Business Area Dental Implants

Business Area Dental Implants

Nobel Biocare offers the market’s most completeimplant system for the permanent replacement of lost teeth. The group has a complete pro d u c tp rogram when it comes to both indications andcustomer pre f e rences and market segments. Thew o r l d ’s two leading product systems, BrånemarkS y s t e m® and Steri-Oss®, are marketed withinBusiness Area Dental Implants. To g e t h e r, the two brands have a global markets h a re of some 40% and are the leaders on everyi m p o rtant market.

Sales on major markets Sales in 1998SEK 1,170.2 M (1,019.8)

Percentage of group sales 89.3 % (95.5)

Nordic countries 12%

Others 15%

North America 32%

Europe41%

Enhancing quality of life by per-manently replacing lost teethThis business area focuses on the devel-opment, production and marketing ofdental implants, i.e. permanent replace-ments for dental roots in patients whohave lost one or more teeth. The treat-ment is based on a medical phenomenonknown as osseointegration, which meansthat the body tissues integrate with themetal titanium. The systems NobelBiocare offers comprise the differentcomponents and instruments that areneeded for treatment, as well as trainingprogrammes and manuals for oral sur-geons, dentists, dental nurses and dentaltechnicians.

Implant treatment gives the patienttruly enhanced quality of life. As animplant provides a permanent replace-ment for a tooth, the patient recovershis/her chewing ability, appearance andsocial confidence. Implant treatmentdoes not require healthy adjacent teethto be ground down, as conventionaltherapy does. Moreover, the treatmentalmost always lasts for the rest of thepatient’s life, unlike a standard bridge,for example, which has an average life of eight years.

Nobel Biocare is prospecting the mar-ket for dental implants using two power-ful brands, Brånemark System® a n dS t e r i - O s s®. These brands complementone another effectively and cover most

of the customer preferences for special-ists and general dental practitionersalike.

Brånemark System — the mar-ket’s most reliable implant s y s t e m The Brånemark System® b r a n dname re p resents what is by far the mosttested and documented implant system inthe world. This system is based on 35years of clinical experience and at least fiveyears of clinical studies have been con-ducted for every type of implant indica-tion, with a success rate of 90-99 perc e n t .

Implant treatment with BrånemarkSystem complies with the rigorousrequirements patients set for permanenttooth replacements and produces anesthetically pleasing solution, which lastsfor the rest of the patient’s life in the vastmajority of cases. The first patient wastreated almost 35 years ago and, sincethen, more than 700,000 patients world-wide have been given new teeth usingBrånemark System. The success of thebrand name is based on three core values— safety, reliability and esthetics.

Steri-Oss — innovative implant system with great freedom ofchoice In September 1998, NobelBiocare acquired the leading US dentalimplant company Steri-Oss, whichoffers a wide range of innovative surgicaland prosthetic components.

Steri-Oss supplies implants with diffe-rent types of surface coating and has aparticularly strong position and top-classexpertise when it comes to implants withwhat is known as an HA (hydroxyl apatite) coating, a substance which isdesigned to accelerate integrationbetween the implant surface and the jawbone.

These products are characterised byuser-friendliness and offer dentiststremendous freedom of choice. This hashelped to give the system a powerfulposition among general dental practi-tioners, especially on the US market.Steri-Oss® is the most rapidly-expandingimplant system in North America. Thenew Replace™ product program accountsfor a significant part of Steri-Oss’ salessuccess.

Good market growth in NorthAmerica and Europe It is estimatedthat the global market for dental implantsincreased by 5-10 percent in 1998.

The market value is estimated ataround SEK 3.5 billion, of which NobelBiocare, including Steri-Oss, accountedfor about 40 percent.

Nobel Biocare recorded a steady in-crease in sales during the year in NorthAmerica and Europe and growth onthese markets exceeded the averagegrowth on the global market. Thegroup’s growth was, however, affected

Steri-Oss is included with four months of sales in 1998.

negatively by the economic crisis inAsia and by the decline in demand inSweden and delays to import permits inBrazil.

