BDTA Profile of British Dental LaboratoriesExecutive Summary-October 2012 I.

Background

The British Dental Trade Association is committed to providing sales statistics to members concerning every aspect of the UK dental business. This is the eleventh year that the BDTA has published a report including comprehensive sales statistics for the laboratory market. The UK laboratory market offers certain challenges in this area. There are a number of specialised distributors that concentrate on the lab business exclusively and there are a number of smaller manufacturers who offer their products directly to labs. The Statistics Committee of the BDTA, chaired by Peter Gowers of Panadent, have set the following objectives for this research: a. Determine the relative position of each brand in all major UK laboratory categories. b. Determine the average spend per laboratory for each category and estimate the average size of each UK lab category. c. Deliver information on lab purchasing decisions and lab business trends. II.

Methodology

Laboratories were randomly selected from a list of all UK dental labs to ensure representation of smaller and larger labs. 300 labs were contacted by telephone and agreed to participate and were sent survey forms in the post. Data was collected via a follow-up telephone call which averaged ten minutes in length. A total sample of 266 was achieved (some lab owners did not complete the survey). Response was incentivised via the use of a £10 voucher for the laboratory owner who answered the survey. In the final tables, all responses are categorised according to specific lab characteristics. There are significant differences throughout the study on the basis of the size of labs and whether the lab primarily does NHS work or not. There was close consistency between the demographic profiles of this year’s and last year’s laboratory sample. The laboratory sample this year has the following characteristics: (due to the lack of response to some questions, total respondents may not always add to 266 total respondents)

BDTA 2012

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Total sample (266)  Sole trader (88) vs. Partnership (48) vs. Limited Company (130)  Owner’s experience as a lab technician 20 Years or Less (35) More than 20 years (231)  30 or Fewer Accounts Serviced (143) vs. More than 30 Accounts Serviced (123)  Customer base has increased in past twelve months (90), remained the same (124) or decreased (52) 

III. Overall Conclusions a) The percentage of NHS work being done by UK laboratories (45%) was down from 50% in the prior year. b) 46% of the UK labs sampled in this report service more than thirty accounts (up from 39% last year). c) Use of laboratory management software is at 45% of responding labs, up from 37% last year. d) The most important issues that UK lab owners face are new legislation/regulation, business growth, and just staying busy (no change from last two years). e) The percentage of labs with internet access continued to increase this year. Almost threequarters (74%) of labs have access in their labs (68%last year). f) Prosthetics remains the largest component of lab turnover, with no change from last year (52%).Crown & Bridge was reportedly the second largest component of lab turnover (34%-up 1% from last year, 35%). g) Articulators (20%) and Micromotors(31%) represented the most often ordered categories of Lab Equipment in 2011. h) Only 18%of responding labs (down from 31% last year) made an equipment purchase of more than £2,000 in the last year. i) Consumables sales in the categories projected here generated sales of £42.2MM. j) Precious Metals sales were £20.7MM. k) The largest Consumables categories were Teeth and Implants & Implant Accessories. l) The fastest growing categories were Implants & Implant Accessories and Casting Alloys. IV.

Summary of Findings 1. General Lab Characteristics

Of the laboratory owners interviewed, the vast majority (93%) were men. One-quarter of responding laboratories were located in Northern England (25%) and nearly a quarter in London/Southeast (24%) and the Midlands (23%). More than four-in-five respondents (87%) BDTA 2012

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have been a lab technician for more than twenty years.More thanfour-fifths (82%) of responding labs were DLA members. The majority (64%) had 3 technicians or fewer with only 6% of labs responding having more than 10 technicians. 2. Components of UK Dental Laboratory Turnover The largest percentage of turnover for UK dental labs comes from Prosthetic cases accounting for approximately 52% of turnover (no change from the prior year). Crown & Bridgerepresented more than one-third (34%)of average lab annual turnover. Implants were up slightly to 9% (+1 pt. from prior year) of average turnover. Virtually all (98%) of responding labs reported that 0-5% of their supplies are purchased abroad and that 0-5% of their work is outsourced overseas. For the vast majority of labs, overseas outsourcing does not appear to be a significant component of their business. A majority of responding labs did at least some Prosthetics (75%) and Crown & Bridge (54%). A smaller proportion of labs do at least some Implant (40%) and Orthodontic (26%), Total Percentage of Lab Turnover by Lab Procedure (N=266) Procedure Prosthetics Crown & Bridge Implants Orthodontics

This Year (2011)-Mean Turnover by Procedure 52% 34% 9% 6%

Last Year (2010)-Mean Turnover by Procedure 52% 35% 8% 5%

3. Profile of UK Lab Customers 54% of UK labs have thirty or fewer active accounts and 20% have ten or fewer accounts. There were a number of large commercial labs in the sample with 10% of all labs having more than 100 active accounts. About one–third (33%---down from 37% last year) of lab owners reported an increase in customers with 20% (up from 19% last year) of respondents seeing a decline in the number of accounts from year-to-year. Among those who reported an increase in customers, the majority (78%) reported an increase in customers of 10% or less, while 22% reported growth of 11% or more. Only 52 respondents reported a decrease in customers over the year. In total,10% reported a loss of less than 10%, whereas 9%of the total sample reported losses greater than BDTA 2012

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10%. Over the next twelve months, the majority of lab owners (60% vs. 61% last year) project no change in their business while 32% (versus 30% last year) project a business increase. Larger labs are statistically more likely to be more optimistic about business prospects for next year. Nearly one-quarter of labs (23%) reported an increase in NHS work this year (the same as last year). On average, responding labs reported 45% of their turnover coming from NHS sources in 2011---down from 50% last year. Private work is up to 54% of derived turnover on average, up from 50% for 2010. 44% of respondents report that more than half of their turnover comes from Private; conversely 48% reported that more than half of their turnover came from NHS. Of the 266 respondents, 64 labs (24%---up 4% from last year) do only private work. Among labs that do denture work, it was reported that, on average, 44% of turnover derived from denturework came from Private/Independent. Whereas 56% of turnover derived from denture work came from NHS. One-third (33%) of Crown & Bridge cases were All-Ceramic. Total Percentage of Lab Turnover by NHS vs. Private and Other Sources (N=266) Procedure NHS Private Other

This Year (2011)-Mean Turnover by Source of Case 45% 54%