EUR 850.00 For Business Accounts Only

Morningstar | Straumann Facing Strong Dental Market Headwinds

Straumann has made a name for itself as a global leader in the dental implant industry, consistently gaining market share from competitors through product launches, strategic acquisitions, and operational expansion. The implant market, which provides patients with a cost-effective option for single-tooth replacement, remains one of the more attractive segments of the dental industry, in our view. This market typically grows slightly faster than global GDP, thanks to increasing oral health awareness, low reimbursement risk, and an aging population. Furthermore, Straumann’s implant volume benefits from the growing number of general practitioners placing implants.While we expect these tailwinds to continue in the short term, we remain concerned about the implant industry’s longer-term shift toward lower-margin products. Straumann's growth, margins, and returns on invested capital have consistently improved after its 2012 Neodent investment, which marked its entry into the value implant market. The company’s internationalization of the Neodent value portfolio has helped Straumann steal market share from key competitors, including Dentsply Sirona and Danaher. We note that Straumann’s entry into emerging markets like China and India are primarily driven by nonpremium products. Growth of nonpremium products, which command weaker prices, should gradually dilute Straumann’s margin. Additionally, higher growth of value products, especially among general practitioners, makes the customer base less focused on product differentiation, in our view.The company’s ClearCorrect acquisition marks its orthodontic entry into the clear aligner market, which should help drive near-term growth. Straumann’s international operations and implant cross-selling opportunities create some potential with Straumann’s strategy of becoming a total solution provider in tooth correction. While we expect this segment to benefit from Align’s manufacturing patent expirations, we remain skeptical that the company can create sustainable competitive advantages in the segment, as we believe the category will become more competitive.