Invisible orthodontics has become one of the hottest tuyere on the oral track.

In the middle of this year, dental invisible orthodontic institutions$Angelalign Technology Inc. (06699.HK) $Landing in Hong Kong stocks caused investors to rush to buy, soaring 132% on the first day, with a market capitalization of nearly HK $70 billion. Since the submission of the prospectus in January, Angelalign Technology Inc. has received widespread attention in the capital market, with the IPO stage being more than 2, 000 times oversubscribed.

Investors are crazy bet on Angelalign Technology Inc. behind, in fact, the entire invisible orthodontic track is optimistic.According to the statistics of Burning knowledge Consulting, the number of orthodontic cases solved by invisible appliances in China increased from 47000 in 2015 to 335500 in 2020, with an annual compound growth rate of 47.7%. It is expected that 3.8 million cases will be reached in 2030, and the market has good room for growth.

More importantly, the invisible orthodontic track has been proved by the market to be able to give birth to Daniel stocks.In the past decade, the share price of Yinshimei, the leader of the industry, has increased more than 30 times. Therefore, when there is an invisible orthodontic company with excellent business performance in the domestic market, investors are undoubtedly fanatic. after all, scarcity is an important factor in investment decisions.

The market space of rapid growth, coupled with the potential for the birth of Daniel stocks.Invisible orthodontic track attracts more and more enterprises.According to the research of Zhongtai Securities, as of January 2021, there are 125 valid invisible orthodontic product registration certificates in China, which are held by 104 companies. In other words, more than 100 enterprises have obtained the registration certificate of invisible orthodontic products alone.

In addition,In the primary market, invisible orthodontic enterprises also obtain financing frequently, and the amount of financing per round is generally at the level of 100 million yuan.

But on the other hand,The vast majority of enterprises have not yet gained a foothold in the market.For example, among the companies that have obtained product registration certificates, only 31 companies are providing invisible correction services. Most of these manufacturers have only a single appliance product, and no more than 5 have complete stealth correction products and technologies.

Why does invisible orthodontics form a huge tuyere? What is the core barrier of the industry? Under the "duopoly" pattern of Yinshimei and Angelalign Technology Inc., do other enterprises have a chance to come out? What are the difficulties in the whole track? How do enterprises find the path of differentiation? In response to these questions, Arterial Network interviews senior institutions and enterprises in the industry in order to get a glimpse of the answers to the questions.

With high gross profit margin and high unit price, why are invisible orthodontics so profiteering?

When it comes to invisible orthodontics, many people will think of the word "profiteering".

This is because the information revealed by the two major industry leaders, Yin Shimei and Angelalign Technology Inc., shows thatThe gross profit margin of both invisible orthodontics is as high as 70%.According to the general standard of the industry, the gross profit margin is more than 50%. The ultra-high gross profit margin makes invisible orthodontics known as "oral Maotai".

On the other handThe unit price of high passengers has also become the standard in the invisible orthodontic industry.. Searching the price of mainstream braces (orthodontics) in the market, we can find that the price of traditional steel wire braces ranges from 10, 000 yuan to 20, 000 yuan, while the price of invisible braces is even higher, with domestic brands ranging from 20, 000 yuan to 30, 000 yuan and imported brands from 40, 000 yuan to 50, 000 yuan As a result, invisible orthodontics is also known as "Oral Herm è s".

Behind the "profiteering", one is the difference between invisible braces in technology and product experience.Compared with traditional braces, invisible braces have the advantages of beauty and comfort, and can greatly reduce the pain of patients. In addition, thanks to the rise of digital orthodontic technology, users can visually see the treatment effect of each step before treatment, which is the barrier formed by the integration of multi-disciplinary technology, so the premium of invisible orthodontics is higher.

Second, due to the scarcity of dentists, doctors' fees account for a large part of the total cost of treatment."the price of the leading brand is about 80,000 to 20,000, and the price has doubled when it is sold to users, and the price difference is mainly to cover the expenses of the clinic, of which dentists have the highest cost. The founder of a dental clinic in Chongqing told Arteria Network that the reason behind this is that orthodontics is very dependent on the ability and experience of dentists, but there is a shortage of talents in the industry as a whole.

