With a 100-billion-level oral market, 70% of the gross profit is huge profit, why does she not have a "Moutai life"

　　Capital invests in dentistry, and it takes hard work.

　　Wen 丨 Hua Shang Tao Luo Mu Mu

　　Some businesses are inherently unsuitable for capital, but they are "small" rich and difficult to be "big" expensive.

　　【1】

　　In 2021, on the day of the listing of Angelalign, the first stock of China's orthodontics, the opening soared by 182%, and the total market value soared to HK$80 billion, becoming the second most popular IPO of Hong Kong stocks that year.

　　The company began with a father and daughter, Lee Wah Man and her father, Lee Se-joon, who works in dentistry.

　　In 2003, when Li Huamin, who was a financial student, helped his father open a dental clinic, he learned that Professor Yan Yongnian of Tsinghua University and Wang Bangkang, dean of the School of Stomatology of Capital Medical University, were developing bracketless invisible orthodontic technology.

　　At that time, the products of the two experts had not yet been officially born, and they were facing the dilemma of capital rupture. Because they are optimistic about the market prospects of invisible orthodontics, Li Shijun and Li Huamin bought out this technology with 2 million yuan and invested 5 million yuan to jointly establish Beijing Angel of Time Biotechnology Co., Ltd. with Yan Yongnian and Wang Bangkang.

　　By 2006, Angelalign had finally officially launched its first invisible appliance product.

　　At that time, the domestic business orthodontic audience was narrow, the business was not easy to do, and the two experts withdrew. But Li Huamin is still firmly optimistic about China's orthodontic market, continues to operate Angelalign, and even mortgaged his own house for this purpose.

　　During this period, Angelalign has been relying on financing to burn money and waiting for the market to develop.

　　In 2015, Li Huamin, who had insisted on 12 years, almost couldn't survive, when she ushered in a "white knight" - Feng Dai. Star pharmaceutical companies such as Harbin Pharmaceutical Group, Lepu Medical, and WuXi AppTec are all works cast by Feng Dai.

　　Feng Dai spent $63.94 million to acquire the entire stake of Angelalign and has since ceded 32.21% of the shares to the team as an incentive. To this day, Songbai Investment, founded by Feng Dai, is still the actual controller of Angelalign.

　　As commercial orthodontics are recognized by more and more people, Angelalign's business is also getting bigger and bigger. Until 2020, Angelalign has become an orthodontic giant that can be divided from foreign invisalign, with a market share of up to 41%.

　　The data shows that about 1.04 billion people in mainland China have cases of malocclusion in 2020, while by the end of 2021, the regular treatment rate of dental deformities in mainland China is only 15%.

　　At present, China's orthodontic penetration rate is only 0.68%, but thanks to the high customer unit price, the market size has reached 34.7 billion yuan.

　　The market is large and potential, the strength of the enterprise is strong enough, at that time many people predicted that angelalign into the market value of hundreds of billions is not a dream.

　　However, only half a year later, Angelalign has experienced many rounds of sharp falls. As of press time, the market value of Angelalign has fallen to 36.9 billion yuan compared with its peak.

　　A few days ago, Credit Suisse lowered Angelalign's revenue forecast from 2021 to 2023, believing that under the weak consumer sentiment, shipment pressure may last longer, and reiterated Angelalign's "outperform the market" rating.

　　A good business with a unit price of tens of thousands of customers and a gross profit margin of more than 70%, why does capital have no choice but to take it?

　　【2】

　　Some of the data in Angelalign's prospectus points to the answer.

　　Between 2018 and 2020, Angelalign's cash flow has barely changed in the face of revenue growth. The reason behind this is the surge in marketing and sales expenses – in three years, Angelalign distributor rebates have increased by more than 7 times, and expenses such as theme activities and advertising are also high.

　　However, these terminal stimulus measures have not achieved obvious results, and the capacity utilization rate of Angelalign has been declining, with 99.6%, 76.9% and 74% in 2018-2020, respectively.

　　Just this month, Angelalign also lowered its full-year 2021 shipment target by 10 percent, from 200,000 units to 180,000 units.

　　It can be seen that under the fierce market competition, even as one of the duopoly, Angelalign is facing the dilemma of weak growth.

