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Dental Laboratories

THE U.S. DENTAL LABORATORIES INDUSTRY

(January 2005 – 3rd Edition)

TABLE OF CONTENTS

PAGE

Introduction - Study Scope, Methodology, Sources Used 1-4

Nature of The Business - How Dental Labs Operate #9; ($75) 5-12

Industry definition & structure, discussion of number of labs and fragmented nature, evolution of dental labs/technicians in the U.S., R&D, how labs are organized internally, typical services performed and products made (crowns, veneers, dentures, partials), who labs serve, definitions of restorative, recon- structive, cosmetic product groups, major customer groups, why the business is so labor-intensive, characteristics of lab technicians, list of dental lab technology programs in the U.S.

Executive Overview of Major Findings ($300) 13-31

Highlights of ALL report chapters: nature of the business, estd. number of dental labs in U.S. Analysis of major trends (consolidation, increased global competition, modest sales growth/effect of last recession, cosmetic dentistry boom, demographic factors favoring more dental spending/aging population, less fear of dentistry, dental school enrollment trends, findings of Peter Stein report, etc. National spending on dental care 1999-2010. Covers industry size/growth (lab receipts as % total dental care spending 1990-2003, Marketdata estimates of revenues for 1987-2003, 2004 & 2008 forecasts. 2002-2003 market performance. Results of 2004 phone survey of lab directors. Value of 3 major market segments 1998-2004. Includes labs’ key operating ratios from US Census: 1997-2002, lab worker wage trends - 2004 vs. 2002 , fee increases. Names/address of major multi-lab chains and competitors: National Dentex, Dental Services Group, Glidewell Labs,

DaVinci Dental Studios, Americus Labs.

Factors Affecting Demand For Dental Lab Services ($250) 32-60

Summary of Marketdata interviews with industry consultants and competitors, trade associations, special report by Peter Stein, other research sources:

  • Discussion of major factors driving the business
  • Emergence of cosmetic/appearance model
  • Patient needs: consumer demand for esthetics, frequency of dental visits (by age, income, gender, race)
  • Funding sources, insurance coverage
  • Dentists/service providers trends

Why the doomsayers have been proven wrong about the industry’s decline

Discussion of the aging of US population and impact of dental care, by age groups, baby Boomers, seniors, etc., 2025 projections

Factors Affecting Demand For Dental Lab Services (continued) PAGE

The dentist population (service providers), dental office demographics, supply of dentists & dental school enrollment trends, managed care impact on dentists/shift to group practices, dental care trends among the population

Orthodontic services market outlook, $ size/growth rate, patient cases & avg. fees: 1990-2003, typical practice characteristics.

Company Profile: Orthodontic Centers of America.

Funding measures: discussion of dental insurance/coverage of US population, managed care vs. fee-for-service, findings of "Oral Health 2000" Surgeon General’s report

Dental practice management: profiles of 13 dental practice groups across the nation

List of U.S. dental schools (name, address, phone, directorsz0

Tables:

  • National spending on healthcare & dental services: 1999-2010 projections
  • Share of people making at least one dental visit/year: 1997 & 1998 (by gender, age, race, region)
  • Percentage of people visiting a dentist or clinic, by state – 1999
  • No. of dental offices, by employment size: 1997-1999
  • No. of dental schools, enrollment, grads, 1st year enrollment: 1980-2003

Industry Size & Growth ($200) 9; 61-73

Sources of industry receipts data by: US Census of Mfg., Service Annual Survey, trade groups (NADL, ADTA), methods to estimate industry size.

Dental lab receipts as a % total U.S. dental care spending for 1990-2003 (estimates of indy. Size by ADTA, Deware Sloan)

Historical industry growth and during past recessions

Industry performance during 2002-2003, responses to Marketdata’s 2004 phone survey of lab owners regarding sales growth, biggest trends/factors affecting the business (new technologies, competition, outsourcing, price wars, supply of dental techs, etc.)

2004 outlook – results of phone survey, materials prices, effect of the overall economy, sales performance (2003-2004 growth) for top 6 multi-lab chains

2008 Forecast: Marketdata $ forecasts, growth rate projected, considering all demand factors, pricing, patient demographics, historical growth rate, economic outlook, insurance, projections by other industry consultants (Peter Stein), etc.

Cosmetic Dentistry Market Segment: discussion of, estimated $ value in 2004, estd. Growth rate.

Tables:

  • Value of industry receipts from Service Annual Surveys (1987-1998), $ value and
  • annual % changes
  • Dental lab receipts reported by Census of Mfg. For 1999-2002
  • Marketdata’s estimates of the true size of the industry (1987-2008 F), $ value and annual % changes
  • Major market segments: estimated value for 1998 & 2004 for: restorative, reconstructive, and cosmetic products.

Economic Operating Performance & Key Ratios ($250) 74-98

(2002 vs. 1997 Census data)

Summary & Analyses: clarification of 2002 Census of Manufacturing data, key statistics & snapshot of the industry: no. of firms, dental labs, value of shipments, no. of employees, value added by manufacture: 1997-2002, all 5 years.

