Growing overcapacity in the clear aligner space and gradual commoditization is making it almost impossible for brands to differentiate their clear aligner line-up from another manufacturer’s portfolio. That’s another rationale why management teams are skeptical about any possible ASP increase.
insightsZ predicts that ongoing price wars may lead to serious decline in brand’s bottom-line performance. insightsZ also predicts that the industry may undergo consolidation wherein weaker players may have to exit the business in the next 60 months. Direct to Consumer (DTC) brands particularly have been at the receiving end of this with record levels of operating losses and no clear path to profitability – as also demonstrated by SmileDirectClub’s continued lackluster performance.
Price reductions, per aligner billing and free replacement aligners are the principal weapons that brands employ to fight off competition. In fact, there is little talk of quality of clinical outcome, almost inexistent focus on materials and a blatant non sensical chatter about how or why fewer aligners are needed to achieve the same result than another brand. FY 2022 was underlined by routine price cuts which almost transformed into a full-blown price war with ASPs declining across the board.