　　The reason for hindering growth is not Angelalign's own problem, but the general dilemma of the industry - there are too few strict orthodontic doctors with qualified qualifications in China!

　　Pacific Securities analysis pointed out that the dependence of stomatological hospitals on doctors is significantly higher than that of other specialized hospitals, and the supply of doctors cannot keep up with the expansion of clinics!

　　This analysis is also confirmed by the 2018 data of the National Health Commission, when the mainland had a total of 217,300 dentists and 156 dentists per million people.

　　In developed countries, the figure is between 500-1000.

　　At the same time, between the various fields of dentistry, interlaced like a mountain, the same dental clinic, to meet the different needs of patients, often have to be equipped with dentists with different "surgical" industries, which further aggravates the scarcity of dentists.

　　According to the data, by the end of 2020, there were only 6100 qualified specialist orthodontists in China.

　　In addition, the dental profession relies heavily on clinical experience, which should be deeply felt by patients who have had experience with orthodontics or implants, and the decisions, procedures and results made by an experienced dentist and novice doctor vary greatly.

　　How long does it take to train a qualified dentist?

　　Starting from the study, the doctoral degree is the standard for doctors, it takes 10 years for the master's degree to graduate successfully, and the clinical and compliance training often takes more than 3 years, which is already 13 years. Qualified doctors will have to gain richer clinical experience and participate in various refresher courses, which add up to 16 or 7 years.

　　As mentioned earlier, there are only 6,100 qualified specialist orthodontists in China, compared with less than 200 in the late 1980s.

　　That is to say, in the past 30 years, the number of specialized orthodontists trained in the mainland has increased by more than 5,000 people.

　　In other areas where capital is proficient, such a talent training progress is unimaginable - a barista, a hot pot shop manager or even an Internet programmer cannot spend such a long training time to qualify for the job.

　　This determines the "routine" that capital is used to, which is not feasible in the matter of dental rectification. Venture capital firms can invest huge amounts of money to support companies to open clinics, buy equipment, and do publicity, but they can't "change" a huge number of qualified dentists out of thin air by spending money.

　　【3】

　　The solution that Angelalign came up with was digitalization.

　　Let the computer replace part of the human work, and after entering the data, the computer automatically completes the arrangement, so as to make up for the expansion problem caused by the shortage of dentists. However, this plan has been questioned by many professional doctors.

　　Yang Maolin, president of Jiamei Stomatological Hospital (Beijing Poly Store), likened digital technology to automatic driving, and said, "At present, it is far from the time when it is possible to automatically drive without a doctor grasping the steering wheel." ”

　　Zhu Genghui, head of the Beijing Shangpin Dental Clinic, also said publicly last year: "Without face-to-face examination and communication, the current technology cannot design a personalized plan." ”

　　Looking at the large number of complaints about orthodontic rollovers on the Internet in recent years, most of them focus on doctors who do not have professional qualifications.

　　Some patients have found that the first face-to-face consultation in these dental institutions is not an orthodontist, or even a general dentist, but an institutional consultant.

　　Such a pattern not only does not guarantee orthodontic effects, but also has the risk of triggering other conditions.

　　As Yang Maolin said, "After 5 years of correction, it may rebound, there will be braces face, tooth loss, recovex, orthodontics after complete diagnosis and treatment, there may still be many disputes, not to mention remote correction without even face-to-face diagnosis." ”

　　Dental surgery is still a technical work that machines cannot replace, and in the end, capital still has to do the difficult and correct thing - to solve the "human" problem. In the mature operation of the ophthalmic track, or there is experience that can be learned.

　　There are well-known ophthalmology institutions in China that have opened up a path of "surgical industrialization" through the model of batch "manufacturing doctors", which has greatly improved the speed of training doctors and reduced costs and increased efficiency. However, whether this model can be successfully copied to the dental track and how it should work still needs to be explored and studied.

　　Seemingly profitable dentistry is not a fast-moving consumer goods, and it is difficult to make fast-moving consumer goods, and it is difficult to quickly add a few more zeros in this business.

　　Capital invests in dentistry, to work hard, to be a friend of time seriously, and this is a "have to" option.

　　——END——

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