SIC 3843
DENTAL EQUIPMENT AND SUPPLIES



This classification comprises establishments primarily engaged in manufacturing artificial teeth, dental metals, alloys, and amalgams, as well as a wide variety of equipment, instruments, and supplies used by dentists, dental laboratories, and dental colleges. Excluded from this classification are dental laboratories that construct artificial dentures, bridges, inlays, and other dental restorations on specifications from dentists; these are classified in SIC 8072: Dental Laboratories.

NAICS Code(s)

339114 (Dental Equipment and Supplies Manufacturing)

Industry Snapshot

Essential to the practice of dentistry, the dental equipment and supply industry represents a modestly sized market and, in terms of sales, is considered to be one of the smallest industries, compared to the other medical supply and equipment industries. It is also an industry of expected growth due to increases in the cost of dental care, baby boomers taking better care of both their teeth and their children's teeth, and technological advances in dental equipment such as advanced root canal procedure machines, less expensive oral cameras, and the Food and Drug Administration's (FDA) approval of Perioglass, a surface-active, bone-grafting material.

Dental equipment and dental supplies are regarded as separate markets, with some companies manufacturing only supplies; some manufacturing only equipment; and others, generally the larger companies (with a diverse mix of medical products), manufacturing both equipment and supplies. These products are then sold to dentists, dental laboratories, and dental colleges.

Products manufactured by industry participants include dental chairs, dental hand instruments, and drills, which are considered equipment; and plaster, amalgams (alloyed metals used for filling cavities), and cements, which are considered supplies. Other products, more than 25,000 of them, include abrasive points, wheels, and disks; dental cabinets; denture materials; orthodontic appliances; and artificial teeth, which are not made in dental laboratories.

Dental equipment and supply manufacturers shipped a total of $3.11 billion worth of goods in 2000, compared to $2.66 billion in 1997. Manufactures continued developing niche products in the late 1990s, these are expected to become increasingly popular, fueling future industry growth. Examples include premixed temporary fillings (DenTek's Tempenol), reusable toothpicks, and plastic dental cleaning equipment for those who are "metal sensitive." These products are mostly sold through drugstores.

Organization and Structure

In the early 1990s, approximately 500 companies in the United States were manufacturing dental equipment and supplies as their primary business. The majority of these manufacturers were small-and medium-sized companies, with only 25 percent of the total employing 20 or more employees. The typical dental equipment and supply manufacturing establishment was half the size of the typical establishment in all other U.S. manufacturing industries, employing 26 people compared to the national standard of 54 employees per establishment.

By the mid- to late 1990s, larger medical supply companies also started to include dental products in their portfolios and changed the market from exclusive type manufacturers (small- to medium-sized companies) to multi-manufacturers (larger companies). Mergers and acquisitions became more common among medical companies to enhance the current product line for greater profits, and to share research and development costs of new dental products and supplies.

The bulk of the industry's manufacturing establishments were located in California, which contained 124 facilities in the early 1990s, leading all other states in dental equipment and supply production. New York was a distant second, with 48 manufacturing establishments; Illinois followed, with 39 facilities. Aside from the concentration of facilities on the West Coast, in the Northeast, and in the Great Lakes region, dental equipment and supply production was scattered throughout the country, with 25 states containing manufacturing establishments.

Background and Development

Manufacturers of dental equipment and dental supplies first emerged as an appreciable component of American industry in the 1890s, although the first manufacturers of such products undoubtedly originated much earlier, appearing during the genesis of the nation itself, when the practice of dentistry first began in the United States. In fact, the earliest progenitors of the dental equipment and supply industry were the dentists themselves, who made their own equipment in workshops adjoining their public offices. Over the ensuing decades, as the nation's population grew and the magnitude of the country's commerce increased, the production of dental equipment and supplies became distinct from the practice of dentistry, leading to the emergence of small, independent dental manufacturing companies by the latter half of the nineteenth century.

Once the manufacture of dental equipment and supplies became a distinct segment of the dental industry, characterized by small, frequently family-owned businesses—many of which appeared in the decade leading up to the turn of the twentieth century—the dental equipment and supply industry was truly born. During the next half century, the industry remained small, comprised of companies that generated a negligible amount of revenue. The modern version of the dental equipment and supply industry, which began to assume the characteristics of the industry in existence during the 1990s, would not emerge until the 1960s, when a combination of developments engendered a new breed of dental equipment and supply manufacturers.

