In the early stages of the COVID-19 pandemic, most countries took initiatives to close their dental offices to minimize the spread of the virus. As most dental procedures are non-essential, with only about 5% being emergency procedures, dental spending during this time was reduced to near-zero levels.

After the first wave of the pandemic was avoided, most facilities were reopened with limited capacity and postponed procedures were rescheduled. The first flood of rescheduled appointments brought spending back, reaching almost 50% of 2019 levels in the United States during the months of April and May.

Understanding Historical Data

Short-term effects of the outbreak are difficult to draw a comparison to as there have never been similar shutdowns of global economies before. Total mortality rates within any country remain low as the virus has claimed fewer than one million lives worldwide. While not dismissing the catastrophic effect this has had on families and communities, the direct reduction in population is not expected to amount to a significant reduction in market size.

US Dental Spending Recovery during Great Recession, 2008

In terms of longer-term effects, there has been a debate over which historical events most closely match our current scenario. Studies from the American Dental Association (ADA) following the 2009 financial crisis linked country-wide dental spending to the growth in consumer income, which took almost four years to recover. Compared to GDP growth, this study indicates that the household income measure is a better indicator of dental market recovery as households are ultimately the payers of dental procedures (see the graph above).

Lower-Income Groups Being Affected the Most

The initiatives imposed by most governmental organizations, closing restaurants, public spaces, and implementing shelter-in-place protocols, disproportionately affected lower-income groups. Both within developed[1,2,3] and developing[3, 4] countries, this has held true. Epidemiological studies from the National Center for Health Statistic [5, 6] and other national dental literature in the area[7, 8] have noted a higher rate of dental caries development, missing teeth, and total tooth loss amongst lower income brackets, in their given populations.Met with generally lower treatment rates and cosmetic procedures performed, this combined effect of higher-treatable population and lower-treatment rate produces mixed results.

It is not immediately identifiable if the treatment rate will change significantly in the long-term given the temporary shock caused by the COVID-19 pandemic. For instance, the Asia-Pacific and Latin American markets have been gaining considerable momentum over the past years, witnessing double-digit annual growth in most dental markets. However, it is unclear whether the inertia of this historical growth will be lost.

Creating Accurate Forecasting Model

The disproportionate effect each income group has had resulting from COVID-19 is a strong starting point for building forecasting models in developed regions. Job and income loss, restructured work, and a reduction in hours all translated to reduced household income amongst the income brackets.

To build an accurate model, it is important to account for national initiatives that support lost income due to large differences observed between regions. Lost savings and other accrued debts during this period would also need to be accounted for, varying on the duration of the virus and capacity to return to previous household income levels.

While microeconomic effects can be captured using such model, the macroeconomic consequences of the virus run significantly deeper. International trade has been limited over a multi-month period changing the dynamic of imports and exports. Large pricing changes originating from restructured tariffs, disease-spread protection measures, and hesitancy over international trade are some of the factors to consider.

For developing regions, modelling the recovery from the COVID-19 requires a different approach as a greater portion of the population was affected by shelter-in-place policies. Though high-income groups’ return to dental offices within these regions can be modelled using a very similar approach to more wealthy nations, the middle-income group recovery must account for the impacted household income growth. Moreover, macroeconomic effects must also be considered more heavily to capture the effects of an increasing demographic seeking primary and cosmetic dental care.

Conclusion

Currently, the inertia accrued from large historical growth in developing regions is not expected to be significantly minimized from the impacts of the COVID-19 pandemic. After a few years of recovery from the immediate effects, current expectations forecast that as the macroeconomy recovers, originally forecasted growth in the dental markets should be observed.

The increasing consciousness around cosmetic dentistry and the underlying expansion of dental coverage are not structurally impacted through the COVID-19 pandemic or the imposed governmental measures. In spite of household expenditure on healthcare remaining relatively consistent over the last 20 years[5], the reduced household income becomes a major limiter to the dental market recovery during the pandemic

As the pandemic had disproportionately affected the lower-income groups and caused some shifts in the macroeconomies, building an accurate forecasting model became fairly complex. While the developed regions are expected to recover significantly after the household incomes get back to their pre-COVID levels, the same cannot be said for the developing regions. The recovery of the dental market within those regions is expected to be greatly affected by shelter-in-place policies and other macroeconomic factors, such as anti-COVID measures.

Interested in How the Global Dental Market is Impacted by COVID19?

iData Research has performed an extensive analysis of the impact of COVID19 on the dental market. Based on a combination of quantitative and qualitative data, iData’s analyst team was able to perform a multi-scenario analysis of best/worst/base cases adjusted based on current world conditions. Contact us today to learn more about what to expect during the dental market recovery!


 References

  1. “Poverty and Distributional Impacts of COVID-19: Potential Channels of Impact and Mitigating Policies.” World Bank. 16 April 2020. http://pubdocs.worldbank.org/en/980491587133615932/Poverty-and-distributional-impacts-of-COVID-19-and-policy-options.pdf
  2. “COVID19 in the United Kingdom: Assessing jobs at risk and the impact on people and places.” McKinsey & Co. 11 May 2020. https://www.mckinsey.com/industries/public-sector/our-insights/covid-19-in-the-united-kingdom-assessing-jobs-at-risk-and-the-impact-on-people-and-places
  3. “COVID-19 and the world of work: Impact and policy responses.” Internation Labour Organization.  18 March 2020. https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/documents/briefingnote/wcms_738753.pdf
  4. “COVID-19 crisis and the informal economy: Immediate responses and policy challenges.” Internation Labour Organization. May 2020. https://www.ilo.org/wcmsp5/groups/public/—ed_protect/—protrav/—travail/documents/briefingnote/wcms_743623.pdf
  5. Eleanor Fleming, Ph.D., D.D.S., M.P.H., and Joseph Afful, M.S. “Prevalence of Total and Untreated Dental Caries Among Youth: the United States, 2015–2016.” National Center for Health Statistics, Data Brief No. 307. April 2018. https://www.cdc.gov/nchs/data/databriefs/db307.pdf
  6. “Oral and Dental Health: Data for the U.S.” National Center for Health Statistics. https://www.cdc.gov/nchs/fastats/dental.htm
  7. Oral Health Facts Sheet. World Health Organization. https://www.who.int/news-room/fact-sheets/detail/oral-health
  8. Frencken JE, Sharma P, Stenhouse L, Green D, Laverty D, Dietrich T. “Global epidemiology of dental caries and severe periodontitis – a comprehensive review.” Journal of Clinical Periodontology, vol 44 (Suppl. 18). https://onlinelibrary.wiley.com/doi/pdf/10.1111/jcpe.12677