[The Venezuelan Dental Equipment & Supply Market]{.underline}

**Prepared by: Ms. Kalenka Velazquez, of the United States Commercial
Service**

**U.S. Embassy, Caracas, Venezuela**

# 

# Summary

We project that Venezuelan imports of dental supplies and equipment from
the United States will show solid, perhaps even strong, growth over the
next several years. Below, we list seven key characteristics of the
Venezuelan dental equipment and supply market \-- some positive and some
negative -- for U.S. exporters to consider in assessing opportunities
here.

First characteristic, a sophisticated orientation among Venezuelan
dental professionals toward advanced dental technology procedures and
equipment. Second characteristic, a strong preference of the Venezuelan
private sector market for the U.S. products. Third characteristic, a
relatively compact market that can also be a jumping off point for entry
into the regional market. Fourth characteristic, a lack of transparency
in the commercial legal system. Fifth characteristic, the current
national government's anti-U.S. bias in public procurement. Sixth
characteristic, exchange control policies that can affect local
companies' (including reps or distributors) ability to settle
dollar-denominated overseas obligations. Seventh characteristic,
enhanced competitiveness (for already competitive U.S. products) that
comes from dollar weakness vis-à-vis European competitors.

Venezuela is a country of 25 million, an estimated 15% of whom make
frequent and regular use of dental care services. This population is
served by 17,000 licensed dentists, about 60% of whom work in the
private sector.

Products with the best prospects are those that are the most
technologically advanced and/or of high quality. In Venezuela the
interest in cutting edge equipment is strong. The key competitive
factors for U.S. manufacturers of dental equipment and supplies are high
quality, relatively affordable prices (factor in dollar weakness), and
lower import costs (factor in geographic proximity) to Venezuela.

Over the last three years, economic uncertainties have led many
Venezuelan dentists to settle for second best, or technologically less
advanced, items at lower prices. Third-country manufacturers such as
Brazil, Colombia, Argentina and Pakistan have increased market share by
virtue of lower prices and aggressive financing offers.

There are no significant trade barriers or restrictions for U.S. imports
on dental equipment and supplies. Most dental products can be imported
into Venezuela after a one-time registration Ministry of Health
requirement is met. The registration process can be somewhat lengthy,
but is relatively transparent and inexpensive. Dental equipment and
supply imports are subject to an ad valorem C.I.F. tariff duty ranging
from 5% to 15%.

# 

# Market Overview

We forecast that Venezuelan demand for U.S. dental supplies and
equipment will grow solidly, perhaps strongly, over the next several
years. The general need for dental care is constant, and we expect the
market for dental supplies, equipment and services to be boosted by
increased acceptance of newer technology. There is a strong preference
for U.S. products, but German and Brazilian producers are also strong in
the Venezuelan market. There is little local production in most
sub-sectors.

[Venezuelan Dental Equipment and Supplies Market (Millions
US\$)]{.underline}

2002 2003 2004 Projctd Ann.Growth

(Projected) For following 2 years

Import Market 11.67 8.33 13.0 15 %

Local Production 3.0 2.3 2.3 7 %

Exports 0 0 0 N/A

Total Market 14.67 10.63 15.30 9 %

Imports from U.S. 5.33 4.64 4.64 15 %

Exchange Rate: Bolivars 1,920/US\$

Sources: Instituto Nacional de Estadisticas (INE), Asociación Venezolana
de Distribuidores de Equipos Dentales (ASODENTALES)

The Venezuelan economy was hit hard by various factors in 2002-2003.
Growth returned in 2004, but uncertainties linger. Regardless of the
economic and political challenges Venezuela has faced in the last two
years, demand for dental supplies and equipment imports has remained
constant. Indeed, the dental equipment and supplies sub-sector has been
one of the most resilient and profitable sectors of health care in
Venezuela.

# Trends and Best Prospects

Industry sources estimate that the percentage of the Venezuelan
population regularly accessing dental care has declined from 18% to 15%
over the last few years. The government has recently committed to
dramatically increased spending to increase public access to essential
healthcare. It is too early to forecast the impact of this initiative,
but it could prove significant for the dental sector.