By the 1960s, the scope of the dental equipment and supply industry widened considerably, and its market matured significantly, drawing the attention of would-be manufacturers and investors. The shift toward preventive dentistry altered the complexion of the dental equipment and supply industry, but it had not significantly changed the composition of the industry. Still primarily comprised of small, independent manufacturing companies, roughly 500 of them in the early 1960s, the industry continued in many ways to resemble itself 50 years earlier. Its sales volume still represented a modest sum, amounting to roughly $150 million per year as the movement toward preventive dentistry gained momentum. Still, it had not yet attracted large manufacturing concerns; its largest manufacturer, S.S. White Dental Manufacturing Co., generated $40 million in sales in 1961. The optimism pervading the industry, therefore, was not so much attributable to a dramatic transformation of the industry, but rather stemmed from the expectation of a future transformation.

During the early 1960s, American families on average were spending twice as much per year on dental care as they had 10 years earlier—the natural extension of a society growing increasingly more affluent—while the number of prepaid dental plans multiplied during the same period, covering approximately 700,000 Americans. These prepaid plans, coming from either private insurance plans or union-employer agreements, would grow exponentially throughout the decade and into the 1970s, fueling much of the optimism articulated by manufacturers and industry pundits during this 20-year period. Union-sponsored dental care plans proliferated after the landmark agreement reached between the International Longshoremen's & Warehousemen's Union and the Washington State Dental Association in 1954, when the first such program was initiated.

By the mid-1960s, thanks in large part to the growth of union dental care plans, the number of Americans provided with an opportunity for dental care increased to three million from the 700,000 covered roughly five years earlier. Also, Medicare, a U.S. government health insurance program for those over 65 years of age, and Medicaid, a program that provided medical care to those who could not pay for it, both came into existence in 1965, and promised to extend dental coverage throughout the country. By the end of the decade, the number of Americans covered by dental care plans doubled again in a five-year period and included more than six million people.

The increase in the number of potential dental care customers that sparked so much interest in the dental equipment and supply industry during the 1960s persuaded larger, conglomerate manufacturing companies with no previous vested interest in the dental field to begin dental equipment production. Many of the smaller, independent manufacturing concerns were absorbed by the incursion of these larger companies, altering the composition of the industry. Meanwhile, those manufacturers already in the industry were diversifying, applying the same technology used in the production of dental equipment to the manufacture of nondental products. Consequently, as this period of mergers and diversification occurred into the late 1960s, the typical manufacturer in the industry changed from a small, independent company, almost entirely devoted to the production of dental-related products, to a larger, more diversified manufacturer.

This transformation did not, however, have an equally significant effect on the industry's sales volume. From the $150 million generated by U.S. manufacturers at the beginning of the decade, the industry's sales volume only increased to roughly $280 million by the beginning of the 1970s, a total that seemed to belie the industry's growth in other areas over the course of the decade. Dental equipment manufacturers supplied two revolutionary pieces of equipment during the dental industry's emergence as a more visible sector of the health care field: the air-driven, high-speed drill and the reclining dentist's chair.

By the mid-1970s, approximately 30 million Americans were covered under some sort of dental care plan, which represented a tremendous increase during the previous 15 years. When this figure was analyzed to reflect the number of those who actually visited dentists, rather than the number who were provided the opportunity to visit a dentist, the reason for the industry's laggard growth in sales volume became readily apparent. Of all the people receiving dental care in the United States, only 15 percent were covered by dental insurance, compared to more than 90 percent for health care. Since a large proportion of the people covered by dental insurance opted not to receive dental care, the number of people insured in the country, which over the past 20 years had inspired much of the optimism within the dental equipment and supply industry, proved to be a misleading figure: the more people covered did not necessarily translate into an increase in the industry's sales volume.

Once this misleading measure of the industry's potential growth was removed, a clearer estimate of its true position within the larger health care field showed a relatively small industry, generating roughly $670 million in revenue in 1975.

