“Go or No Go APAC” - Who will win the race after COVID-19?

1. Healthcare Services WHITEPAPER “Go or No Go APAC” – Who wins the race after COVID-19?

2. “Go or No Go APAC” – Who wins the race after COVID-19? A white paper on the market entry strategies, changing demands in dental clinics, perceptions of patients and manufacturers’ dilemma, in the invisible orthodontic product segments of Asia Pacific. Introduction While businesses run on visibility, orthodontics in the dental industry is booming under the ‘invisible orthodontics’ sub segment. Based on published reports from Databridge (2022), Global Invisible Orthodontics Market is expected to reach USD 13,673.64 million by 2029 from USD 5,283.15 million in 2021, growing with a CAGR of 12.6% in the forecast period of 2022 to 2029 while APAC market is expected to grow upto 1,742.99 million by 2029 (from 798.07 in 2021). 70% of our patients are women who often visit our clinics before marriage and the reason for aligners? The bride wants to look her best during the wedding Zenyum (Singapore based dental start-up) in an interview with CAN Women magazine (Feb, 2022) What are invisible orthodontics? Why are they so popular? The rise of clear dental aligners, ceramic bracers, lingual bracers and clear retainers are proof of a new demand that has come from the Gen Z’s of the APAC market. One of the driving factors that was observed during the pandemic and after normalization was perception of users towards smile correction, teeth realignment and cosmetic surgery. Invisible orthodontics is more of a aesthetic procedure which does not usually get covered under Health insurance in any of the APAC countries including India, Indonesia, Malaysia, etc. Dentists from Australia and Malaysia have reported high demand for clear aligners and ceramic braces as these markets are offering more affordable options for its patients. More people are also doing it because orthodontic treatments are more accessible now, and the methods of doing so are a little ‘gentler’ than in the past What worked post pandemic? #1 Changing demands of dental clinics and perceptions of patients Based on SGA’s interaction with key dentists in southeast Asia, the trigger for invisible recliners can be anything from marriage to modelling or just facing the society with more confidence. The fear of conventional aligners had kept many away from getting their teeth re-aligned. However, with the new marketing strategies used by marketing gurus, the scenario has changed, and the demand has increased. Dr Reuben How, a dentist at Luminous Dental Group in an interview with CAN Women magazine (Feb, 2022) 2

3. “Go or No Go APAC” – Who wins the race after COVID-19? #2 Manufacturers’ dilemma in APAC - right product or right pricing? One of the major hurdles in the dental industry is non- coverage of dental procedures as insurance companies consider them under cosmetics. Most of the segment is out of pocket. I can tell you from my personal experience that when I went to check for aligners for my relative, the specialist in India had quoted me 3,300 USD (INR 2.75L) before the pandemic. Post pandemic I opted for a far better procedure at 450 USD. Affordability plays a major role in orthodontics market. Hence, specialists are sceptical is using or recommending high ended products to their patients. There are more cases where patients have switched to economical solutions offered by other dentists rather than sticking to the preferred one. Based on a published study by Everyday Health in May 2022, the researchers invested 3,300 hours while speaking with key experts, 1000+ survey respondents, one focus group and factoring 17 most visible brands. 7 most promising invisible braces were recommended as a popular choice among users and price did play a major role during their selection. Byte NewSmile Best Value • No office visits required • Complimentary teeth whitening Best for Free Perks • Day and nightime aligner options • Includes first set of retainers and teeth whitening SmileDirectClub Candid Best Treatment Variety • Variety of treatment options, including in- office scans or at-home impression kits • Lifetime Smile Guarantee can provide a full refund in the first 30 days or additional touch-up aligners during or after treatment Best for Expert Case • In-office evaluations and remote monitoring • Suitable for more compnlex teeth issues Invisalign AlignerCo Best for In-Office Case • In-person treatments with dental experts • Best for complex corrections Most Affordable • All-day and nighttime-only options available • Custom professionals treatment plans from dental Besides the above, SGA also found that AngelAlign from China has a growing market not only in mainland China but gaining visibility in entire SE Asia, especially among Chinese dental clinics (costs 24,000 to 40,000 yuan in China in 2022) Strayt From investors’ or manufacturers’ perspective, the production cost and ex-factory price of invisible braces (aligners) are not high. There are huge distributor and retailer margins in between (almost 72%) and the user purchases the same at much higher cost than it is originally manufactured. If the pricing is capped, then there are higher chances of growth in this segment. Most Convenient • Free mobile scan consultation • Lifetime alignment guarantee 3