One opportunity created by this initiative could be portable low-cost
units, which could be used in mobile units in rural zones of the country
where there are few hospitals. A related current trend among some
dentists is to combine efforts to have semi-private mobile units where
they can render their services at lower prices to lower income people.

For several reasons, the private sector is probably of most promise to
U.S. dental equipment and supply exporters. Up to now, public health
programs have covered only basic odontological procedures, and it has
been left to patients to cover any further treatment and/or procedure.
Dental procedures in Venezuela are expensive relative to local
professional salaries, and most insurance policies don't cover many
dental procedures. Many dental providers offer financial programs to
cover treatment, and most patients pay providers by installments per
session.

Venezuelan dental clinics are interested in keeping up-to-date on the
latest technological advances and satisfying patients' demands for
state-of-the-art care. Newer methods, such as laser dentistry, are
becoming more and more popular. Implants and cosmetic/aesthetic
dentistry are among the most rapidly growing market segment. A
significant percentage of Venezuelan dental service consumers use
private dental clinics, so we expect this trend toward ever more
sophisticated higher dental technology to be pronounced.

Hi-tech materials and equipment, such as implant products, X-ray,
laboratory and laser machinery are growing more popular as technology
advances in Venezuela. Consumables and disposable products have always
been in steady demand.

In general, products with the best prospects are those that are the most
technologically advanced and/or of high quality. In Venezuela the
interest in cutting edge equipment is strong.

## Best Prospects by Product Line

[Dental chairs and units]{.underline}: over the past ten years, there
has been a trend amongst clinics to upgrade their dental chairs rather
than replacing the entire unit. Not only is this more cost-effective,
but it allows the dentists to upgrade their chairs with the most updated
components without having to purchase a whole new system. However, many
dentists still replace their full systems every five to six years,
depending on the economy.\
 \
[Esthetic dentistry]{.underline}: we project rapid growth in this area
over the next decade, as more and more people request cosmetic changes
to their appearance. Whitening, bleaching, straightening and restoration
are in demand.

 \
[Implants]{.underline}: implantology is growing in the Venezuelan
market. As more and more people opt for permanent solutions to tooth
loss or for cosmetic replacement, implants are the solution of choice.\
 \
[Laser dentistry]{.underline}: laser dentistry is a new and growing
field in Venezuela. Some market skepticism remains, but laser dentistry
is beginning to take a hold in the market. Patient demand for more
precise treatments with less healing time will produce growth in this
area.

 \
[Endodontic materials, prostheses, microprostheses, orthodontia and
X-ray equipment and supplies, filling material and small
tools]{.underline}: demand remains constant and strong.\
 

# [A Best Prospect Listing by Harmonized Code:]{.underline} 

Harmonized Code Description

11. Apparatus based on the use of X-ray or

> Of alpha, beta or gamma radiations-dental uses.

29. Dental fittings, parts and accessories.

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21. Artificial teeth, parts and accessories thereof: of plastic.

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49. Other instruments, including dental burrs, and parts and
    accessories.

    30. Anesthetic instruments and appliances.

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31. Dental drills engines.

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```
10. Prepared binders for foundry molds.

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```
3407. Dental wax or dental impression compounds other preparations for
      use in dentistry.

      40. Dental cements and other dental fillings.

      ```{=html}
      <!-- -->
      ```
      10. Dentist's chairs.

          10. Wall lighting fittings, lamps used in surgery rooms.

8419.20 Medical, surgical or laboratory sterilizers.

# 

**Competition**

Imports dominate the Venezuelan market for dental equipment and
supplies. There is very little manufacturing locally. Local production
has increased, however, in the manufacturing of resins, amalgams,
cements, disposables, aspirators, mirrors, anesthetics, disinfectants,
and applied cabinetry and office furniture. Beyond basic items, most
manufacturers in Venezuela require significant imported inputs.
Generally, it has been difficult for the few local manufacturers to
maintain production.

U.S. dental equipment and supplies are well received by Venezuelan
dentists. Many private and public dental facilities (universities,
public hospitals, armed forces) prefer to acquire American or
German-made equipment because of their quality and reliability. U.S.
products have been seen as of higher quality even than products
manufactured in Europe.