As the industry progressed past the mid-1970s, when it was mired for several years in a global recession, its growth during the 1980s continued at a moderate rate. By 1982, the industry's sales volume increased to $1.11 billion, having eclipsed the $1 billion mark three years earlier. In the face of a sharp decline in the number of labor contract agreements that included dental care coverage, the industry's sales volume increased only marginally by the end of the decade, reaching $1.27 billion.

Ambiguity about U.S. health care reform and its effect on dentistry coupled with deleterious economic conditions during the early 1990s stunted the dental equipment and supply industry's growth in 1995, causing the value of its shipments to increase by only 2 percent to $2.39 billion, compared to the 14 percent growth recorded between 1993 and 1994. Projections for the industry's growth called for a 3 percent increase in aggregate revenue from 1995 to 1998, fueled in part by the growth of certain fledgling areas of dentistry, such as periodontal surgery, treatment with lasers, and cosmetic dentistry.

Dental products and accessories have become more specialized and targeted to end users: adults, children, and infants. Dental floss and dental picks, products for healthier gums, and premixed fillings are all examples of these niche products. The biggest product changes have occurred in children's dentistry. Various manufacturers added specialty-type products for children, including brighter colors, different packaging, timers to help children know when to brush, and smaller sizes.

During the 1990s manufacturers focused on gum care. Dental supply and equipment manufacturers built relationships within the community of 140,000 dentists by conducting research on dental care and publishing the results in various studies. For example, Bausch & Lomb conducted one of the largest ongoing studies on plaque removal by using different brushes on implant wearers to remove plaque.

Current Conditions

New product introductions in the late 1990s included advanced toothbrushes that enabled users to decrease the plaque formation around the gum line (for adults and children), and dental floss with fluoride, mint-flavored, whitening abilities, and a special feature called nonshredding, which prevents breakage of the floss. New ways of flossing were introduced that allowed users greater precision and control to reach plaque in between teeth by using specially designed prongs.

Other introductions in the dental equipment industry that are expected to increase sales to dentists are oral cancer tests, digital radiography (which decreases radiation exposure to the patient by 90 percent), "Save-A-Tooth" program developed by 3M, oral cameras that allow dentists an easier option for root canals, and more consumer-related dental products to increase patients' awareness of the importance of self-care.

The value of industry shipments grew steadily throughout the late 1990s, jumping from $15.23 billion in 1997 to $17.84 billion in 1999. Shipments reached a record $18.86 billion in 2000. That year, manufacturers spent a total of $1.14 billion on materials. Despite industry growth, the number of employees declined from 18,495 in 1998 to 17,409 in 2000.

Industry Leaders

Sybron Corporation, based in Milwaukee, Wisconsin, led the industry with sales of $960.7 million for the fiscal year ending September 30, 1998; Sybron employed 7,900 workers. The company's total unadjusted net sales for fiscal 1999 amounted to $1.1 billion. The company made six acquisitions during the year, requiring restructuring of its financial statements.

Block Drug Company, Inc., based in Jersey City, New Jersey, generated $821.1 million in sales during its fiscal year ending March 31, 1999. For the next six months (ending September 30, 1999), Block reported sales of $415.8 million, an 11.4 percent increase over the same period in 1998, after taking into account the effects of currency and the selling of its household products businesses. Block capitalized on this strength in December 1999 by approving a repurchase of 500,000 shares of its Class A Common Stock. Block is perhaps best known as the marketer of Polident, a widely popular brand name most closely tied to denture care products.

The industry's highest-ranking privately owned manufacturer, Dentsply International Inc. of York, Pennsylvania, posted sales of $795.1 million for its fiscal year ended December 31, 1998. Industry observers attributed the growth of Dentsply to acquisitions, baby boomer demand for dental care, and the improvement of dental care in developing countries. Only half of Dentsply's sales are domestic.

Braun, Sonicare, and Interplak, which were recently purchased by Conair, were the major players in the dental accessory market. These three companies all introduced rotary type toothbrushes that cleaned in between teeth. Rowenta introduced two new interdental brushes, Dentacontrol for adults ($80 retail) and Dentiphant for children ($25 retail). Glide led the industry in tooth floss sales, though it was a premium product at $4 per unit. Procter & Gamble marketed the best-selling denture adhesive, Fixodent. Block's Poli-Grip competed by growing its product line to include Poli-Grip Free, Super PoliGrip, and Ultimate Hold Poli-Grip.

