"The secret of change is to focus all of your energy, not on fighting the old, but on building the new."
If you haven't already heard, effective 2/29/2016, Sirona and Dentsply merged to create the largest manufacturer of dental consumables and technology in the world. This has brought about a lot of questions, especially regarding Sirona's CAD/CAM exclusivity agreement with Patterson Dental that is set to expire in September 2017. Will the profitable agreement be extended? Or will Dentsply's lucrative consumables relationship with other distributors such as Henry Schein influence the new decision makers into opting-out? Early indications are that Sirona will allow Schein to join Patterson in the CEREC game. Although one can't say for sure just yet, we do know changes are coming.
The company now known as Dentsply Sirona has released details of their latest Ultimate CAD/CAM Buy Back program, in which they are offering up to $40,000 toward the purchase of a new CEREC system with the trade-in of your current CAD/CAM machine. This promotion lasts through October 28, 2016 and brings the price of a CEREC AC Omnicam, MC X and Sirona CEREC SpeedFire sintering furnace to $103,000 before taxes/delivery. This trade-in credit is reduced to $20,000 after October 28th and runs through April 28, 2017.
We have seen these trade-in offers before as they have historically preceded the release of new technology. In May 2012, Sirona and Patterson promoted their "Wake Up to Trade Up Opportunity", in which they offered a free Keurig Coffee Maker if you invited your Patterson rep to visit your office and demonstrate the CEREC AC Bluecam system. After the demonstration, they would offer you $54,000 towards a new CEREC AC Bluecam and MC XL in exchange for your CEREC 3 system. That promotion ended June 22, 2012. On August 16, 2012, Sirona released the CEREC AC Omnicam. Anyone that took the bait and purchased the Bluecam during the promotion period were in disbelief when they found out it would cost another $27,500 to upgrade to the Omnicam just two months later. For anyone unfortunate enough to purchase their Bluecam prior to January 1, 2012, the cost to upgrade was a staggering $40,000, even though most Bluecam owners still had not recouped their initial investment. This situation created a substantial contingent of unhappy CEREC users, who feel they were taken advantage of.
If we look back at the evolution of CEREC since its commercial introduction to the world in 1987, an average of 6.25 years have elapsed between CEREC generations. As mentioned before, the Omnicam debuted in August 2012, which means a major new CEREC development is probable before late 2018/early 2019. I'll be the first to admit that I do not have any direct knowledge of the reasons why Sirona is offering such a large incentive to buy a new CEREC machine at this time, but I do know that the best indicator of future behavior is past behavior. Rumor has it that this new CEREC promotion is a last ditch effort to offload Sirona's remaining Omnicam inventory before they release the "next big thing" at Dentsply Sirona World next September in Las Vegas.
So, how does all this affect the used market? For starters, we are likely to see an increase in demand for CEREC 3 or other cheap CAD/CAM systems in the short term so they can be sacrificed in the trade-in program. There will also be price adjustments to used Omnicam systems that take into account the current offers from the manufacturer. In spite of this, I think this is good news for the used CEREC market because it proves once again that purchasing a three or four year old CEREC is a much a surer investment versus buying new. There are no pricing games. You will not pay $20,000 more because you were a day too late. Even those that manage to get a $40,000 credit will still pay at least 20% more (plus interest) than they would if they had bought used for virtually the same equipment. Now that Patterson's service plan extends the warranty out 7 years, many used systems still have 3-4 more years of coverage left. I believe many buyers will see that $40,000 credit or not, you still can't beat the house at its own game. If a dentist can come to peace with the fact that it's economically impractical to "keep up with the Joneses" in dental technology, they will come to enjoy the serenity of patience and fiscal discipline. You don't want to be like the Joneses, they are in debt up to their eyeballs.
That's it for this market update brought to you by the CAD/CAM HERO. For expert help with buying or selling your CEREC system, call (844) 385-4376.