Steri-Oss’ sales on the global marketincreased by around 15 per cent in1998, in spite of a decline in demandfrom distributors who were reducingtheir stocks prior to the takeover byNobel Biocare. The sales increase forBrånemark System was 2 percent.

Sales trends on major markets

USAAfter a weak start to the year, sales im-proved during the second half and theyear ended with a very strong finalquarter. In all, sales in Brånemark Sys-tem increased by 7 percent comparedwith 1997. Steri-Oss’ sales improved byaround 25 percent for the whole yearcompared with 1997. The total marketgrowth for dental implants in the USAwas between 5-7 percent in 1998.

Sales in Brånemark System impro v e dsharply during the second half of 1998,p a rtly as a result of successful product in-t roductions such as Simpler in Practice™

and the pre-launch of the new fixturesystem for soft bone, Mk IV.

Steri-Oss recorded continuing salessuccess with its new implant systemReplace™, which comprises new and in-novative products and a colourcodingsystem to simplify the use of the system.

SwedenThe company succeeded in keeping itsmarket shares for Brånemark System ata very high level in Sweden, in spite ofconstantly increasing competition on astagnating market. The acquisition ofSteri-Oss has the potential significantlyto improve the company’s competitivestrength in Sweden and it is expected tohelp the company maintain its powerfulposition on the market, as it will enablenew customer groups to be prospected,among other things.

The new dental insurance system whichcame into force on 1 January 1999 willstill give patients good protection fro mhigh dental costs and will also compriseimplant treatment. Overly high pricei n c reases by dental care providers onthe new deregulated dental marketcould re p resent a potential threat to con-tinued growth on the Swedish market.

GermanyBrånemark System improved its markets h a re on the German implant market,which is characterised by a temporarydecline in volumes as a result of the with-drawal of insurance protection for den-tal implants on 1 January 1997. In spiteof this, Brånemark System recorded asales increase of some 10 percent and a significant improvement in marketshares. The focus on partnership withcus-tomers and the successful launch of Simpler in Practice™, the one-stageOverdenture Pillar implant, the Osseo-Care™ drilling machine and the pre-launch of the new soft-bone fixture, the Mk IV, contributed to BrånemarkS y s t e m ’s success.

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Steri-Oss experienced satisfactory salestrends on the German market via itsdistributor. This distribution agree-ment will be terminated and sales willbe integrated in Nobel Biocare’s salesorganisation in Germany.

The acquisition of Steri-Oss willmake Nobel Biocare the leading suppli-er on the German market with an esti-mated market share of some 26 perc e n t .

Other European marketsGrowth in Brånemark System onEuropean markets, apart from Sweden,remained at a stable level during theyear. Average growth totalled 14 per-cent and thereby exceeded the totalgrowth on these markets. The market,which is extremely competitive and hasno patient reimbursement of any kind,is expected to continue to experiencegood growth in 1999.

On 1 January 1999, Nobel Biocaretook over responsibility for sales for theSteri-Oss product programme from the previous distributors in the UK, the Netherlands, Spain, Belgium,Switzerland, Austria and the Nordic

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The acquisition of Steri-Oss makes Nobel Biocare the clear market leader with some 40 percent of the world market and marketleadership on every important market, such as North America, Germany and Japan. The smaller bar represents Nobel Biocare’smarket share prior to the acquisition.

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countries. Responsibility for sales onother European markets will beassumed by the end of September 1999.

JapanThe decline in the Japanese economyled to a reduction in sales in BrånemarkSystem of some 14 percent in 1998. A slight improvement was recordedduring the fourth quarter and thisrecovery is expected to continue in1999. In Japan, the current Steri-Ossdistributor will be retained for the saleof this product range.

The Japanese market represents avery interesting opportunity for futurerapid growth, as the older members ofthe population are affluent and, at thesame time, implant treatment is startingto be known and accepted on an in-creasing scale by large patient groups.

