Profit squeeze pressures dental implant industry to transform

China’s centralized bulk procurement policy has driven dental implant prices down by half, easing costs for patients but shaking the profit model of dental providers

By Lead Leo Research Institute

As China’s healthcare reform has deepened in recent years, the country’s centralized bulk procurement (CBP) policy has expanded from pharmaceuticals and medical consumables to dental implants. CBP involves large-scale, unified government tenders to lower medical product prices by exchanging volume for price reductions. First piloted in the pharmaceutical sector in 2018, the policy was later extended to high-value consumables such as coronary stents and artificial joints, and has now reached dental implants.

In the past, a single dental implant could cost over 10,000 yuan ($1,390), a heavy burden for many middle-aged and elderly patients. With the implementation of CBP, prices have dropped significantly, greatly easing the financial pressure on patients. But for dental institutions long reliant on the high-margin implant business, the policy represents a structural shock.

According to Lu Jiarui, a medical industry analyst at Lead Leo Research Institute, CBP is transforming the dental implant market by dismantling the long-standing high-price model, compressing profit margins across the supply chain into a more transparent range.

Current dental implant prices generally range from 5,000 yuan to 7,000 yuan, a drop of more than 50%. This has sharply lowered the threshold for patients, theoretically stimulating demand. However, the sudden price cut is painful for many dental chains. Implant services used to be one of their profit mainstays with gross margins of 60% to 70%, which may now be slashed in half. In the short term, many small and medium-sized clinics may be forced out due to cash flow pressure. Leading chains can partially offset the shock through economies of scale and diversified services, but an overall margin decline appears inevitable.

Upstream integration and service innovation

For dental chains, this is both a crisis and an opportunity for transformation. Leading companies are building competitive advantages in three ways: moving upstream in the supply chain, such as by establishing processing centers or partnering with domestic manufacturers to reduce costs; adopting digital transformation through AI implant planning and 3D printing to improve efficiency; and innovating service models, such as offering full-cycle care packages combining implants, periodontal treatment, and regular maintenance.

The market is becoming more segmented — high-end clinics are shifting toward complex implants and premium services like ALL-ON-4 to maintain pricing power, while the mass market is pursuing scale through standardized procedures.

At a deeper level, the reform highlights structural contradictions in China’s dental care sector, addressing the public’s complaints about expensive dental care while ensuring the sustainability of medical institutions. Future policies may need to establish differentiated payment systems (basic CBP-covered options plus premium self-paid options), or reform personal medical insurance accounts to improve payment capacity. The era of relying solely on policy dividends is over; companies must build long-term competitiveness centered on medical quality and supported by patient experience.

Lu Jiarui predicts several trends for the dental clinic sector. First, the industry will accelerate toward a dual-track structure of “high-end specialty clinics + community-based affordable clinics.” The high-end market will focus on complex implants and orthodontics, while community clinics will handle basic treatment and preventive care, achieving scale through standardized services and insurance coverage.

Second, growth momentum will shift toward efficiency gains from technological innovation, new value created through services, and incremental demand from market penetration into lower-tier areas. Two niche segments — early intervention in children’s oral health and elderly oral care — may become new growth drivers.

On a broader level, the evolution of dental clinics reflects a transformation in China’s medical service system — from “commercialized medicine” toward “medicalized commerce.” Where the past emphasized rapid expansion and high profits, the focus must now return to the essence of medicine, seeking sustainable models.

For chain operators, the biggest strategic challenge is balancing economies of scale with medical quality. Some brands have shown a “McDonaldization” tendency during expansion, where excessive standardization leads to declining quality; others have remained “small but beautiful” but struggle to break growth bottlenecks. A potential solution is the “flagship + satellite” model: establishing flagship institutions with teaching and research capacity in core cities, supported by standardized satellite clinics in surrounding areas, with remote consultations and technology sharing to maximize resource efficiency.

LeadLeo Research Institute is an original content platform for research on banks and companies and an innovative digital research service provider with nearly 100 senior analysts. You can contact the platform at CS@leadleo.com.

This article was originally published on Blue Whale Finance by Tu Jun.

This commentary is the views of the writer and does not necessarily reflect the views of Bamboo Works

To subscribe to Bamboo Works weekly free newsletter, click here