Role of GPOs in US Dental Supply Industry

The total market size of the US Dental Supply Industry in 2021 is estimated around USD 7 billion. The two largest players in this category – Henry Schein and Patterson Dental have an aggregate market share of +70 percent. If we look at the three major players in this category, then the combined market share exceeds 80 percent. In other words, the industry is highly consolidated and exhibits the characteristics of an oligopolistic state, which has recently attracted the ire of major DSOs in the country.

The US dental supply industry is characterized by four kinds of companies:

1. Direct Sales Companies (Small & Medium Size Manufacturers)

2. Traditional full-service supply companies

3. Mail order distributors

4. Group Purchasing Organizations (GPOs)

The tradition full-service supply companies such as HSIC, PDCO, Benco Dental Supply represent the dominant players in the US Dental Supply Industry. However, there is another segment that’s on the verge of experiencing significant growth in the upcoming years. This segment is represented by group purchasing organizations (GPOs) – which unlike the hospital supply segment where they may dominate up to 98+ percent market share, is still struggling to get a foothold in the dental supply segment. The domination of the existing oligarchs is making it difficult for new as well as existing GPOs in the country to service the growing DSO segment by raising both - the entry as well as operational barriers.

Some of the reasons why GPOs have not yet succeeded by making their mark in the US dental supply industry are that the cost of sales for a solo dental practice is much higher than that of hospital or even those of Animal-health practices because:

1. The practice of dentistry is highly decentralized. While 50 percent of all dental practices across US are solo, even small group practices (<3 offices) are not able to demonstrate economies of scale in purchasing.

2. Average material spend per dental practitioner is lower than that of the average medical physician.

To find out more about US Dental Supply Market & GPOs, please refer to our Research Report here (available for registered members only).