The data of cautery consultation can prove that there are about 277500 general dentists and 6100 orthodontists in China in 2020, which is equivalent to 19.5 general dentists and 0.4 orthodontists per 100, 000 people, compared with about 158000 general dentists and 10800 orthodontists in the United States. Compared with 47.8 general dentists and 6100 orthodontists per 100000 people, the dentists in China are obviously underequipped.

To sum up, we can seeInvisible orthodontics undoubtedly has the characteristics of a good business: high unit price, high gross profit, and relatively scarce in the supply side (dentist) in the short and medium term, which is an important factor for it to become a tuyere.But in addition, the popularity of capital also attaches great importance to the sustained and rapid expansion of the industry, which is related to the long-term needs of users.

So pull the perspective back to the demand side. First of all, from the point of view of the disease, due to the increasing fineness of modern food and other reasonsThe incidence of malocclusion such as uneven dentition has increased significantly, and the demand for orthodontics continues to be strong.

Furthermore,The rise of the beauty economy has made people willing to pay for needs such as teeth that are not white and neat enough.The superposition of the two makes invisible orthodontics a high-quality choice for users.

"as long as they are not particularly price-sensitive users, they will basically choose invisible orthodontics because they are more beautiful and more comfortable. The founder of the oral clinic said. The rapid growth trend of the number of invisible orthodontic cases can support this claim. Research figures from Sino-Thai Securities show that from 2015 to 2019, the number of invisible orthodontic cases increased from 47800 to 303900, with a compound annual growth rate of 58.8%.

In addition to the overall demand, the segment of the invisible orthodontic market is also extending more possibilities.

For example, the space for early correction of children is being released. Data from Zhongtai Securities show that the prevalence rate of malocclusion in children during the replacement period has reached 71.2%. At this stage, the periodontal tissue and jaws have great plasticity, the effect of correction is twice the result with half the effort, and the current market penetration is low, and the long-term market space is expected to reach 50 to 60 billion.

For example, the subsidence space of third-and fourth-tier cities needs to be excavated. First-and second-tier cities account for about 70 per cent of the invisible orthodontic market, with market growth of 53 per cent from 2015 to 2019, slower than 66 per cent in third-tier and below cities, according to Sino-Thai securities. With the sinking market layout of oral terminal service institutions and invisible correction enterprises at the same time, the consumption potential of third-tier and lower cities needs to be explored urgently.

It is based on the growing market potential and good cost structure that the invisible orthodontic industry has become a high-quality track sought after by investors, and has given birth to leading enterprises such as Yinshimei, Angelalign Technology Inc., Zhengya, Zhengli and so on. and attract more and more entrants.

What is the core barrier of the invisible orthodontic industry?

In the face of invisible orthodontics, which is a billion-level market, what is the core competition barrier of the industry? In other words, in the competition, what capabilities (technology, products, channels, etc.) are the most important for the entrants?

Before answering this question, we must first answer what the characteristics of invisible orthodontics are.

The first is technology-driven.As a combination of multi-discipline and multi-field technology, invisible orthodontics is continuously optimized and developed by the iteration of technology from the beginning of its birth.

Invisible orthodontics depends on materials, software systems, algorithms and other technologies, and the core link is correction scheme design, which involves two key capabilities, one is modeling ability, the other is digital development ability. "the R & D director of an invisible orthodontic leading enterprise told Arteria Network.

Take Yinshimei as an example, it has its own orthodontic force drive system, including SmartTrack proprietary materials, SmartForce optimization accessories and SmartStage precision algorithm. Among them, SmartTrack diaphragm material is the core patent, which can provide gentle and continuous orthodontic force, and has the characteristics of high elasticity, stress relaxation, high fit and high durability. In terms of user experience, advanced technology ensures better aesthetics and comfort.