4. “Go or No Go APAC” – Who wins the race after COVID-19? What orthodontic market? This segment includes invisible braces (disposable and non-disposable), that are usually manufactured by dental product companies (e.g Invisalign, Toothsi, Aurora, Candid, etc), however this segment also offers opportunities for the markets of orthodontic wax, aligner retrieval tools, dental chewies, floss picks, travel Oral Hygiene Kit/Storage Case Combo, cleansing towelettes and sprays. all constitute the invisible #3 Direct to customer model versus In-clinic model This model is growing day by day and I can tell you from my experiences that there are few brands in India who constantly call you for marketing/promotions on a Sunday afternoon till Friday 9 pm. Direct to customer model works more where dental market is fragmented. SE Asia is an ideal example where there are very few dental chains, and the market is fragmented and price sensitive. During the pandemic, there were even models where dental assistants were visiting the houses of prospects for measurements. Users were ready considering the pandemic outside and this encouraged the players to play strongly in the DTC sub-segment. As mentioned earlier the current market size is approximately 800 million in 2022 (APAC only) and growing at a CAGR of 10.2% till 2029. Invisible braces are considered mostly as a second- grade medical device in most of SE Asia and are subject to strict approval by the local Food and Drug Administration for their listing and production. In most of the markets a doctor’s prescription is also required for use though smart players are by-passing norms as the regulations are not strict everywhere. This also has led to a sudden boom in the demand for invisible braces and orthodontic products. Who are the key players and what is the cost sensitivity across APAC? Singapore The cost of invisible orthodontic procedures comes around Infact, DTC (Direct To Customer) players of invisible orthodontics has already bypassed the hospitals or dental clinics and are selling orthodontic solutions and braces directly to consumers through the internet, mobile marketing and market place selling booths (in malls and shopping centres). Direct-to-consumer In-clinic aligners $2,000 to $3,000 SGD ($1,417 – 2,125 USD) $2,600 to $9,000 SGD ($1,842 – 6,376 USD) Companies in Asia pacific are replicating the much popular US model of SDC (Smile Direct Club), and implementing a similar smile formula to capture the market. In-clinic models are conventional and popular in pockets however, direct to customer is the new norm post COVID and is picking up faster than any other business model in 2022. Clear Aligners in Singapore Invisalign Zenyum Clearcorrect Aurora Wondersmile Smiledirectclub Candid Type of clear aligner system Direct-to- consumer Direct-to- consumer Direct-to- consumer In-clinic In-clinic In-clinic In-clinic • Protrusion • Spacing • Crowding • Gap between teeth Not suitable for patients with severe malocclusions Certain types of malocclusions Treatment effectiveness All type of molocclusions All types of malocclusions All types of malocclusions • Spacing Crowding • Resistant to stains • BPA-and phthalate- free • Resistant to stains • BPA-and phthalate- free • Mode of medical-grade thermoplastics approved by US FDA • Medical- grade plastic • BPA - and latex-free • SmartTrack material that offers greater comfort • Resistant to stains and cracks Aligner material BPA-free • Physical (depending on treatment plan) • Remote • Physical (upon request) • Remote • Physical • Remote • Physical • Remote Treatment monitoring Physical Remote Remote Price $3,500 - $9,000 $2,590 - $3,900 $2,500 - $3,500 $2,400 - $4,900 $2,490 - $2,560 $2,500 - $3,110 $2,841 - $3,247 4

5. “Go or No Go APAC” – Who wins the race after COVID-19? The market is closed, and competition is fierce in Mainland China. Currently, Invisalign is fighting for number 1 position with Anegelalign, closely followed by SmileDirectClub, Candid Co, Byte, SnapCorrect and few other brands. Most of these companies sell through specialty clinics that promote their own products, i.e., will only promote their brand with high promises like entire treatment to be over in 16 months. India The cost of teeth aligner treatment and invisible braces may vary depending on the complexity of procedure or the number of aligners required or location (Tier 1 cities charge premium). Usually, the treatment may cost from INR 30,000 to 90,000 (360 USD to 1090 USD) Note: For detailed players in the Indian market please contact marketing@sganalytics.com [Among] the 3.1 million treated malocclusion cases in China in 2020, only 11.0% were addressed with clear aligners China In between 2015-2020 (pre covid) the number of orthodontic treatments addressed using clear aligner therapy in China increased from 47,800 to 335,500. As per CIC reports (2022), the segment will grow at a compound annual growth rate of 23.1% to increase the retail value of $11.9 billion by 2030. Table: Key Invisible Orthodontic Aligner Brands, price sensitivity in China (2022) Invisalign (隐适美正畸) Angelalign (时代天使) EasySmile (君笑) xixilab Most popular brand in Mainland China All public hospitals and few pvt clinics Local brand, popular in Tier 2 cities Available mostly around Shanghai Market positioning 50,000 rmb (6,870 USD) 20,000-30,000rmb (2,700-4,100 USD) <20,000 rmb (upto 2500 USD) <20,000 rmb (upto 2,500 USD) Cost per patient Shanghai # 2 position Other cities # 1 position High presence/ Market positioning Shanghai Shangai Source: SGA internal resources and databases (2022) How is the competition in APAC? Big players versus small? In the speciality orthodontics space, SGA feels that invisible aligners and accessories are a separate sub-set and have higher chances of near-term growth. We have mapped the market and divided it into broad players (overall orthodontics products) and core players (only aligners or invisible aligner products). Looking at US based and European manufacturers, we feel that big players like Danaher (sales: $18 billion) that manufacturers clear aligners may plan for market expansion in 2023, followed by 3M (sales: $32 billion) that received clearance from the FDA for a clear aligner in 2018 and have market access plans in 2023. Other big names such as Dentsply Sirona (sales: $4 billion) and Straumann (sales: $1 billion) have each purchased Invisalign competitors, besides, Henry Schein (sales: $12 billion) plans to make a market entry soon. 5

