From the near-blank slate of the 1990s to a market space breaking the hundred billion yuan mark, the domestic oral industry has undergone earth-shaking changes over the past 20 years. On the crest of this wave, there are opportunities as well as challenges. In recent years, chain dental hospitals have sparked a wave of closures.

Rui'er Group, established in 1999, is a witness and participant in the development of the domestic oral industry.

Where will the oral industry go in the future, and how will strategies change under centralized procurement?

Inevitability with a touch of chance

"Entrepreneurship was inevitable, but oral was a matter of chance," said Zou Qifang when discussing why he chose to delve into the oral market with a journalist.

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His overseas study experience introduced him to many successful corporate cases and the social value they bring, which attracted Zou Qifang to the path of entrepreneurship.

After returning to China, a chance opportunity led Zou Qifang into the oral industry. "A senior wanted to introduce dental implants into China, so we conducted a survey on the domestic oral market at that time," he said.

This survey led Zou Qifang to discover that domestic clinic-style oral medical services were almost non-existent, with only public hospitals providing oral treatments. In his view, China's economy still has a lot of room for development, the domestic middle class will continue to grow, oral health will increasingly be valued by the Chinese people, and the future market space is very promising.

Therefore, in 1999, Zou Qifang introduced the internationally renowned Nobel dental implant system, filling the gap in China's high-end oral medical care. In the same year, the first Rui'er Dental Beijing International Building clinic was established. In the following 20 years, Rui'er Dental has entered cities such as Shenzhen, Shanghai, Guangzhou, Xiamen, and Hangzhou.As of today, the Ruier Group has established 123 clinics across 15 cities in the country, with a total of 972 dentists under its umbrella. In 2022, the Ruier Group successfully went public on the Hong Kong Stock Exchange. In the latest fiscal year of 2024, the Ruier Group's total revenue reached 1.746 billion yuan, a year-on-year increase of 18.5%; the net profit was 13.4 million yuan, achieving profitability since its listing.

The Ruier Group stated that the overall positive performance of the annual results is mainly due to the business recovery after the COVID-19 pandemic and a significant increase in the number of patient visits. During the reporting period, the Ruier Group treated over 1.9 million patients, a year-on-year increase of 28.1%.

Zou Qifang, when interviewed by journalists, said that the profitability of the 2024 fiscal year was expected. "From a business model perspective, the chain dental industry has retail attributes, requiring profitable old stores to drive new stores that are not yet profitable, which is also known as 'a small horse pulling a big cart.' This also means that the company's profitability requires a certain ramp-up period. Last fiscal year, we reached a turning point, with the proportion of profitable clinics increasing. Therefore, the overall business situation has improved."

From Increment to Stock

It is understood that from 2018 to 2023, the number of oral medical institutions in China increased from 99,000 to 127,000, with a compound annual growth rate of 5.1%. Among them, the number of private oral medical institutions accounts for more than 90%, and this proportion has been steadily rising in recent years. The significant increase in private oral medical institutions on the one hand means that the overall demand for the oral market is positive, with more opportunities; on the other hand, it also brings more intense competition and challenges, and many oral clinics have already started to close and withdraw.

Faced with this challenge, Zou Qifang told reporters that the Ruier Group made adjustments to its business strategy as early as 2019, shifting from an incremental mindset to a stock mindset. "What still supports our development is the old customer base. Serving existing customers well and operating existing stores well is what we have been doing in recent years," said Zou Qifang.

At the same time, the Ruier Group has not given up on developing new customers and new markets. On September 20th this year, the Ruitai Oral海淀 Hospital, in which the Ruier Group holds shares, opened. This is the third second-level specialty hospital of the Ruitai Oral brand in the Beijing area. At the opening ceremony, Zou Qifang said that the opening of Ruitai Oral海淀 Hospital demonstrates our confidence in the Chinese oral medical market - the people need high-quality oral doctors and services, and Ruier will also work hard to maintain its original intention.

In addition to the above fierce market competition, the decline in customer unit price due to the centralized procurement of dental implants in recent years is also a significant challenge. In 2023, the centralized procurement of dental implants was implemented, and information from the National Healthcare Security Administration shows that the purchase price of some implant systems has dropped by more than 50%.

However, looking at the financial report of the Ruier Group, centralized procurement has actually allowed the company to achieve volume in exchange for price, with a year-on-year increase in implant revenue of 12.5%. "The centralized procurement policy for dental implants has reduced the price threshold, allowing more patients to afford high-quality dental implant services," said the Ruier Group. Moreover, the increase in the number of implants has also driven the development of comprehensive treatment (general dentistry) business, with the revenue of Ruier Group's general dentistry increasing by 22.5% year-on-year during the reporting period.

Zou Qifang also said that Ruier will now pay more attention to urban encryption and cost reduction to maintain a healthy financial situation. Regarding whether to consider entering the overseas market in the future, Zou Qifang said that the company is currently open to the overseas market. "Ruier is committed to becoming an internationally leading oral medical institution, and the overseas market is within our consideration. But this is an opportunity and a challenge. Before going overseas, we still need to clarify the purpose and pace of going overseas," said Zou Qifang.Embracing AI Revolution

At present, AI is integrating into various industries, and the dental industry is no exception. In August, an overseas innovative company announced that its AI-controlled fully automatic robot successfully completed a full set of dental restoration surgery on a human patient, with the entire process taking only 15 minutes, which is 8 times faster than human dentists.

In Zou Qifang's view, AI is about empowerment rather than replacement. The infusion of AI technology will greatly enhance the overall efficiency of the industry. "AI is an inevitable development process, so we choose to embrace it," he said. The digital technologies currently adopted by Ruier Group include digital oral scanning and dental implant navigation systems, which can improve the accuracy and efficiency of diagnosis and treatment.

Ruier Group has also integrated more than 20 years of experience in dental medical management into a software application service platform, providing customers with a 5A-level technical and service experience through standardized processes, digitalized information, intelligent decision-making, platformized resources, and refined management.

To enhance the company's overall talent competitiveness, Ruier Group also increased campus recruitment efforts in the last fiscal year to reserve talents for future development. Zou Qifang said, "Ruier is willing to cultivate talents, create a harmonious working atmosphere for employees, and help employees grow. The fact has also proved that the current core talents of Ruier are the backbone cultivated through campus recruitment. Such long-termism is what Ruier has always advocated."