Is invisalign still the market champion?

Most ideas take years to develop. Even the most brilliant ideas can be born from fragments of little ideas, most materializing from a “slow hunch”. One such idea went on to give us one of the most innovative technologies of our time, Invisalign. The all-encompassing finesse of Invisalign came to be as a result of a single eureka moment. In the mid-1990s, a Stanford University student named Zia Chishti conceived of the basic design of Invisalign clear removable aligners while undergoing adult orthodontic treatment in his early 20s.

A BA in computer science and economics, Chishti envisioned wearing a series of clear plastic appliances over his teeth to drive tooth movement and how it would be a great idea to leave the whole process of straightening teeth up to a series of clear removable aligners. By driving small, incremental movements towards the desired outcome, he realised that the traditional method of teeth straightening with braces could be replaced once and for all. And so it did.

In 1997, Chishti partnered with Kelsey Wirth to look for developers for Invisalign. As Stanford University students, it made sense to look for partners on their own campus. They were soon met with prodigious candidates, the best of whom were Apostolos Lerios and Brian Freyburger. They worked tirelessly to execute Chishti’s ground-breaking idea and eventually co-founded Align Technology in 1997.

Just a few years later, in 1999, Align pioneered the invisible orthodontics market with the introduction of the Invisalign® system. By 2001, this company was listed on NASDAQ with a $1 billion valuation. Today, Align Technology has more than 2,000 employees and earns an annual revenue of over $550 million.

Align Technology took over the US market with their simple philosophy – leveraging technology to straighten teeth. With a wide variety of clear aligner companies hitting the market, where does Invisalign stand amongst the competition?

Is Invisalign still the top dog?

Despite its decade-long track record of growth, Align Technology continues to reign at the top as the undisputed category leader in clear aligners. Align Technology, Inc. has established its dominant position in the global clear aligner market and has continued to do so in spite of its patents expiring in 2017. This could be attributed to Align’s competitive advantages such as unrivalled economies of scale, a large pool of Invisalign-trained dentists, and a loyal consumer base.

Today, Invisalign is partnered with over 200,000 dentists worldwide.  In fact, by 2001, Align had manufactured one million unique clear aligners and helped treat hundreds of patients. All this has been possible by “combing digital treatment planning and mass-customization, with shape-engineering based on biomechanical principles”, according to Invisalign.

Market growth

Align has continuously evolved in the last 26 years and has been able to build upon its experience with a variety of consumers. Today, Align sells the Invisalign system of clear aligners, iTero intraoral scanners, and exocad CAD/CAM software for digital orthodontics. Align Technology’s annual revenue for 2021 was $3.953 billion, a 59.9 per cent increase from 2020. For the twelve months ending on September 30, 2022, its revenue was estimated at $3.864 billion, a 2.88 per cent increase year-over-year.

It seems that Invisalign continues to be the top dog in the aligner market even today, possessing over 60 per cent of the market share. Invisalign is available in more than 100 countries, thereby allowing Invisalign to establish its own dental ecosystem in the fiercely growing market. On the production front, Align is continuing to expand its capabilities. Recently, it announced the construction of its third manufacturing plant in Wroclaw, Poland. Its existing facilities were in Juarez, Mexico, and Ziyang, China.

Financial performance

Align Technology’s revenues have compounded at 23% CAGR annually since 2011. Clear aligner revenue has grown by 22 per cent while Systems and Services (iTero scanner and related services) revenue has expanded by 38 per cent annually. They have been averaging 70%+ gross margins and 20%+ operating margins since 2011.

Doctors are willing to pay premium prices for Invisalign services owing to their operating efficiency as compared to conventional braces. Similarly, the consumer is also willing to pay the premium price because of the one-time nature of the purchase and the “tangible” value they receive in return. Significant free cash flow, coupled with zero debt, and over $1 billion of cash on the balance sheet makes them an undefeatable profit machine in today’s aligner business.

Commenting on Align’s 2021 results, Align Technology President and CEO Joe Hogan said, “Overall, I’m very pleased to report fourth-quarter results and another record year for Align. Full-year revenues of $4.0 billion and operating margin of 24.7 per cent were both at the high end of our guidance for fiscal 2021.”