Workforce

In 1997, the work force numbered around 17,806. The number of employees increased to 18,495 in 1998 and declined to 18,137 in 1999. Employees numbered 17,409 in 2000; of this total, 10,881 were production workers. Total payroll costs for 2000 were around $667 million.

Production workers in the dental equipment and supply industry generally earned slightly less than the national standard for production workers employed by manufacturing industries. In 1989, the typical production worker earned $10.49 per hour compared to the $10.31 per hour averaged by production workers in the dental equipment and supply industry. In 2000, the hourly wage for production workers in the dental equipment and supply industry climbed to $14.17.

America and the World

U.S. manufacturers controlled roughly half of the international market for dental equipment and supplies. This lead in the global dental equipment and supply market was largely predicated on the ability of U.S. manufacturers to incorporate high technology into the production of their merchandise. The dental equipment and supply markets in Canada, Germany, Japan, Italy, and France proved to be the strongest export destinations for U.S. manufacturers, while manufacturers in Germany, Japan, Switzerland, Italy, and France posed the greatest threat to the overwhelming lead of U.S. manufacturers in the global market.

Fluctuations in foreign exchange rates tend to work for the U.S. import market. In 1994 the United States had 62.3 percent of the import market, and further growth was expected. No customs duty was levied on medical, surgical, and dental instruments and supplies, which also had a favorable effect on U.S. dental supply and accessory sales.

China imported $737,000 or 30,910 kilograms of dental cements, dental fillings, and bone reconstruction cements in the first three quarters of 1996. Japan's imports of medical and dental equipment were expected to rise steadily from $3.33 billion in 1994. Imports from the United States accounted for 62.3 percent of the import market, totaling $3.51 billion in 1995 and $3.86 billion in 1996. Japan's expected introduction of social insurance for long-term care, improvement of government relations during the past decade, and a U.S.-Japan agreement on government procurement, all provided more opportunities for U.S. suppliers of health care products.

Further Reading

"Best-selling Denture Adhesives." Chain Drug Review , 6 January 1997, 19.

"Block Drug Company Approves Stock Repurchase." PR Newswire , 7 December 1999.

CorpTech Technology Industry Growth Forecaster , January 1997.

Darnay, Arsen J., ed. Manufacturing USA. 5th ed. Detroit: Gale Research, 1996.

"Dental Tech Firm Bites Into Sales." Crain's Small Business-New York , May 1996, 3.

"Dentsply to Buy New Image." Wall Street Journal , 26 December 1996, 125.

Infotrac Company Profiles, 21 December 1999. Available at http://web7.infotrac.galegroup.com .

"Inside Industry: US Biomaterials." Genetic Engineering News , 1 November 1996, 16.

"Japan Medical and Dental Equipment & Supplies Markets Are Steadily Increasing." Biomedical Market Newsletter , 30 September 1996, 6.

"Mergers and Acquisitions." Med Ad News , February 1996,15.

"New Flosses from Colgate." News Brief Journal , 2 December 1996, 46.

"A Next Step for Rowenta." HFN , 30 September 1996, 70

"Putting Teeth In Relationships." HFN , 8 April 1996, 70.

"Save-A-Tooth is Unveiled at Retail by 3M." Chain Drug Review , 20 May 1996, 18.

Schifrin, Matthew and Christopher Helman. "Streetwalker" Forbes , 27 December 1999.

"Shiseki-Ya Kun Teeth Cleaner and Mirror." International Product Alert , 19 February 1996, 13.

"Statistics: China Chemical Import & Export Data From January to October 1996, Part 80." China Chemical Reporter , 26 December 1996.

"Super Poli-Grip Denture Adhesive Cream." Product Alert , 9 September 1996, 26.

"Sybron International Announces Fourth Quarter Record Sales and Earnings." PR Newswire , 16 November 1999.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

"Zila Inc. to Absorb Bio-Dental Technologies Corp." Denver Post , 4 June 1996.



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