Biting back: The strengthening economic climate should fuel demand for dentistry
London, United Kingdom (PRWEB) September 19, 2013
Great progress has been made in the past 50 years in understanding and acting upon common oral diseases such as tooth decay and gum disease. More people now retain their natural teeth for their whole life, which promotes sustained demand for dental services from Britain's ageing population. General health consciousness has also followed an upward trajectory, further boosting demand for dental services. According to IBISWorld industry analyst Robert Scotton, “the dental industry in the United Kingdom is heavily dependent on governmental subsidization which has plunged in recent years as a result of the squeeze exerted by the 2008 economic downturn and, more recently, healthcare reform”. Further depressed by falling private dental expenditure due to contracting disposable income, the Dental Practices industry revenue is expected to fall at a compound annual rate of 2.5% over the five years through 2013-14. Revenue is forecast to suffer a more modest fall of 0.6% in 2013-14 before settling at £6.2 billion.
The industry outlook is slightly more promising. Scotton adds, “as the economic downturn abates and household disposable income begins to grow, private expenditure on lucrative industry services is expected to follow suit, lifting bottom line”. Following an unsettled period as the industry adjusted to NHS reform, public industry spending is also likely to begin rising to cater to growing demand. Industry revenue is forecast to grow over the five years through 2018-19, largely reversing losses incurred over the past five years.
Industry profit margins, however, are likely to be squeezed by intense competition and rising labour costs as practices fight to carve out market share. Larger dental chains have started to make their mark on the industry, enjoying rapid growth through acquisition. This trend is expected to continue into the future. As a result, smaller operations struggling on the back of economic hardship are likely to become takeover targets.
The four largest firms in the Dental Practices industry are estimated to account for just 9.2% of industry revenue in 2013-14, which indicates that the industry has a low level of concentration. However, industry concentration is increasing as the major players merge with smaller practices to widen their geographic spread and broaden the range of services they offer. In 2006, amendments to the Dental Act granted that companies could own a dental practice and allowed non-dentists to own shares and be involved in the management of companies operating dental practices. In the past five years, private equity companies have begun to acquire dental companies and practices with the intention of building scale and consolidating the industry. These companies state that they can create economies of scale and benefit from the way NHS contracts are awarded. There are already economies of scale in regulatory compliance, IT and systems, purchasing, marketing, staff recruitment and retention and negotiations with the NHS. Major companies include Integrated Dental Holdings, Oasis Healthcare and Dr J D Hull & Associates.
For more information on the Dental Practices industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
This industry includes health providers that practice general or specialised dentistry or dental surgery. These practitioners operate private or group practices in their own offices or in alternative facilities, such as hospitals.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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