Good morning, everyone, and thank you for all of you for joining us for this conference call on Straumann 2023rd quarter results. We are glad to have you with us again, and we very much hope that you, your families and your colleagues are all safe and well. I am pleased to say that we have had very few reported cases in of COVID in our global organization over the past 8 weeks, none of which have been serious and for which we are very grateful. To protect our colleagues and to support the fight against coronavirus in the community, more than 80% of our headquarter colleagues are working remotely and the building is closed to visitors. So I'm very sorry that we can't welcome you physically, but we do hope to see you in person as soon as the situation allows.
As usual, this morning's presentation and discussion will include some forward looking statements, so please take note of the disclaimer in our press release and on Slide 2. At the summary, I will give you a brief overview, and Peter Hackard, our CFO, will share the business performance and financial details with you. After that, I'll bring you up to date on recent events and strategic initiatives. And of course, we look forward to answering your questions afterwards. Following our previous media conference 3 months ago, we enjoyed a period of respite in the pandemic with the recovery trend continuing through the end of September.
As you know, earlier in October, the situation tipped and many countries are now battling against a second wave. On Slide 5, you can see that in September, the OECD considered the economic outlook to be especially uncertain. It noted that all major economies will have certain recession this year with the exception of China. Recovery will be fragile and GDP next year is expected to be lower than it was in 2019 in many countries. Therefore, restoring confidence will be crushed.
In view of the latest even and the current surge in section rates, the projected recovery curve for GDP is leaning towards the OECD's downside scenario. Confidence is essential, not just for economic recovery in general, but also for industry. Unit liability of disposable income will also be pivotal because implants and clear aligners are elective procedures that are not generally reimbursed. The chart on the right reflect assessments provided by our country organizations at the beginning of this month. While the majority of dental practices remain open in most regions, restrictive measures to control new outbreaks have increased significantly, especially in EMEA.
In North America, the situation is still somewhat challenging. Latin America is beginning to emerge, while Asia Pacific is still running very well. Now practices are rigorously implementing safety measures, and patient flow is still fairly good at the moment. But we don't know if it will stay like this now that treatment backlogs have been reduced and pandemic is resurging. Moving on to Slide 6 and how we are adapting to the new reality.
The surge of COVID infections mean that we are coming back to more stringent measures in many areas to ensure people safety and business continuity. Safety considerations prevent us from reaching and serving some customers physically in some geographies and we have shifted to working remotely in many areas. The pandemic has further accelerated the trend in digitalization, and we are leveraging this to expand our base of installed intraoral scanners, in addition to attracting other scanner users by offering seamless connection to the Straumann Group digital ecosystem. We are intensifying our use of alternative channels, such as remote selling and direct to consumer, which implements traditional sales and marketing approaches. COVID-nineteen will also accelerate consolidation, both on the provider and supplier side, making our focus on DSOs even more relevant.
In general, customers are seeking solutions that increase efficiency, sharpen treatment times, reduce practice visits and offer greater affordability. We are addressing these needs, for example, by offering a range of immediacy solutions and brands that cover all price levels. But the most important thing is to approach these new realities with the right mindset and behaviors, which is where our culture of agility, embracing change, creating opportunities, focusing on customers, building trust and communicating is key. We will be sharing more of this later, but first, let's look at the 9 month and 3rd quarter highlights, which you can see in Slide 7. The pandemic and stiff currency headwind cut group revenue in the 1st 9 months of this year by 15% in comparison with the corresponding period of 2019.
The impact was heaviest early in Q2, but we have climbed out of the trough to post third quarter revenues in line with the prior year in Swiss francs. In organic terms, this is excluding the effects of acquisitions and currency exchange rates, we grew 8%, making Q3 the 1st positive quarter this year. The improvement was driven significantly by pent up demand for prosthetics, implants, but also clear lines. Further contributions came from strong sales of digital equipment and the Straumann BLX implants. All regions reported a continuation of the improvement that started around mid Q2 led by Asia Pacific, which posted double digit growth in Q3.
Customer focus has been central to our recovery Through intense online activities and by tapping into new sales channels, we gained share of voice and warm customers in many segments. From a brand and product perspective, it is interesting to note that growth was powered both by our premium business with Straumann Bialik Simples and our value franchise with Neodent and Medentica, lifted by strong digital and clear aligner sales. At the same time, we were able to launch new products, which I will tell you about later. In short, Q3 was very encouraging, but pent up demand has now been fully absorbed in view of the uncertainty surrounding COVID and the economy, it is still very difficult to make any forecast even for just the remainder of the year. Looking at the sequential figures in Slide 8.
As I just mentioned, all regions reported continued improvements from mid Q2 onwards, and the sequential improvement from first half to Q3 was between 24 and 27 percentage points in each case. And with that, I will hand over to Peter for more details on the financial performance.
Thank you, Guillaume, and good morning, everyone. As usual, I would like to begin with our revenue development at the group level and then look at our 4 regions. On Slide 10, you can see that at 2020 exchange rates, our 9 month revenue in 2019 would have been CHF 80,000,000 lower because all our major currencies weakened against the Swiss franc. The effects of mergers and acquisitions added CHF 22,000,000 bringing the adjusted revenue base to almost CHF 1,100,000,000. The M and A effect in Q3 was mainly due to Doctor.
