Open orthodontic collection in multiple locations

Recently, the Shaanxi Provincial Public Resource Trading Center released the "Announcement on Centralized Quantity Procurement of Orthodontic Brackets for Inter Provincial Alliance (Region, Corps)", deciding to carry out centralized quantity procurement of orthodontic brackets in 15 provinces (autonomous regions, production and construction corps) including Shaanxi, Shanxi, Inner Mongolia, and Xinjiang. This is another dental medical consumables included in the scope of centralized procurement after dental implants. Industry insiders indicate that the current penetration rate of China's orthodontic industry is relatively low, and the implementation of special governance activities such as centralized procurement is expected to release patients' demand for dental care and improve the industry's prosperity.

Reduce price by at least 30%

From the procurement details, in this centralized quantity purchase, ordinary metal brackets, ordinary ceramic brackets, self-locking metal brackets, self-locking ceramic brackets, and non bracket orthodontic appliances are each divided into two groups A and B, with cheek tubes as bargaining products.

Sort the procurement demand of inter provincial alliance medical institutions in descending order, and select the top 70% (inclusive) of enterprises covered by the cumulative procurement demand of each product category as Group A bidding units, and the rest as Group B bidding units. If the number of effectively declared enterprises in Group A bidding unit is less than 5, they will be supplemented in descending order according to the procurement demand of inter provincial alliance medical institutions, until the number of effectively declared enterprises in Group A bidding unit reaches 5; If there are less than 5 declared companies in the same product category, they will all enter Group A.

From the perspective of price reduction, the minimum effective reduction for brackets and invisible braces without brackets included in Group A/B is 30%, otherwise it will be considered an invalid quotation.

According to the announcement, public medical institutions (including military hospitals) in Shaanxi, Shanxi, Inner Mongolia, Liaoning, Heilongjiang, Anhui, Henan, Guangxi, Hainan, Guizhou, Xizang, Gansu, Qinghai, Ningxia, Xinjiang and other provinces (autonomous regions, production and construction corps) that carry out oral orthodontics should participate; Voluntary participation in designated social medical institutions for medical insurance. The centralized procurement cycle for brackets, invisible braces without brackets, and buccal tubes is 2 years.

Penetration rate is expected to increase

There are two main methods of orthodontic treatment, namely traditional orthodontic therapy and invisible orthodontic therapy. Traditional therapy uses metal braces, lingual aligners, ceramic braces, and other visible aligners, while invisible orthodontic therapy uses custom produced removable invisible aligners. The cost of orthodontic treatment includes product costs and medical service costs, with product costs accounting for approximately 30% of the overall cost.

According to a report by Zhuoshi Consulting, from the perspective of retail sales revenue, the Chinese orthodontic market increased from 3.4 billion US dollars in 2015 to 7.9 billion US dollars in 2020, with a compound annual growth rate of 18.1%. It is expected that the size of China's orthodontic market will reach 29.6 billion US dollars by 2030, with a compound annual growth rate of 14.2% from 2020 to 2030. Among them, the Chinese invisible orthodontic market is expected to increase from $1.5 billion in 2020 to $11.9 billion in 2030, with a compound annual growth rate of 23.1%.

Guojin Securities believes that the current penetration rate of China's orthodontic industry is relatively low, and the implementation of special measures such as centralized procurement is expected to rapidly increase. At the same time, it will further drive the business volume of orthodontic related departments and meet the large number of hidden oral medical needs of patients. In addition, excellent oral healthcare service institutions in the future can also form new growth points by creating improved and differentiated demand pricing projects.

According to a research report by Western Securities, the invisible orthodontic market in China is growing rapidly, and there is still significant room for improvement in penetration rate. As more and more people are willing to receive treatment, the range of treatable indications is expanding, and the foundation of dentists is expanding, it is expected that the domestic invisible orthodontic industry will continue to maintain rapid growth.

Responsible Editor: Wu Jiaju

Source: China Securities Journal