It is understood that Aiqi Technology spent 8 years, invested millions of dollars, tested more than 260 materials, and adopted a great deal of expertise in the field of biomechanics and material science and technology before successfully developing SmartTrack appliance materials.

On the basis of hidden beauty correction technology, Aiqi Technology also introduced iTero intraoral scanner to build a digital platform with iTero intraoral scanner and hidden beauty correction technology as the core, which greatly improved the modeling ability and digital development ability of hidden beauty.

Through the seamless docking of iTero mouth scan and hidden beauty system, the full digital process is realized from mouth scan modeling, filing, scheme design to large-scale customized production, so as to constantly optimize and improve the whole diagnosis and treatment process. Thanks to continuous technological breakthroughs, as of May this year, Aiqi Technology has served more than 10 million patients worldwide.

In addition, the scale effect is prominent.For invisible orthodontic enterprises, competition is not a single dimension, it requires enterprises to have a relatively complete R & D, sales and middle and background service team, which makes the early cost very high. Therefore, invisible orthodontic enterprises need a growing scale to dilute expenditure, that is, through the accumulation of orthodontic cases to cover this part of the cost.

In addition, the scale effect is also reflected in the accuracy of the design scheme, because for the invisible orthodontic industry, the larger the amount of case database data, the more accurate the "model training".

Similarly, take Yinshimei as an example, it took 11 years from the launch of the first product in 1998 to more than 1 million cases in 2009, while the subsequent time per million cases was continuously shortened, and it took only about one year from 2019 to 2020 to complete the progress from 7 million to 9 million cases. Behind this is that with the expansion of the number of cases, the improvement of accuracy, the better user experience, the market will give more positive feedback.

The last is the ability to get medical treatment, which is also the core competence of the current industry competition.In the orthodontic industry, whether users wear braces or not must be prescribed by orthodontists, so orthodontists play a very important role. However, due to the long treatment cycle of orthodontic cases, which often takes 1 to 2 years, and the mature orthodontists in the industry need to reach about 100 cases, the training cycle of orthodontists is usually 5 to 7 years. Compared with the demand of the market, the number of doctors is very scarce.

As invisible orthodontic enterprises cut into the professional scheme design, so they have a strong connection with doctors, and the resources of doctors are limited, so the ability to obtain medical treatment is an important part of the market expansion of invisible orthodontic enterprises.

"Invisible orthodontics is highly dependent on doctor-patient scenarios. Chende Capital told Arterial Network that there are three main difficulties in getting medical treatment.

The first is whether it can provide doctors with cutting-edge technology and quality products. The essence of invisible orthodontics lies in medical treatment. for doctors, when choosing products, they are bound to pay attention to the actual clinical efficacy of the products, especially the technologies covered in the products. it can even help some grass-roots doctors in China to achieve more difficult correction of malocclusion.

The second is whether it can provide adequate service support and logistical support for doctors. Invisible correction is not a simple diagnosis-treatment process, it also covers early client acquisition, counseling, mid-term cephalometric measurement, program design and later services. If enterprises can provide a series of treatment support for doctors, so that doctors devote themselves to treatment, it will be an effective competitiveness to get medical treatment.

Finally, whether the legitimate rights and interests of doctors can be protected, now many enterprises in the market are emphasizing the combination with doctors to carry out technology research and development, so in this process, whether enterprises can take into account the interests of doctors is also a point of concern.

Take Zhengya of Chen de Capital Investment as an example. Since 2019, Zhengya and Taikang Baibo oral Shen Gang orthodontic team have worked together, and the two sides have supported in a number of projects for more than two years. For example, the cooperative project "Zhengya active jaw holder S17" launched in January this year is an important independent original technology in the clinical field of our country. It is reported that the research and development of the retainer can effectively stabilize the mandibular position and the relationship between the maxilla and dentition.

To sum up, we can see that technology, scale and access to medical treatment are not only the important factors for the considerable development of invisible orthodontic enterprises, but also the key to build the core competition barrier.

Under the "duopoly" pattern, can the invisible orthodontic industry still produce new giants?