However, third-country manufacturers such as Brazil, Colombia, Argentina
and Pakistan have occupied an important share of the market because of
their lower prices and financing. Latin American producers have also
benefited from regional trade agreements. In some instances, these
arrangements have exempted importers of regionally made products from
the exchange application procedures that affect importers of U.S. and
European products.

According to a local industry estimate, a recently graduated dentist who
prefers an American dental equipment would need an average of \$20,000
for his initial office equipment purchases: dental unit, supplies, and
hand tools. In comparison, he would need \$8,000 to purchase Brazilian
or Colombian equipment.

# End-Users and Insurance Companies

# 

Currently, public sector facilities deliver dental services to
approximately 65% of the market. Venezuelans who can afford dental
services at private hospitals, up-to-date clinics, and individual
dentistry offices offering advanced diagnosis and treatment represent
the other 35%.

The private services are concentrated in the major metropolitan areas:
foremost in Caracas, then in the other major cities of Maracay,
Barquisimeto, Merida and Maracaibo.

Venezuelan dentists have always had close ties with their professional
colleagues in the U.S. As a group, they tend to have a very strong U.S.
orientation. They frequently attend trade events, congresses, symposia
and seminars in the States to keep up with developments in American
dental technologies and procedures. In addition, Venezuelan dental
schools generally prefer U.S. brand equipment and stock their labs
accordingly.

Another significant player in the medical/dental sector is the Instituto
Venezolano de los Seguros Sociales (IVSS), the Labor Ministry agency
that provides health-care and retirement benefits for all full-time
workers and employees of the public and private sectors. The IVSS, with
approximately 1,800 licensed dentists on its payroll, provides dental
care in major population centers. They provide treatment in basic
odontology areas, including emergency care, x-ray and diagnostic
services. Corrective/aesthetic treatment is available only up to age 12,
and no prosthetic aids are provided for bridges, plates, implants,
crowns, etc. The Ministry of Health itself does not provide dental care
in any of its nationwide health-care facilities.

Dental care and treatment are also provided for employees of the
Ministry of Education under a separate social program institute known as
IPASME (Instituto de Prevision y Asistencia Social para el Personal del
Ministerio de Educacion). Assistance is either in IPASME facilities or
by contracted services as needed.

The Ministry of Defense similarly provides assistance to all armed
forces members, either at their own hospitals and clinics, or through
mobile care facilities for remote locations. During most of the remote
area operations, basic dental service is rendered to local civilians as
well, who usually have no access to dental care. State health-care
programs, as well as some municipalities, also provide basic dental care
at times.

There are many private charity health-care centers, which frequently
incorporate dental care facilities including x-ray and diagnostic
services. Located in the Caracas metropolitan area, other main cities
and rural areas, they serve those not covered by Social Security, and
the poor or marginal segments of the population. Frequently, they also
provide service to those covered by the IVSS when its facilities are not
operative. Charities providing such services include the Damas
Salesianas, Fe y Alegria, Hermanitas de los Pobres hospitals.

# Market Access, Entry, and Distribution

There are no significant trade barriers or restrictions for U.S. imports
on dental equipment and supplies.

Local clinics prefer to purchase dental supplies through an agent who
registers the devices with the Ministry of Health, and who will be able
to provide after-sales service.

One of the first issues a potential agent will raise with the U.S.
manufacturer is exclusivity, and the vast majority of agencies have
exclusive representation rights. Partnering with a good local
representative that has excellent contacts in the industry, proven
reliability, loyalty, technical sustainability and after-sales service
capability is a key factor to success in selling to the Venezuelan
dental sector. Industry sources estimate that less than 15% of the
Venezuelan importers, wholesalers and distributors of dental equipment
and supplies control almost 80% of Venezuela's total dental imports.

The Commercial Service office in the U.S. Embassy in Caracas has very
strong contacts in the dental sector and can assist U.S. exporters to
identify prospective distributors, importers, or agents. Our office
contact information is provided at the end of this report.

Venezuela acknowledges FDA and ADA approvals, but imported dental
products still have to go through a one-time registration process with
the Office of Registration and Control for Medical and Paramedical
Equipment and Supplies in the Ministry of Health. Registration is
necessary for all business entities, by the manufacturers,
wholesalers/distributors/agents, or service companies, and proof of
registry is required for official bidding purposes. The registration
process is relatively transparent, inexpensive, but somewhat lengthy
(generally in the range of six months). U.S. exporters that do not have
an office in Venezuela are well advised to consider a prospective
distributor's, agent's, or importer's ability to oversee the
registration process in their selection process. This is a routine part
of the business for Venezuelan companies involved in the dental or
medical sectors.