6. “Go or No Go APAC” – Who wins the race after COVID-19? How much money can a manufacturer make market? SGA found a use case of a Chinese manufacturer to reflect the current market sentiments. Based on a published report by Dental resource Asia, the ex- factory price of invisible braces of Invisible Beauty and AngelAlign (Chinese) is 3-4 times the cost price, and the gross profit rate is about 70% (including sales expenses of 16-19%). remains the same, and the price in public hospitals is slightly higher, hence more and more patients opt for private or direct to customer model (remote consultation + Product delivery at home) in the invisible orthodontics Top three market entry strategies from SG Analytics • phrase that what’s visible only sells. It shall remain invisible yet make money for the manufacturers, distributors, retailers and the dental specialists. It will be the most promising orthodontic segment in 2023 Invisible orthodontic segment defies the popular Based on this September 2022 article, the Chinese manufacturer supplemented by distribution. The bulk of direct sales are aimed at dental clinics and private hospitals, contributing more than 60% of the income; distribution is an agency model for the public hospital system. The business model included the route of admission to hospitals through provincial and municipal bidding has accounted for the proportion of distribution in the past three years (2020-2022), from 11% to 32.8%. Currently, in the Mainland China market the price of invisible orthodontics in public and private dental institutions mainly focuses on direct sales, • Japan is set to have more demands in invisible braces and companies like Align Technology will expand more in 2023-2024. Currently they are in high demand in India, China, Singapore and Australia. • Chinese accessories and raw material will be used across most of the APAC invisible orthodontic products in 2023-2024. Investors must tie up with Chinese firms for first to market advantage and low cost – high profit margin business advantage. The Final Word The segment offers high return and most of the products and accessories are wallet-friendly and convenient, but the American Association of Orthodontists has warned people against using them, and even filed legal complaints against companies like SmileDirectClub; even Indian dental association has issued advisories against these, but in a fragmented market like India, it is impossible to restrict the sales or marketing of these products. Till the local governments make it illegal or unfit for use, this segment will yield high returns for investors, manufacturers, suppliers, and physicians till next few years. 6

7. “Go or No Go APAC” – Who wins the race after COVID-19? About the Authors Dr. Siddhartha Dutta • Practice Head, Healthcare Dr. Siddhartha Dutta has been working in the healthcare industry for the last 22 years. He has been involved with clinical trials, medical research, planning, and various roles in public and private healthcare domains. He has extensively worked in South East Asia (including Japan), and key markets such as Europe and the US. As a medical microbiologist, he began his career in hospital reference laboratories in the US & India, and has been helping industry clients since 2007. He is a writer, blogger and strategist and has represented his industry on various platforms of international repute. His current areas of interest are AI in Healthcare, vaccines, femtech, info-products, patient data convergence and market access. Disclaimer This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by SG Analytics (SGA) and is not intended to represent or get commercially benefited from it or imply the existence of an association between SGA and the lawful owners of such trademarks. Information regarding third-party products, services, and organizations was obtained from publicly available sources, and SGA cannot confirm the accuracy or reliability of such sources or information. Its inclusion does not imply an endorsement by or of any third party. Copyright © 2022 SG Analytics Pvt. Ltd. www.sganalytics.com GET IN TOUCH Pune | Hyderabad | Bengaluru | London | Zurich | New York | Seattle | San Francisco | Austin | Toronto 7