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Dentistry - A sector ripe for consolidation

Simon Hughes, Managing Director - Medical, talks about consolidation in the Dental sector.

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Much is written about ‘consolidation’ in the dental sector and its effects on the industry. But what is actually meant by the term and what effect could it have on the ambitions of independent dentists to buy a first practice and expand from there?

Consolidation basically refers to the ‘buying up’ of assets by companies who benefit from economies of scale through multiple business ownership. Some argue that consolidation is inevitable, given the increase in running costs – staff, equipment, fixed and variable costs and materials amongst others. Dentistry is extremely resistant to recession, therefore capital investors view it as extremely attractive, as do entrepreneurs, although delivering growth, particularly in the NHS segment is proving to be extremely challenging.

The real answer lies in the segmentation of practice ownership, in which less than 10% of the dental practices in the UK are currently corporately owned. Whilst the impact of the corporates’ acquiring is significant in terms of column inches, the sector is still remarkably fragmented when compared to Pharmacy, where some 35% of stock is owned by major companies.

The dental sector in particular is fiercely independent and it’s simply not easy, given the lack of availability of opportunities, for consolidation to occur.

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