead on expansion plans to capture a market share from franchise locations. It recently purchased a lab in Bethesda, Md., and is in the process of constructing a centralized milling center that will accommodate work from future DentaSwiss lab-partners in the United States and Canada.

“We have started to promote this model, and we will have another 20 labs under contract by January,” said Morten Brunvoll, Executive Chairman of Biodenta Swiss AG. “Our ambition is to place another 50 scanners in the United States next year.” Biodenta also has milling centers in Europe, Brazil, the Middle East, and Asia that handle only work from their specific region as part of Biodenta’s decentralized/centralized production concept.

Biodenta developed an alternative business model that allows veteran lab owners as well as those just entering the field to become part of a global franchise brand known as DentaSwiss through the incorporation of proprietary technology. “Our philosophy is completely different from the other big players,” said Brunvoll. “We have a franchise concept where we basically rent the scanners and you send all the milling exclusively to our milling center.” As part of the franchise model, DentaSwiss labs receive a wealth of support, including training, business assistance, and marketing services.

Optident Ltd., a U.K. dental supplies company with a laboratory business, also recently moved into the U.S. lab market by opening a U.S. satellite in Oregon in addition to its UK and China labs. According to Randy Leininger, President of Optident USA, the three separate labs focus on specific types of cases based on their market strengths. The U.S. lab specializes in highly esthetic smile design cases; the U.K. center deals with implant cases; and the Asian facility concentrates on posterior work. All of which are available to the global market.

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