Dental Insider Blog

Observation and Commentary On the Dental Industry

End of the Week Odds and Ends

Posted by dentalinsider on May 25, 2007

Well it’s been an long year this week and I thought I would give you a mish-mash of content to end the week, going into the long holiday weekend.

Dentsply by the numbers.
Is Sullivan-Schein buying Becker Parkin?
Memorial Day in the United States.

First off….I told you a while back that I was analyzing Dentsply’s 1st quarter numbers and I would post my thoughts on it. I have been fairly busy as of late and put it on the back burner, but after receiving 5 emails from readers requesting that I post my thoughts, here they are.

Disclaimer: I am not a financial analysts, nor do I pretend to be one, but I did stay at a Holiday Inn Express last week, so take it for what it’s worth. The numbers that I am using are coming from the transcript of the May 1, 2007 conference call, which can be found here.

Reported sales for the quarter were 472.9 million, which is a 9.7 percent increase compared to the 2006 quarter. The 10.4 percent increase in sales, excluding precious metals, was comprised of internal organic growth of 6.4 percent and foreign exchange of 4.0 percent. The internal growth rate was led by both our implant and our orthodontic businesses, which both had double-digit growth in the first quarter. Our worldwide implant internal growth rate was in excess of 20 percent. And in total, including currency effect, the implant business grew by over 30 percent during the quarter. Our orthodontics business also had an internal growth rate in the low teens for the first quarter, and this was helped by a strong demand for our new self-ligating ceramic bracket called Innovation C. The geographic breakdown of internal growth for the quarter, again excluding precious metals, was 4.7 percent in the U.S., 8.2 percent in Europe and 6.6 percent for the balance of the world.

Ok, so there was a 9.7% increase in sales in Q1 2007 over Q1 2006 with internal growth of 6.4%. So if you take into account the 6% price increase in October 2006, that would leave the internal growth at .4% overall in the U.S. Much of the growth came from their direct divisions, Endo, Implant, and Ortho as well as their direct divisions overseas such as Australia, India, Asia and Africa. In the U.S., growth was almost non-existent due to the efforts of the discontinued dealers after Dentsply’s new “Strategic Partnership Agreement” in the fall of 2006. It looks like Dentply’s plan for the existing 28 dealers to scoop up all of that business didn’t pan out. Never underestimate the little guy!

Late in the quarter, we also became aware that there’s been an influx of our products being sold into the U.S. market from offshore through the discontinued dealers that now can’t source the product directly from us. This is problematic as the offshore product is often labeled differently than is required for the U.S. market. And in many instances, has a different formulation from what we sell in the U.S. market. So we’re very active in trying to track down these channels of supply and hope to make continuous progress in closing them down throughout the year.

This is a bunch of BS…it is actually a hedge, if the numbers didn’t look good in the U.S., then blame it on “gray market” goods infiltrating into the U.S. market. “Gray market” products have been a hot topic in the dental industry for some time. The U.S. market has been flooded with “gray market’ products for the last 10-15 years. It is not just a problem for Dentsply, but for 3M/ESPE, Kerr, Eastman Kodak, GC America, Ivoclar Vivadent as well. Dental dealers have complained to the manufacturers about this problem for years and all they get is lip service. “We are cracking down on gray market products.”, “We have established a team to investigate this problem.”, yet there is more “gray market” product on the market than ever before. Why is nothing being done to resolve the problem? In most cases, upper management of the big manufacturers are paid on “out the door” sales as opposed to the rank and file salespeople who are paid on “zip code data” sales. So there is no incentive for management to do anything about it except put out letters and try to make a point by harassing a few dealers with some obscure FDA, thingamajigger….Gentlemen…the real people you are hurting is your own sales-force.

When I was down at the California Dental Association show in Anaheim, Ca. a few weeks back, I was able to talk with a couple of Dentsply reps. They said that the “strategic partnership” came as a surprise and that sales were down in their territories. They also claimed that morale was poor within the sales-force which was confirmed last week when I got word that a couple of sales reps had recently left the company and there were a few that were ready to jump ship. I truly believe that Dentsply is a good company, that has some solid products, but they just pull some bonehead moves that have and will hurt them in the future. Just my humble opinion!

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Is Sullivan-Schein Buying Becker-Parkin???

Here at the Dental Insider, we are stats junkies….we get stats on who, when, how people came to the DI site. We also get information on what people search for in Google and other search engines to finally end up at the DI site. Over the last 3 days we have had 32 searches that led to the Dental Insider site that involved “Is Schein buying Becker Parkin”, “Sullivan-Schein+Becker Parkin”, “Sullivan Schein to buy Becker Parkin”, and Sullivan-Schein purchase Becker Parkin”. That is alot of SS+BP activity for just 3 days. So is it true? I have no idea…but maybe one of our many readers from Sullivan-Schein and Becker Parkin can shed some light on this story. Remember…Rumors are Facts that Haven’t Happened Yet!

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Memorial Day ribbon_small2.gif

Many of us will spend this long weekend at ball games or Bar-B-Ques with family and friends or maybe a trip to the mall looking for a sale. Lets not forget the real reason behind this long weekend…Memorial Day. For those of you that don’t know, Memorial Day, originally called Decoration Day, is a day of remembrance for those who have died in our nation’s service.

Traditional observance of Memorial day has diminished over the years. Many Americans nowadays have forgotten the meaning and traditions of Memorial Day. At many cemeteries, the graves of the fallen are increasingly ignored, neglected. Most people no longer remember the proper flag etiquette for the day. While there are towns and cities that still hold Memorial Day parades, many have not held a parade in decades. Some people think the day is for honoring any and all dead, and not just those fallen in service to our country. – Memorial Day Website

This weekend before you head out to the mall, ballgame or bar-b-que, take a moment to remember all of those men and women who have given the ultimate sacrifice for this country.

Have a nice, safe weekend…we’ll see you back here next week.

DI and Associate Q

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4 Responses to “End of the Week Odds and Ends”

  1. Brad said

    There has certainly been a lot of activity going on this year in the dental industry. Just reading about all of the moves & keeping up with the changes has been exhausting. I agree that for Dentsply most of their growth going forward has to come from the overseas market. Asia and India in particular may be a strong growth opportunity. In our own little online store dentalmegastore.com that sells used and new dental equipment we have seen steady growth over the last few months though. Hope the local market stays strong.

  2. Danaher Job said

    Well, just to add to the mish mash of topics. I am considering a job opportunity with the Danaher Dental Platform. I know that Danaher is famous for working its people to the bone, but I am wondering if working for them for awhile will make me more marketable to other manufacturers in the future?

    Any thoughts from anyone? It makes me wonder if I should go for it, or stay in my current position and eventually try to work for one of the smaller privately owned companies or one of the more “friendly” companies like 3M.

  3. Answer to question #1…Yes you will be marketable to other manufacturers in the future with some Danaher experience under your belt. But why go anywhere else??? I know many people that work for Danaher in the dental side that are very happy.

    I think if you talk to people in the industry the grass isn’t always greener at 3M or any of the smaller privately owned companies, all companies have their problems. I am sure we will get some more responses from other readers in the industry.

    DI

  4. anonymous said

    Schein is buying/did buy becker parkin
    I assumme it will be made public within the next few days

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