If you’re a dentist or own a dental practice, you must read this!

Dental laboratory corporates, they’re here! they have taken over and if you don’t play nice, your livelihood is on the line!

I said two years ago, after COVID,  was a prime time for dental laboratories to be taken over by corporate entities due to the way dental laboratories was treated during the COVID period and the way the cash flow has been for dental laboratories on a 28 day credit basis. The article I saw on a report stated that “the dental laboratory industry is ripe due to it being a fragmented market instead of a concentrated market”.

In the last year alone, over 50 dental laboratories have been part of acquisitions through out the UK with 2 – 3 main players dominating this space and new ones entering as of 2024.

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What is a fragmented market?
A marketplace in which no single company has enough influence to steer the industry in a specific direction. As a result, it comprises several small and medium-sized businesses that compete with themselves and larger companies. Since no single product dominates the market, companies often specialise in specific products to succeed. This specialisation can make it challenging to leave other businesses behind.

What is a concentrated market?
In a concentrated market, there are only one or two dominant players, making it challenging for new companies to gain customers. This is the opposite of a fragmented market. In fragmentation, there are many different players in the market and each may have their own niche or speciality. As a result, it is easier for new companies to gain customers and enter the market.

While on the other hand, concentration allows companies to establish a strong foothold in the market. A concentrated market also makes it easier for an existing player to dominate the market and increase their profits.

What does this mean for Dentists and dental practices?
When a market becomes concentrated instead of fragmented, it means the dominant companies in the market have more control on services, price structures, as there is less competition and less alternatives. This means, you may have to pay higher prices for your dental laboratory restorations and abide by their terms of business with less negotiation power. if they say it costs £50 for a NHS crown and it will take 15 days, you may have no option but to go with this as it would affect your own livelihood and the treatment care of your patients. This should not effect the quality of the products as they will usually have leverage over suppliers of materials to offer better deals on better quality materials and usually have the financial power for the work force, machines and equipment to facilitate this.

What can you do now?
Invest into a dental laboratory yourself and take an equity stake to maintain your position, create strong relationships with your existing dental laboratories. Ask your dental laboratory, will you be planning to sell? Is there a contract I can sign that will guarantee the prices remain the same if you decide to sell to a corporate? etc. The main thing is to plan ahead and stay ahead of the curve, speak with your dental laboratory today, ask them questions, work with them, I said it many years ago, be nice to dental laboratories, there's not many of us around.

Other areas of fragmented markets:

• Software development
• Retail
  
• Construction and labor
• Hospitality
• Finance and accounting
• Marketing and communication