There are additional, but straightforward, labeling, packaging,
technical specification requirements, but local agents can manage this
as well. Companies should be prepared for a requirement that some
labeling and packaging be in Spanish.

Brazilian and other third-country manufacturers and suppliers are
sometimes viewed as being more supportive of their local distributors
than are U.S. manufacturers, more likely to provide free literature and
catalogues to their local suppliers and to offer technical training for
local distributor employees (dental technicians) at more affordable
prices.

Many Venezuelan dentists may request some type of financing to acquire
expensive equipment. Strong after-sale support (through longer warranty
periods, spare parts stock availability) and Spanish-language catalogues
and brochures can also be important marketing tools.

On dental imports, there is an ad valorem C.I.F. tariff duty ranging
from 5% - 15%:

-   5% for sterilizers, laboratory ovens, photographic and x-ray
    accessories and materials, and artificial teeth;

-   10% for chemicals, amalgams, dental impression pastes some cements,
    and platinum dental units;

-   15% for catgut, anesthetics, waxes for dental impression, air
    compressors of less than 40 Hp, and dental chairs.

# 

# Financing

Traditionally, financing terms between U.S. suppliers and local
distributors was typically net 30 days, but as the economic situation in
Venezuela weakened in 2002-2003, suppliers have increasingly required
cash in advance of shipment to the distributor. As a result, dental
equipment and supplies are now typically paid in cash. Some distributors
may offer 30-day payment to their frequent dentist clients. There is not
much financing or credit available for acquiring dental equipment.

# Exchange Controls

Venezuela remains subject to comprehensive foreign exchange controls and
an official exchange rate. Special regulations ("providencias") exist
for a range of transactions including for foreign investment,
remittances, foreign private debt, imports, exports, insurance and
reinsurance, and the airline industry. While the rate of foreign
exchange approvals and liquidations by the Central Bank has improved,
foreign businesses continue to complain of delays and uncertainty.
Foreign exchange transactions continue to take place on the quasi-legal
parallel market. Legislation is pending in the National Assembly which
would impose criminal penalties for such transactions.

# [An Excellent Opportunity to Promote Your Company in the Venezuelan Market: ExpoMedica Internacional 2005, March 2-4, 2005, in Caracas]{.underline} 

Many dental distributors and manufacturers participate in AVEDEM's (the
Association of Venezuelan Importers and Distributors of Medical
Equipment) bi-annual exhibition, ExpoMedica. This is Venezuela's most
important specialized business forum for the health care sector. AVEDEM
organizes this event, open to all sectors in the health care field, and
includes conferences and lectures as well as exhibition booths. This is
an excellent opportunity for sellers and buyers to meet at displays of
the latest equipment, technology and services of the health care sector.
For details, contact Commercial Specialist Ms. Kalenka Velazquez, at the
Commercial Service office in the U.S. Embassy, Caracas:
<kalenka.velazquez@mail.doc.gov>.

....Or Meet Venezuelans at Major Shows in the U.S.

Many Venezuelan importers, distributors and dentists travel each year to
three major dental-related trade shows events in the United States: the
American Dental Association Exhibition (Chicago, Oct 2005), Dental
Manufacturing of America Mid-Winter Show (Chicago), and the Greater New
York Dental Meeting (N.Y., Nov 25-30, 2005).

[In Any Case, Contact Us....]{.underline}

...for further information about opportunities for U.S. exporters in the
Venezuelan dental equipment and supplies market or for further
information about the ExpoMedica Trade Show in March, 2005.

We have excellent contacts in the sector, and we are interested in
putting that knowledge to work for you.

Contact Commercial Specialist Ms. Kalenka Velazquez in the Commercial
Service office in the U.S. Embassy, Caracas:
<kalenka.velazquez@mail.doc.gov>, or the Commercial Attaché in the same
office, Michael Carroll: <michael.carroll@mail.doc.gov>.