In a recent post on PitchBook, a leading resource for comprehensive data, research, and insights spanning the global capital markets, private equity reporter Janelle Bradley writes in her article "Private Equity Companies Struggle with Dental Investments," that "healthcare-focused private equity managers are struggling to exit their dental investments, and problems overpay and retention are only making matters worse."
Michael Ventriello.
This is a well-written article worth reading, but it is clearly focused specifically on the dental service organization (DSO) market, which has cooled a bit, forcing DSOs to focus more on increasing their same-store sales rather than acquiring or building additional locations. Investor pressure is primarily driving this strategic pivot.
Despite this DSO investment dilemma, the dental industry is still a wise investment, especially if you focus on the latest advances in dental technology, in particular those of paradigm-shifting capabilities.
In fact, the dental technology market is poised for substantial growth, fueled by increasing demand for advanced dental services, technological innovation, and favorable demographic trends. According to recent market reports, the global dental market is expected to reach $37 billion by 2027, growing at a compound annual growth rate (CAGR) of 7.7% from 2020 to 2027.
The potential for transformation
The dental industry is undergoing a transformative phase, driven by rapid technological advancements that promise to enhance patient care, improve clinical outcomes, and streamline operational efficiencies.
The burgeoning dental technology market presents multiple compelling investment opportunities for individual investors, venture capital firms, and private equity groups.
Dr. Shervin Molayem.
Any DrBicuspid.com reader is keenly aware that advancements in dental technology are reshaping the industry, offering innovative solutions across various aspects of dental care.
Key technological breakthroughs include digital imaging, computer-aided design and manufacturing (CAD/CAM), 3D printing, teledentistry, and artificial intelligence (AI)-driven diagnostic tools. These technologies are enhancing the precision and efficiency of dental procedures and expanding the scope of dental services.
Below are a few hot growth sectors.
Digital imaging
Digital imaging technologies, including intraoral scanners and cone-beam computed tomography imaging, are revolutionizing dental diagnostics and treatment planning. These tools provide high-resolution, 3D images of a patient's oral cavity, allowing for more accurate diagnosis and better-informed treatment decisions.
The digital dental imaging market is projected to grow at a compound annual growth rate (CAGR) of 8.6% from 2021 to 2028, reaching $4.8 billion by 2028. The rising prevalence of dental disorders, coupled with the increasing adoption of digital imaging systems, is driving this growth.
3D printing
3D printing is emerging as a game changer in dental technology, enabling the rapid and cost-effective production of custom dental appliances, surgical guides, and prosthetics. The ability to produce complex structures with high precision and minimal waste is driving the adoption of 3D printing in dentistry.
The global 3D dental printing market is projected to grow significantly in the coming years. It is anticipated to grow at a remarkable CAGR of 20.2% from 2021 to 2028, reaching $9.5 billion by 2028. The versatility and cost-effectiveness of 3D printing technology are driving its widespread adoption in the dental industry.
Teledentistry
Teledentistry is expanding access to dental care by allowing remote consultations and follow-ups. This technology became particularly relevant during the COVID-19 pandemic, highlighting its potential to improve patient convenience and reduce the need for in-person visits.
The teledentistry market is expected to continue its upward trajectory as more practices integrate virtual care into their services. The market is forecasted to grow at a CAGR of 16.3% from 2021 to 2027, reaching $2.6 billion by 2027. The convenience and accessibility offered by teledentistry are key factors contributing to its rapid growth.
AI
AI is being integrated into almost every aspect of dental care, from diagnostics to treatment planning and patient management. AI-powered tools can analyze large datasets to identify patterns and provide insights that enhance clinical decision-making. The potential of AI to improve accuracy, efficiency, and patient outcomes is driving investment in this area.
The AI in dentistry market is expected to grow at a CAGR of 17.4% from 2021 to 2026, reaching $1.5 billion by 2026. The integration of AI into dental practices is enhancing diagnostic accuracy and operational efficiency, driving investment in this technology.
On the horizon: Microbiome therapies
The potential for using microbiome-targeted therapies for disease prevention is a significant change. By reducing the incidence of conditions like periodontal disease and caries before they take hold, the dental industry can shift from reactive treatment to proactive health-preserving strategies.
This approach not only improves patient outcomes but also has the potential to reduce the long-term costs of dental care and the treatment of chronic systemic conditions such as heart disease, diabetes, arthritis, low birthweight babies, Alzheimer's disease, and even some forms of cancer.
The market for microbiome-targeted therapies is poised for significant growth. This expansion is driven by an increasing understanding of the microbiome's critical role in human health and disease, technological advancements in genomics and bioinformatics, and rising investment in microbiome research and therapeutics development.
According to a report by Allied Market Research, the global human microbiome market was valued at $1.7 billion in 2019 and is projected to reach $9.9 billion by 2027, growing at a CAGR of 22.6% from 2020 to 2027.
Investor caveats
We are living in dentistry's dot-com era of startup activity, and you may be exposed to over 100 new companies seeking funding. Many dentists are leveraging their deep industry knowledge to diversify their income through strategic angel investments of token amounts of $50,000 to $100,000 at a time.
By investing in startups that are solving real clinical problems -- especially those they have experienced -- clinicians are ensuring that their practices stay at the forefront of innovation while also reaping financial rewards from the growth of these innovative companies. This trend is opening new avenues for collaboration between dental practitioners and the entrepreneurial community, accelerating the pace of innovation across the industry.
Before you leap into angel investing, it is important to fine-tune some key denominators when deciding which company of technology to invest in. Darius Somekhian, a dental business strategist, entrepreneur, and investor has a threefold formula he uses to evaluate dental investment opportunities: Traction, leader accolades, and key performance indicators, or KPIs:
- Traction: Is the company growing? If they are postrevenue, check whether their historical revenue growth had a 10+% in monthly recurring revenue growth and for how long. If it's lasted for more than a year, then you have a winner in that department.
- Leader accolades: Are the company's founders proven winners? What have they accomplished in the past? Are they PhDs in this field? Have they had a prior exit? The more yes answers there are, the more likely it is the company will succeed.
- KPIs: Here you want to see a company with above a 51% gross profit margin. What's more, velocity of growth is a KPI that determines company valuations.
Conclusion
The latest advances in dental technology offer exciting investment opportunities for individual investors, venture capital firms, and private equity groups. The promising growth projections, driven by technological innovation and increasing demand for advanced dental services, make the dental technology market an attractive investment destination. By strategically investing in this rapidly evolving industry, investors can capitalize on the transformative potential of dental technology and achieve substantial returns.
Disclaimer: This article is not intended to provide investment or financial advice. Always conduct due diligence and consult with your financial planner, accountant, or tax attorney for qualified professional advice before making any investment.
Editor's note: References are available upon request.
Michael Ventriello is the owner of Ventriello Communications and is widely recognized as the "Dental Launch Expert." He specializes in developing strategic marketing and public relations programs needed to launch game-changing dental companies and products. Ventriello is also a dental industry pundit and author. Contact him at [email protected].
Dr. Shervin Molayem has practiced as a periodontist in Southern California for the past 14 years. He is the founder of the University of California, Los Angeles and University of Southern California dental research journals, which have been published for 16 and 14 years, respectively. He is the co-founder of Pair Dental, now a Cloud Dentistry company. Molayem is an investor and adviser to several dental technology companies. He can be reached by email at [email protected].