South-East AsiaThe economic crisis in South-East Asialed to a decline in sales of 40 percent inthe region compared with 1997. Thisnegative trend was reversed during thefourth quarter and, in the longer term,the development potential on this mar-ket is regarded as good.

Operations in South-East Asia havebeen co-ordinated with those inAustralia and constitute a new marketregion, Asia/Pacific. This will result incost synergies for management andadministration.

BrazilIn Brazil, the company set up its ownsales organisation in 1998 — to takeover market prospecting from the cur-rent distributor. The necessary permitsfrom the authorities have, however,been delayed and marketing under thecompany’s own management cannotstart until May 1999. In combinationwith the economic situation in Brazil,this resulted in a decrease in sales of 25percent in 1998.

Product launches Frequent launch-es of innovative products play a decisivepart in the growth of this business area.The long-term target is that 30 percentof sales should be accounted for byproducts which have been launchedduring the past three years. In 1998,new products accounted for 20 percentwithin Brånemark System and 30 per-cent within Steri-Oss. A powerfulintroduction programme has beenapproved for 1999.

The new Simpler in Practice™ prod-uct program was launched on all markets in 1998 and sales exceeded theplanned level. This method resemblesconventional dental care when it comesto prosthetic treatment and simplifiesimplant care. The new OsseoCare™

drilling equipment with its unique diag-nostic functions for implant installa-tions was launched in March 1998 andsales for the year were on a par withplan. A totally new fixture program designed to avoid bone transplantationin conjunction with advanced bone resorption was successfully launchedunder the name of Zygoma™. In addi-tion, the Overdenture Pillar, a simpli-fied implant system which is installed inone stage, was introduced. A new fix-ture system for so-called soft bone, Mk

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Sales in major markets

Nordic coun-tries 12%

Europe 41%

North America 32%

Others 15%

Steri-Oss is included with four months of sales in1 9 9 8 .

Market segmentation for different implant types

HA-coated surface 18%

Machined surface50%

Other coatedsurfaces 32%

The implant market is divided into diff e rent im-plant types based on customer pre f e rences. Im-plants under the Brånemark System® brand namehave what is known as a machined surface, while80 percent of implants under the Steri-Oss® b r a n dname have HA-coated and other coated surf a c e s .

1. The quality of the bone inthe jawbone varies fro mh a rd to very soft, poro u sbone. It can be difficult toget an implant to integratep roperly in really soft bone.Using the new Mk IV fixturewithin Brånemark System®,patients with soft bone can be treated with goodresults. The conical shape ofthe fixture and the doublet h reads produce unique stability the moment the f i x t u re is installed.

2. 3. The Replace™ i m p l a n tsystem within Steri-Oss® i scharacterised by freedom ofchoice and user- f r i e n d l i n e s s .The system offers implantsto suit every customer pre f-e rence and the implantscome with a number of dif-f e rent surface stru c t u re s .The systematic colour cod-ing of all the components,i n s t ruments and packaginghelps to ensure that tre a t-ment is straightforw a rd andc o s t - e ff e c t i v e .

4. The OsseoCare™ drill isequipped for both the surg i-cal and prosthetic parts oft reatment. The machinealso has a number of diag-nostic functions, to measurethe patient’s bone qualityand select the optimal posi-tion for the implant, fore x a m p l e .

5, 6. Nobel Biocare has twop roduction units for dentalimplants — in Karlskoga inSweden and Yorba Linda inthe USA. The production ofcomponents for medicaldevices imposes rigoro u sdemands on precision andquality assurance. The pro d-ucts for dental implants arep roduced in so-called multi-operation machines whichmill the small titanium com-ponents. Quality contro l ,cleaning, sterilisation andpackaging are an import a n tp a rts of the pro d u c t i o np ro c e s s .

7. Part of the Steri-Ossrange is made up of whata re known as HA-coatedimplants. A robot is used tocoat the components withh y d roxyl apatite, a sub-stance which helps to accel-erate integration betweenimplant and jawbone.