At present, in the domestic invisible orthodontic market, Yinshimei and Angelalign Technology Inc. occupy 82.3% of the market share, forming a "duopoly" pattern. In the face of such a market situation, can the industry still run out of new giants?

"in the industry competition, enterprises that can break through homogenization competition, integrate industrial chain resources, or develop products with real technical barriers will still be favored by the market. "one industry investor saidFor new entrants, the way to quickly seek a breakthrough is to look for differentiation.

For example, two rounds of financing have been obtained this year, with a total financing of hundreds of millions of yuan.Weiyun artificial intelligence, the differentiation path is to build a closed loop of the whole industry chain with artificial intelligence and robot technology as the core.The technological advantages cover many complex disciplines, such as artificial intelligence, graphics and image algorithms, robotics, motion control, materials, stomatology and so on.

At the beginning of last year, Weiyun officially launched its AI invisibility appliance brand "Elephant Bay" in China. With its network of nearly 20000 clinics already covered, tens of thousands of grade cases have been delivered. Born in this fully automated intelligent factory, Elephant Bay, based on millions of user data and cutting-edge technologies such as oral point cloud scanning, Al simulation, Al tooth arrangement and Al automated production, simulates the ways and steps of clinical orthodontic process and tooth displacement, calculates and generates a full-cycle orthodontic treatment model, and finally carries out production and delivery with micron accuracy through the intelligent factory. Hard core technology is used to bring more efficient and convenient delivery experience and better treatment effect for doctors and patients.

Not only orthodontics, but through the self-developed unmanned intelligent factory composed of digital dental industry cloud SaaS, MaaS and robot terminal matrix, Weiyun provides digital dental industry solutions, with more than 400 SKU, covering many dental fields such as implant, orthodontics, medical beauty and restoration, the production time of single product is reduced by 90%, and the rate of good product is as high as 98%. Moreover, through the strategic deployment of B-end and C-end, we will strive to become the whole department of "hidden beauty" in the domestic oral market.

Or, for example, founded in 2018Easy laugh (easysmile), its choice of differentiation path is directly oriented to the C side.。

The mode of easy laughter is to select moderate and mild orthodontic indications, and to process and standardize the services such as user diagnosis, design of correction plan, doctor's clinical operation, late user wear monitoring, etc. The full-link tracking of data in the process of user correction, the establishment of a large number of moderate and mild cases, the digitization of the whole process of China and Taiwan, and the future digital system will help doctors to serve patients efficiently and solve the difficulties of good doctors in the oral industry. medical practice and other problems.

Specifically, after making an online appointment, users can conduct an oral scan in the Liangxiao offline cooperative clinic. After obtaining the data, after digital modeling, and through the AI intelligent algorithm, matching massive Asian oral data, and on the basis of remote audit of orthodontic experts to design the scheme.

The whole correction process can be carried out online except for a comprehensive oral examination and scanning of oral information to the clinic. For users, easy laughter can bring more convenient and good invisible orthodontic process.

This year, it was invested by Zhonghe Opp Medical and Health Fund of listed company 300595.SZ.The differentiation path of Tiejia Medical (Mei immediately) is to focus on technology and materials.

In the product, the beauty immediately invisible appliance has four bright spots, one is the use of German imported medical grade resin diaphragm to ensure safety, the second is the thickness of only 0.75mm, can be quickly taken off by themselves, with comfort, the third is accurate, each tooth every step of the movement of 0.2mm, the fourth is to measure teeth customized, two weeks replacement, in line with the personal treatment process.

In terms of technical advantages, Yuejia Medical is the first company in China to develop and produce special 3D printing photosensitive resin for oral cavity, has independently produced multi-layer dental diaphragm, and has built an automatic and intelligent manufacturing base in China.

From the above, we can see that invisible orthodontic enterprises still have a good opportunity through the path of differentiation.It is only worth noting that the dental industry has medical attributes, and every product and scheme needs time to precipitate and test from its birth to entering the market. This also requires enough patience and perseverance.