Key ratios: 1997-2002

  • avg. shipments per establishment (labs)
  • payroll per employee
  • value added per employee
  • payroll as % shipments
  • hourly wages per production worker
  • capital expenditures per company
  • materials costs as % shipments
  • value added/payroll (labor productivity) ratio

Industry inventories, by type: 2002

Materials costs, by kind: 2002

Miscellaneous expenses, by type: 2002

Geographic analysis: top 5 states' share of U.S. sales, why California’s share has risen substantially due to cosmetic dentistry boom: top 5 states by… no. of labs, $ shipments, avg. yearly receipts per lab, share of national sales: 1992, 1997, 2002

Table: 35 states’ ratios for 2002: no. of dental labs, $ sales, avg. sales per lab

Ratios by employment size of lab

(1997 vs. 1992 historical comparisons) - Discussions of dental labs by.... number of companies/labs/employees/ avg. receipts per lab, legal form of company, mkt. share levels, single vs. multi-unit companies, labs by revenue size of facility, labs by revenue size of firm, national/state distribution top 50 firms’ share of industry receipts, avg. receipts per lab, avg. receipts & payroll per employee, payroll as % sales, industry composite balance sheet and profitability items, trends in profitability. ;

Census Tables: (some 2002 Census industry series not yet released)

- Dental labs, by legal form of organization: no. of estabs., receipts,

payroll as % receipts (1992)--corporations, proprietorships, partnerships

- Dental labs, by single vs. multi-unit firms (1992): no. of firms

and estabs., annual receipts, payroll as % receipts, 1-10 or more facilities

- Industry concentration (share of mkt.) -- top 50 firms (1992):

no. of estabs., receipts, payroll as % sales, top 4, 8, 20, 50 firms

- Dental labs, by annual receipts size of firms (1992), receipts from

$50 million to less than $100,000: no. of firms, estabs., annual sales, payroll,

no.of employees #9;

- Dental labs, by receipts size of facility (1992): classes under $10,000 to $10+

mill., no. of estabs., receipts, share of receipts, payroll as % receipts

- Number of dental labs by state, (1997, 1992): no. of services, receipts, avg.

receipts per lab

Composite industry Balance Sheet & Income Statement: 1998-2002 (Robert Morris Associates data) – discussion of the financial health of the industry.

PAGE

Dental Lab Operations - NADL Survey Highlights ($100) 99-107

Highlights of 1995 (latest) "Economic Conditions Report", discussion/analysis of:

- Dental labs’ principal product or service, by type (table)

- Primary expenses of labs (labor, materials)

- Fees - actions taken during 1994 healthcare reform talks

- Credit & collections, avg. collection period

- Lab staff - worker shortage, hourly pay rates, typical no. workers employed, staff

productivity (sales per employee), annual growth in productivity, male/female

composition of workforce

- Most common forms of business organization (corporate, partnership, sole

proprietorships, comparison to Census data)

- Avg. no. of customer accounts

Tables:

- Form of dental lab business organization, by employment size and annual revenue

size of lab (sole proprietorship, partnership, corporation, S Corp.)

- Avg. no. of dentists/dental practices/dental labs served, by lab employment and

revenue size

- Avg. expenses of supplies and materials (metal, teeth, materials), by employment

& revenue size of lab

- Avg. sales by technicians and by all employees, change in productivity, by

employment & revenue size of lab.

- Credit & collections: avg. share of credit sales, by age of account receivable, by

employment & revenue size of lab.

Dental Lab Staff Wages & Product Fees Trends ($150) 108-122

Select highlights of Lab Management Today magazine’s 2004 "Wage & Price

Survey" - comparisons to 2002 survey

Wages

Summary of major trends and key concerns of lab owners (lab worker incentives/

morale, major product fee and worker wage increases since 2002, profitability and owners’ pay impact, discussion of pay gains for entry level vs. experienced staff, bonuses, health insurance, flex-time.

Hourly and annual wages for ALL dental lab technicians in 2004, regional differences in salaries, increases by job function - who makes the most?

Tables:

  • Dental techs’ hourly wages: 2004 vs. 2002 for 13 job functions (by 0-8 yrs. experience): waxers, finishers, ceramists, model/die prep, other jobs)
  • Dental techs’ hourly wages: 2004 vs. 2002 for 13 job functions (by 0-8 yrs. experience), by LAB SIZE (no. of workers)
  • Dental techs’ hourly wages: 2004 vs. 2002 for 13 job functions (by 0-8 yrs. experience), By GEOGRAPHIC REGION
  • Who’s paid the most: jobs ranked by hourly wage.

Dental Lab Staff Wages & Product Fees Trends (continued)

Bureau of Labor Statistics Dental Lab Wage Data PAGE

BLS estimates of no. of U.S. dental lab techs, mean hourly wages, annual wages, for 2003

Tables:

  • States with highest concentration of lab workers (number, hrly and yearly wages)
  • Top paying state for dental lab technicians
  • Top paying metro areas for this occupation

Product Fees (LMT magazine survey data)

Analysis of 2004 vs. 2002 product fee increases, comments/feedback from lab owners regarding pricing, why labs often can’t get a fair price for their work, profitability trends, etc.

Historical Data: Wages Trends (2000 vs. 1998)

Discussion and analysis of wage increases, reasons for, relation to worker morale and turnover, dealing with lack of entry-level workers, fears about raising prices.

Tables:

- Percent of dental labs, by 1999 gross sales category

- Gross personal income of lab owners: 1997, 1999

Major Competitor Profiles ($200) 123-137

(In-depth profiles, covering: sales/profits when available, company structure, operations, description of services offered, financial performance (2002-2004 in most cases), recent lab acquisitions, address list of labs, headquarters, etc.)

  • National Dentex Corporation
  • Dental Services Group (Sentage Corporation)
  • Dental Technologies Inc.
  • Glidewell Laboratories
  • Da Vinci Dental Studios
  • Americus Dental Labs

Reference Directory Of Industry Trade Associations, Journals,

Consultants, Other Sources 9; 138-140

List of dental lab & dental national/regional trade associations, journals,

consulting firms, key contacts -- address & phones, websites.