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I V, was given a pre-launch in S e p t e m b e r1998 and the reception was extre m e l ypositive. The global launch of this fix-t u re system will begin in March 1999.

Product launches in 1998 withinSteri-Oss comprised an extension ofthe successful Replace™ implant system.Sales of Replace increased by morethan 100 percent compared with 1997and accounted for a quarter of Steri-Oss’ total sales.

P roduct segmentation The de-mand for implants can be divided intot h ree diff e rent types, depending on theimplant surface — machined, HA-coat-ed and other coated implants. NobelB i o c a re offers products to suit every cus-tomer pre f e rence. Implants under theBrånemark System brand name havewhat is known as a machined surf a c e ,while about 80 percent of Steri-Oss’sales are accounted for by implants withs u rface coating.

C o m p e t i t o r s Following the acquisi-tion of Steri-Oss, Nobel Biocare has sig-nificantly strengthened its global posi-tion and now has a market share of some40 percent, as well as improving its posi-tion on the three largest implant markets— the USA, Germany and Japan.

Nobel Biocare’s leading competitorsare Straumann/ITI (Switzerland), Friadent (Germany) and ImplantInnovations Inc./3i (USA).

Market conditions More than 200million people, which corresponds toaround 30 percent of the adult popula-tion in the industrialised world, havesome form of edentulousness. In theage group over 65, 40-60 percent arefully edentulous. Of these, some twomillion — i.e. one percent — have sofar been treated using dental implants.

In the USA alone, some two millionteeth are lost every year. More than 35million Americans have full dentures orbridges and 60 percent of these patientsfeel that they have problems with thesedevices, according to official statistics.

Market penetration is therefore low,in spite of the fact that, for very largegroups of patients, implant treatment is the best solution to edentulousness.Some of the most important reasonswhy more patients have not receivedimplant treatments are as follows:• the cost and length of treatment• the general public’s lack of know-ledge and awareness of implants • treatment is only offered by a limited number of dentists.

The potential market is estimated ataround SEK 12 billion, based on thepenetration obtained in Sweden. TheSwedish market has the highest pene-tration with 44 implants installed forevery 10,000 inhabitants and year. Byway of comparison, Italy and Switzer-land have a penetration of around 80p e rcent of that in Sweden, Germ a n y

about 45 percent, the USA just over 40p e rcent and Japan and the UK 5-10 per-c e n t .

The average cost to the patient of asingle-tooth implant is around SEK12,000, which is somewhere in theregion of 25 percent higher than tradi-tional treatment. The advantage is thatthe adjacent teeth do not need to beground down. The global average costof replacing all the teeth in one jaw isaround SEK 80,000, with large varia-tions between different countries.Implant components account for 15-20percent of the cost of treatment. Therest is accounted for by the fee to thedentist/oral surgeon and dental techni-cian. At the present time, Sweden is theonly country in which the patientreceives reimbursement for part of thetreatment via a general insurance sys-tem. The treatment takes between oneand nine months, depending on thescope and the quality of the bone.

Market prospecting Nobel Biocarehas its own sales organisations in 24countries. Following the acquisition of Steri-Oss, the two companies’ salesforces will be co-ordinated. The sales of Steri-Oss’ products, which have been made via distributors in Europeand Latin America, will be graduallytaken over by Nobel Biocare in 1999.

On the US market, the two com-panies’ market organisations have beenmerged. The sales force comprises 80people and is therefore twice as large asthat of the closest competitor. A com-prehensive training programme for thetwo product systems has been complet-ed and each sales person offers bothBrånemark System® and Steri-Oss® tohis/her customers.

Nobel Biocare numbers some 24,000dentists among its customers. They arejoined by around 6,000 dental laborato-ries. Only 20 percent of the dentists inthe industrialised part of the worldoffer their patients implant treatment.