The future evolution direction of the industry

In recent years, the oral industry has stood in the tuyere, and invisible orthodontics has also taken advantage of the wind.

但For every entrant, we should not only take advantage of the opportunity to take off, but also find the underlying logic of the wind in order to develop steadily over a long period of time.Combing the current development process of head enterprises, there are five evolution paths worth using for reference.

The first is to attach importance to the collaborative help of the whole industry chain.The oral industry has a high verticality, and the mutual trust and cooperation between the upstream and downstream of the industry, especially the ability to carry out ecological coordination, is more helpful to the development of invisible orthodontic enterprises.

Take Angelalign Technology Inc. as an example, its controlling shareholder Songbai Investment is an industrial investment and management group specializing in the field of oral health care. Judging from the past layout of pine and cypress investment, it covers from upstream orthodontics, planting, repair and software and hardware equipment, to mid-stream clinical management software and distribution, to the industrial chain investment ecology of downstream hospitals and clinics. there are more than 40 investment and cooperative enterprises across Asia, Europe and North America.

According to Angelalign Technology Inc. 's prospectus, the industrial layout based on pine and cypress investment helps Angelalign Technology Inc. to deeply understand the needs of different customer segments and the technological drivers of each market segment in the industrial chain, and has become the most unique advantage of the company.

For example, as an important equipment of digital oral cavity, intraoral scanner is an indispensable part of the invisible orthodontic industry. Pine and cypress Investment has invested in enterprises such as Rui coltan, Medet Medit and Fantai in this field, which provides Angelalign Technology Inc. with more options and a more open cooperation network in the coordination of this strategic resources.

The second is to attract high-quality capital.Invisible orthodontics is essentially an R & D-driven business. therefore, in the process of enterprise development, the role of capital is particularly important.

For example, Chende Capital cooperates with Zhengya. Since 2016, Chende Capital has covered many links of the industrial chain. At present, it has invested in and incubated several oral enterprises, including Felsen Technology, a provider of digital oral equipment and solutions, Xunshi Technology, a research and development company of 3D printing equipment and materials beside chairs, and Aidit, a research and development company of new oral materials and equipment.

"We spent a lot of energy on the service of the post-investment enterprise, thinking of ourselves as members of the team, going through the process of starting a business with the enterprise, and playing the roles of Becton Dickinson & Co, sales, marketing, personnel and even product manager. "Chende Capital said," We communicate very closely with enterprises, through collisions to enhance the awareness of the industry, and deepen the coordination of the industry. "

It can be seen that the investors introduce all kinds of core resources for the invested enterprises, further help the enterprises to open up the market and carry out business coordination, and at the same time provide strategic guidance in the market operation and direction control to ensure the correct direction of enterprise business development.

The third is to continue to focus on the core aspects of digitization and technological empowerment.For example, at present, the popularity of intraoral scanners in China is still relatively low, and accurate optical impressions will effectively improve the accuracy of subsequent appliance design and production. The development of true color mouth scanning technology is also conducive to a key step in invisible orthodontic data processing-the recognition accuracy of teeth and gums.

"2D automated cephalometric analysis on the side of the head has emerged, freeing doctors from writing at their desk. Industry insiders say that the wide application of CBCT in the field of orthodontics in the future will further improve the risk prevention of invisible orthodontics (assessment of root and alveolar bone mass, assessment of the health status of temporomandibular joint, whether there are impacted teeth, etc.), while reducing the reactivation rate of invisible orthodontics derailment. For example, IRS, a new root and bone treatment system released by Angelalign Technology Inc. at this year's A-TECH conference, evolves invisible orthodontics from simulated crown movement to considering both crown and root movement.

In the aspect of 3D printing large-scale manufacturing, fully automated and flexible production with strong seasonal cyclical demand, it is a key to further improve the delivery quality and delivery cycle of the appliance. At the same time, because orthodontics is a diagnosis and treatment process that lasts as long as 2-3 years, it is very important to monitor the progress of diagnosis and treatment through revisit in the whole process of orthodontics, and this part has great digital potential. Industry insiders predict that in the future, through more popular oral image acquisition equipment, it is expected to achieve digital revisit, further improve the diagnosis and treatment efficiency of stomatologists, and even through remote diagnosis and treatment, improve the current uneven allocation of orthodontic treatment resources in China.

