Zia Chishti has no training in orthodontics. And yet he came up with a teeth-straightening idea that has sidelined methods relying on brackets and wires. Known as Invisalign, Chishti’s stroke of genius uses 3D printing and a series of clear ‘trays’ that patients swap out every two weeks to correct crooked teeth and overbiting. Dentists questioned the former banker’s credentials when he launched his new product. But Invisalign was commercialised in 1999 and Align Technology, which owns the trademark, went public on Nasdaq four years later.
However, Align has struggled to maintain its once-leading position in China’s ‘invisible braces’ market. Since 2018 the California-based company has hit a speed bump in its second largest market, seeing sales growth slow to 26% in 2019 from an average of 102% between 2013 and 2017. The reason: Angelalign, a fast-follower brand based in Shanghai that has been offering similar treatments at much lower prices since 2006. Last year it finally overtook Align as the largest player by chomping 41.3% of the Chinese market, according to China Insights Consultancy.
Braces work by putting pressure on the teeth that pushes them in the preferred direction. As the process takes effect, the bone in the jaw changes to allow the teeth and their roots to move.
What Angelalign has achieved is no small feat, considering the technological sophistication required to deliver tailored treatments at scale. Above and beyond producing the 40-60 pairs of aligners that each treatment cycle requires with 3D printers, a typical Angelalign offering also includes diagnosis, treatment planning and ongoing case assessment. All of this is offered via digital platforms developed by Angelalign that read and store intraoral images, comb through volumes of biological data, perform computer-aided simulations and maintain patient records.
“Materials science, biomechanics, computer science and smart manufacturing are all at play,” Li Huamin, the 47 year-old founder of Angelalign, told Caijing, a business weekly.
Benefiting from growing affluence and better dental health awareness in Chinese households, Angelalign has logged steady growth, turning profitable for the first time in 2015 and booking an increase in sales of almost a quarter to Rmb601 million ($93 million) for the first nine months of 2020, despite Covid-19. New scale in sales and production has helped it to widen its gross profit margins to more than 70%, comparable to those of Align.
Analysts are forecasting that retail sales for orthodontic products in China will reach $29.6 billion by 2030, which would make the market the second largest by revenues. That potential has already attracted a number of international entrants including Envista Holdings, DentsplySirona and 3M. Domestically, there are also Tianjin-based ZhengLi Technology (which has been partnering with Swiss dental company Institut Straumann since 2019) and Chengdu’s AirMico, best known for an innovative platform that allows orthodontists to create mouthpieces in-house (with a system comprising of a small laser scanner, a 3D printer and a multi-axis robotic arm).
To help retain its lead in this crowded field Angelalign is planning to raise $300 million through an initial public offering in Hong Kong, reports International Financing Review. A portion of the funds will go towards the construction of a new manufacturing site and research and development centre in Wuxi, a port city in Jiangsu province. The facility is being designed to produce 100 million units of aligners a year, with the first phase of construction slated for completion by the end of this year.
Angelalign is currently 67% owned by CareCapital Orthotech, a Hillhouse Capital-backed investment fund that focuses on dental care businesses worldwide. Li, the founder, still holds a 16% stake.
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