To make implant treatment availableto larger groups of patients, NobelBiocare is involved in developments inseveral areas:• simplified treatment methods• functional, cost-effective implant systems for new patient groups• training programs to increase the number of dentists offering implant treatment

Market penetration/potential

Number of implants sold/10,000 inhabitants a year

The implant market is expanding by 5-10 percent a year, but the level of penetration is low. Thepotential market is estimated at SEK 12 billion at the very least, based on the penetration achieved inSweden. The market value in 1998 was estimated at around SEK 3.5 billion.

Potential SEK 12 billion

Implant market todayaround SEK 3.5 billion

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• market activities aimed directly at thegeneral public to stimulate demand.

As a result of the merger with Steri-Oss, Nobel Biocare has substantiallyincreased its market shares and will befocusing on more systematic marketingaimed directly at patients.

Nobel Biocare ’s home page off e r se l e c t ronic services at a Customer Center.Customers can order products, searchfor published scientific articles and takepart in a discussion forum with col-leagues from all over the world. Thetarget is that 10-20 percent of sales willbe made via the Internet a couple ofyears from now.

This home page also contains infor-mation aimed directly at patients whocan obtain information and look for theanswers to the most frequently-askedquestions about implant treatment(www.nobelbiocare.se).

Research and development In1998, 6 percent of sales income wasused for research and the developmentof new and innovative products and treatment concepts. The national andinternational contact network was extended still further to strengthenlong-term research on the interactionbetween the implant surface and thesurrounding tissue.

The acquisition of Steri-Oss has fur-ther strengthened the research and de-velopment organisation, with skills andexpertise in areas such as HA and othersurface coatings. A new research organ-isation has been set up; it is based inGöteborg and has two product devel-opment teams in Göteborg, Swedenand in Yorba Linda, USA.

R&D focuses on developing implantalternatives which will reduce the costof treatment with no change in func-tion. Examples of these systems includeimplants that can be loaded directlyafter installation and implants with so-called bioactive surfaces. A great deal ofweight has also been placed on identify-ing research projects which focus onimplant treatment for patients with toolittle bone or poor bone quality.

Another interesting developmentarea is individualised prosthetics, inwhich Procera® technology is beingused to reinforce the implant offer.

SafetyReliabilityEsthetics

InnovationFreedom of choiceUser-friendliness

Streamlining product supplyDuring the spring, the US productionunit for Brånemark System in Oglesbyin Illinois was closed and the productionof these components was concentratedin Karlskoga, Sweden, which will resultin large-scale improvements in pro-ductivity.

For a number of years, the Karlskogaunit has been systematically working todevelop its quality system in accordancewith both ISO 9000 and TQM. Thishas resulted in a high and stable qualitylevel, significant reductions in leadtimes, fewer internal rejects and anannual improvement in productivity of around 10 percent.

In recent years, the technology basein Karlskoga has been extended, follow-ing the start of production for new com-ponents such as Procera® Abutment andProcera® All-in-One. In addition, theproduction processes for preparationand production have been developed toenable the next generation of productsto be produced effectively.Even closer collaboration between thedevelopment organisation, purchasingand some of our suppliers has enabledsubstantial savings to be made. At thesame time, the lead times for the devel-opment of new products have beenreduced.

Following the acquisition of Steri-Oss, the co-ordination and optimisationof the group’s production units inKarlskoga and Yorba Linda has been initiated. In combination with the co-ordination and streamlining of the supplier structure, this will lead to sig-nificant savings.

Streamlining the distributions t ru c t u re In April 1998, the centralw a rehouse was transferred fro mKarlskoga to Almere in the Netherlands.During the year, direct deliveries fro mthe central warehouses in Almere to cus-tomers in Germ a n y, the Netherlands,Belgium and the Nordic countries weregradually introduced. As a result, we havebeen able to rationalise and close our locals t o res in these countries, while incre a s i n gthe availability of products. At the end of1999, the Almere warehouse is expectedto be able to make direct deliveries to allour customers in Euro p e .