Maintenance in the later stage of orthodontic treatment is also important. "the United States is a big orthodontic country, and we have observed more and more recurrent cases. In China, we believe that the later maintenance is not only the maintenance of the tidy degree of dentition, but also the overall health maintenance of periodontal soft tissue occlusal relationship, reducing secondary caries, secondary periodontal tissue withdrawal and mucosal injury. there are opportunities for interdisciplinary cooperation. "people in the industry said.

The fourth is to take medicine as the core, and to provide localized solutions for users in various markets according to local conditions.For example, in view of the pain points of insufficient supply and non-standard ability of doctors in our country, on the one hand, we can provide standardized services to lower the technical threshold of doctors, and on the other hand, we can help doctors improve the efficiency of diagnosis and treatment, especially to supplement the ability of larger general dentists. Fully empower it.

In addition, China has a large population, Chinese people are mainly convex, the prevalence rate of complex malocclusion is higher than that of the United States, and there are more complex cases. Therefore, for patients from medical design, to the research and development of appliance material diaphragm, to production and multi-batch delivery, personalized arrangements should be made based on the current situation of Chinese people. This puts forward higher requirements for many capabilities, such as medicine, research and development, advanced manufacturing and so on. As invisible orthodontics highly depends on the characteristics of digital science and data analysis, the medical ability of enterprises not only needs the blessing of the research and development of underlying technology, but also needs the accumulation of the number of databases and case types.

In view of this problem, many enterprises have been actively laying out. For example, Angelalign Technology Inc. has set up one of the largest databases of Asian stomatology and formed the largest team of medical designers in the field of dental services in China, including more than 400 members. At present, Angelalign Technology Inc. has 93 registered patents in China and has developed his own technology and data platform. With the breadth and maturity of the technology and data platform, Angelalign Technology Inc. has established a unique advantage in helping dentists solve some unique and ubiquitous complex medical records in China.

The fifth is to pay attention to the trend of stealth orthodontics towards subdivision.At present, children's early correction is becoming a rapid growth pole in the field of invisible orthodontics. A survey conducted by the Orthodontic Committee of the Chinese Stomatological Association on more than 20,000 Chinese children and adolescents showed that the prevalence rates of malocclusion in the deciduous tooth group, replacement tooth group and permanent tooth group in 2015 were 51.84%, 71.21% and 73.97%, respectively. The total prevalence rate of the three groups was as high as 67.82%. It can be seen that children have a great need for oral health.

This part of the demand is getting more and more attention. Take Tongshi Healthcare at the dental server as an example, its financial report data show that the compound growth rate of pediatrics business income from 2016 to 2020 is about 36%, which is in a high-speed growth channel. Among them, orthodontic requirements occupy an important position in this business.

From the overall pattern of the market, children's early correction now has the layout of Romu, MRC, ETA and other enterprises, which mainly provide functional appliances for early treatment of malocclusion of 5-to 12-year-old children, while stealth orthodontic service providers such as Yinshimei and Angelalign Technology Inc. also expand their product lines to orthodontic appliances for children during the replacement period, and actively layout. For example, Angelalign Technology Inc. Children's Edition is a comprehensive invisibility solution for children aged 6 to 12, including an invisibility appliance, lip and buccal muscle barrier and a set of muscle function exercises.

As children's functional appliances can generally be worn for 3 to 9 months to complete muscle adjustment, and then only need to wear retainers for half a year to one year, the treatment cycle is shorter than adults, which has a certain advantage in product promotion.

To sum up,For the invisible orthodontic enterprises that have entered or are about to join the bureau, attach importance to technological research and development and pay attention to industrial coordination, and are good at discovering new trends in the industry in order to seize the opportunity in the next stage of industry evolution.