Analysts predict bright future for global CAD/CAM market

Aug. 6, 2012

I recently saw the following release on

Global Dental CAD/CAM System Market Will Grow Strongly to $540 Million by 2016
Chairside System Segment to See Strongest Growth, According to Millennium Research Group

According to Millennium Research Group (MRG), the global authority on medical technology market intelligence, the global dental CAD/CAM system market will grow strongly to reach a value of more than $540 million by 2016. This market will see particularly strong growth in its chairside segment. Furthermore, Japan will see stronger growth overall than Europe or the United States.

The dental CAD/CAM system market was affected by the global economic slowdown, but is resuming strong growth as economies improve. These improvements are being seen in the United States and Japan now, while European countries, particularly the United Kingdom and Italy, are not expected to see improvements until 2014 or later.

The chairside segment, which permits dentists to have CAD/CAM functionality in their offices, will show the most significant growth worldwide. From around 50 percent of this market in 2010, chairside systems and intraoral scanners will hold nearly 60 percent of a much larger market by 2016.

As a result of demand from dentists for chairside systems, there will be a number of new competitors entering the market through 2016, which will lead to greater competition and a downward pressure on selling prices. The low penetration of CAD/CAM technology into the dentist office setting leaves significant room for growth, promising substantial revenue gains. In the US, for example, 3Shape’s TRIOS scanner will capitalize on dentists’ interest in replacing traditional impression-taking methods with digital techniques. The marketing of this intraoral scanner, along with new devices from Laserdenta, MHT (to be rebranded by Zfx and Clon 3D), Dimensional Photonics International and a.tron3d, will dramatically expand the market.

“The Japanese market will see the most dramatic growth through 2016,” said MRG Analyst Brady Baker. “This market is extremely underpenetrated, but at the same time has a large number of technologically savvy dentists who are seeking a marketable advantage in their practice. Because the ceramic dental restorations associated with CAD/CAM technology are not reimbursed by national health insurance, reimbursement cuts to competing traditional metal restorations will actually improve the relative cost of ceramics.”

Sirona continues to dominate the overall market, competing strongly in the laboratory segment and holding a significant majority of the global chairside system segment. The company will face increasing competition in the chairside market following the expected entry of additional competitors into several geographies by 2016.

Millennium Research Group’s Global Markets for Dental CAD/CAM 2012 report includes procedure, unit, average selling price and revenue information, along with market drivers and limiters and competitive landscape for laboratory and chairside dental CAD/CAM systems sold in the United States, France, Germany, Italy, the United Kingdom and Japan.

Seeing this, I had some questions for Mr. Baker...

Proofs: Why do you think CAD/CAM is growing so strongly in a time of economic uncertainty?
Some of that feeling is coming from the current low penetration CAD/CAM has in the market. When you start with already low numbers, any increase can represent strong growth. Because so many dentists have yet to invest in CAD/CAM technology, there is a lot of room for growth in the global CAD/CAM market. There are somedentists who will be in a position to make the investment. Furthermore, CAD/CAM technology is still in the early-adoption phase of its penetration curve. Adopters in this portion of the curve tend to be less cost-conscious than later-adopters.

Proofs: Do you see the growth in CAD/CAM as an overall indicator that dentists are ready to spend on big-ticket items?
Baker: Again, I think we're still in the early adoption phase for CAD/CAM. I think we're in a market where market revenues can be expanding healthily, but the dent the technology is making into the overall population of dentists is minimal. The adoption of CAD/CAM, however, will accelerate as new dentists will come out of dental school with a familiarity/preference for the technology. As the younger dentists take over more practices, the awareness of CAD/CAM will increase.

Proofs: You mentioned some of the new products coming to market. Do you believe those can challenge market-leading Sirona?
Baker: The bulk of new products I see coming to market will be products related to intraoral scanners. Those don't compete directly with Sirona, because Sirona's focus remains on the CEREC complete chairside system. Make no mistake, the new products I mention are going to be important products for the dental industry, but they probably won't challenge Sirona in the short term. I think there will be some erosion when the new products are available, but it won't be a significant amount. Let's face it ... Sirona is synonymous with CAD/CAM technology and is a very well recognized name.

Proofs: What other thoughts do you have on the introduction of these new intraoral scanners?
Baker: In the short term, there will be an overall growth in that market and there will be a drop in prices because of the entrance of new competition, and because of the end of the "charge-what-the-market-will-bear" mentality on the part of manufacturers. I see upfront costs going down, which will make this market more attractive to dentists as lowered prices soften a key barrier to adoption.

Proofs: What trends are you seeing to show Japan as the next "hot market" while the U.S. and Europe won't grow much until after 2014?
Baker: The American and European CAD/CAM markets are a little more mature than the Japanese market. Japan's numbers started from an extremely small base. There has been very low penetration by CAD/CAM in the Japanese market. Part of the reason for that is the stronger regulatory hurdles that must be cleared. There are a high number of Japanese dentists, and many view this technology as a competitive advantage. That will contribute to its growth.