{"text":[[{"start":5.96,"text":"This article only represents the author's own views."}],[{"start":9.04,"text":"Feng Dai, the Harvard-educated chairman of Angelalign Technology Inc. (6699.HK), likes to tell the story of his first encounter with his company when he walked into a “small, stuffy office with old cubicles and stained carpets” in 2012. As head of Asia healthtech at private equity giant Warburg Pincus, he liked what he saw at China’s largest maker of clear, or “invisible,” dental aligners, which help to straighten teeth."}],[{"start":34.92,"text":"Three years later he bought the company."}],[{"start":37.18,"text":"In the latest sign that Feng made the right decision, Angelalign issued a glowing profit forecast last week, saying its revenue jumped 41.9% to 43.1% year-on-year in the first half of 2026 to between $229 million and $231 million. Its profit rose by an even stronger 69% to 78.9% to between $24 million and $25.4 million."}],[{"start":63.82,"text":"It attributed the big increases to growing quality awareness among consumers and dental professionals, as well as its own heavy investments in professional branding, direct sales and customer service infrastructure. Investors were all smiles over the results as well, sending Angelalign’s shares up nearly 21% in the first two trading days after the announcement."}],[{"start":84.24,"text":"There were other reasons to smile as well, as Angelalign emerges from legal issues and adjusts to the bruising impact of China’s policy that has squeezed medical suppliers for rock-bottom prices through a national procurement program."}],[{"start":96.2,"text":"We’ll return to those issues shortly, but first the strong revenue and profit growth that reflects Angelalign’s success both in China and abroad. Its sales volume in China rose by 36.8% for the six-month period to 148,600 cases, the unit it uses for its mainstay product. International sales increased by 43.3% to 168,000 cases – as global sales overtook domestic ones only three years after Angelalign started selling outside its home market."}],[{"start":127.16,"text":"That trajectory could soon put the company on track to challenge the much larger Align Technology (ALGN.US), owner of the rival Invisalign product, for global leadership in clear aligners."}],[{"start":127.66,"text":"Global expansion"}],[{"start":136.96,"text":"Angelalign acquired Aditek, a leading Brazilian orthodontic brand, in 2022, and set up subsidiaries the same year in the U.S., Europe and Australia. In 2023, it generated 145.3 million yuan ($21.5 million) in overseas sales, or about a tenth of its 1.48 billion yuan in total revenue that year."}],[{"start":164.16,"text":"The international market has been growing rapidly ever since, with annual sales volume up 82.1% to 256,200 cases last year, compared to 26.3% growth for domestic sales to 276,200 cases. The company’s revenue for 2026 rose 37.8% to $370.3 million, thanks to a doubling of global revenue to $163 million. And as we’ve already noted, international sales volume passed domestic sales in the first half of this year."}],[{"start":202.04,"text":"Angelalign was set up in 2003 by dental professionals, including former CEO Li Huamin, who co-developed the first clear aligner treatment approach in China. Li stepped down in 2023, and was replaced by Hu Jiezhang, formerly a managing director with Feng Dai’s CareCapital Group, a private equity and venture capital firm focused on the dental industry."}],[{"start":226.32,"text":"Angelalign went public in 2021, and saw its shares more than double on their first trading day. By that time, it controlled 41% of the domestic market, just behind Invisalign’s 41.4%. China became the world’s second largest market for clear aligners in 2019, with sales of $1.5 billion in 2020 out of global sales of $12.2 billion, according to Angelalign’s prospectus at the time of its IPO."}],[{"start":256.16,"text":"That brings us back to the present, where Angelalign scored a victory on the legal front in May, when the Düsseldorf branch of the European Patent Court rejected a patent infringement claim by Align Technology and Invisalign. In July, the Zhengzhou Intermediate People’s Court in China rejected the same charges."}],[{"start":273.72,"text":"Meanwhile, the impact of China’s national procurement program on the oral health services industry has been devastating, much like a similar policy on pharmaceuticals that began in 2018, cutting generic and mature drug prices by an average of 50%. The extension of the program to the dental sector in 2023 had a similar effect on companies like Angelalign."}],[{"start":294.32,"text":"Getting included in the program is a trade-off of price for volume. Three of Angelalign’s product lines were selected in China’s first volume-based central procurement program, which is on a three-year cycle whose second round is just beginning."}],[{"start":294.82,"text":"Price pressure"}],[{"start":309.08,"text":"“Invisible” orthodontic prices took an initial hit of 23.3% to 55% from the program. Lower prices paid by public hospitals and clinics also had a knock-on effect of depressing private-sector prices, tending to favor brands with sufficient scale to benefit from higher volumes. Chinese manufacturers more reliant on the domestic market were hit harder than foreign brands. And some dental services providers like private chain Meilike Orthodontics had to close down."}],[{"start":339.56,"text":"Angelalign faced price pressure as well, but came out a clear winner against Invisalign. Align Technology submitted seven of its Invisalign products for consideration in the procurement program but none were selected. As a result, its market share dropped from just over 40% to 25% based on volume after the first round of national procurement, while Angelign’s market share rose to over 41%."}],[{"start":365.4,"text":"Before the pandemic and national procurement program for oral healthcare products, the pair were roughly tied in the domestic market, while the smaller Zhengya Dental was third."}],[{"start":374.76,"text":"China’s estimated average growth rate of 23.1% between 2020 and 2030 for dental care products reflects a growing awareness of the importance of oral health and dental aesthetics among China’s growing middle class."}],[{"start":389.32,"text":"So, what’s next for Angelalign? At that fateful meeting in 2012, Angelalign’s chief orthodontist told Feng Dai: “Other aligners are tech focused. It’s always exciting for them to talk about shiny new stuff. But our founders demand clinically predictable outcomes and stability, while being easy to use. That makes life much harder for us and kind of boring for our investors.”"}],[{"start":413.6,"text":"The company’s latest earnings announcement, with its strong double-digit profit and revenue growth, seems to vindicate that approach. “After trying different brands, dental professionals and patients realized that even though all aligners look similar, the treatment results are significantly different,” it said. But it also acknowledged its approach requires heavy investment in professional branding, direct sales and local service infrastructure, adding it “remains committed” to serving dental professionals directly."}],[{"start":447.92,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786080173_5282.mp3"}