Smile, which we consolidated as of September. In the center of the chart, you can see that all our regions reported double digit contractions for the full 9 month period, taking group revenue down 19%. This was mainly driven by EMEA and North America, which collectively contributed in more than 70% of the reduction, as you can see to the right of the main chart. On the far right, you can see that the good recovery in Q3 did not make up for the heavy decline in the 2nd quarter and slight drop in Q1. Furthermore, the growth in Q3 was driven mainly by pent up demand and should not be viewed as the new norm.
On Slide 11, you can see that in our largest region, EMEA, the continuing turnaround lifted quarterly organic revenue by 7%. All the major markets posted growth with strong rebound in Italy and Spain as treatment backlogs were reduced. Germany and France reported moderate increases, where Turkey achieved dynamic growth fueled by the launches of Straumann BLX and Nuvo implants together with strong digital equipment sales. Russia and distributor markets in Eastern Europe performed well, while the UK, Portugal and the Middle East continued to struggle. One regional highlight that I would like to mention is our expansion in the Romanian market where 120,000 implants are sold annually.
At the end of September, we acquired the business of Arcus Biotech, a well established national distributor of dental implant systems. This will boost our local presence and presents an excellent opportunity to convert customers from competitive systems to Straumann Group brands. In North America, both the U. S. And Canada recovered from heavy declines in Q2 with solid growth in the 3rd quarter when organic revenue climbed 9%.
The increase was driven by pent up demand for implants and restorative solutions and fueled by strong demand for Straumann BLX, which was launched a year ago. Both the premium and the non premium implant franchises grew, the latter outpacing the former, driven mainly by Neodent and its growth in DSO channels. Restorative Solutions also increased, while digital equipment sales grew substantially, thanks to strong sales of payers into our channel. Moving on to Slide 14. Asia Pacific saw a further sequential improvement in organic revenue from a decline of 12 percent in Q2 to 11% growth in the 3rd quarter as China, Australia and New Zealand all rebounded to double digit growth in Q3 and Taiwan continued to post very strong growth throughout.
With the exception of Singapore, all other countries in the region reported sales decreases due to the pandemic. However, nearly all of them experienced a sequential improvement in Q3. In Japan, the comparatively soft sales reflected the exceptionally strong Q3 last year when customers purchased stocks ahead of the tax increase. In plant sales picked up across the region, driven by premium and nonpremium brands. While our premium business is significantly bigger than nonpremium, the latter grew faster, lifted by Nieland, which gained ground in Australia, India, Japan and Thailand.
Sales of intraoral scanners also increased, especially Carestream models, which we distribute in China. Moving across the world to Latin America, the organic revenue in Q3 was just 5% below the prior year period. While still negative, this is a significant improvement from the 60% decline in the Q2. Of all the countries in the region, only Argentina and Chile managed to grow in Q3. The majority of practices in the region remained closed until July and even September in some countries.
However, most are open now and patients are seeking treatment. In the largest regional market, Brazil, we remain open and continue to supply customers through the 17 NelDent stores across the country. NelDent was the region's main driver in Q3, supported by strong sales of clear aligners, digital equipment and 3 d printing vessels. Slide 15 gives you an indication of how the individual businesses have performed. In our core implant and restorative business, the Straumann premium range continued to gain market share, reflecting its strong brand equity, innovation and customer loyalty.
Sales of BLX continue to recover, and we are confident that they will exceed the 2019 levels over the full year. Our nonpremium franchise continued to outpace the premium business driven by Neotend and lifted by Menentika. Share of wallet gains, particularly in the DSO segment, were the main contributors. The digital business achieved dynamic growth in Q3, driven by intraoral scanner sales, especially Trios models, which are now fully integrated into our digital ecosystem and seamlessly connected to ClearCorrect and other work blocks. The CADCAM Restorative business reflected the backlog of restorations that were postponed during lockdown as well as developments in implant sales.
Consumables, including ceramics and 3 d printing resins, developed well. Biomaterials also returned to growth in Q3, reflecting the pickup in implant procedures and sales. The orthodontics business picked up substantially, fueled by a large number of case starts, more than half of which were generated outside the U. S, which is ClearCorrect domestic market. To support expansion in Europe and dynamic growth in the D2C business of Doctor.
Smiles, our new manufacturing unit in Germany went into operation in the Q3 with a production capacity of almost 10,000 aligners per day. And with that, I will hand back to Guillaume.
Thank you very much, Peter. I have already referred to the immediate measures and initiatives we are taking to adapt to the new realities. Now I would like to give you an update on our recent progress with our 3 long term strategic priorities. The first of which is to drive our high performance, Straumann Group culture and organization. For the past 6 years, we have constantly fostered the play on our mindset, which, as you can see in Slide 19, embraces change and stimulates growth in contrast to the less flexible victim lower mindset.
All through the crisis of staff have shown agility, flexibility, creativity, but also teamwork, customer focus and endurance, which I'm convinced are reflected in the turnaround and market share gains we have achieved. I would like to commend and thank them sincerely for this. Slide 20 presents some recent examples of this player learner agility. When lockdown came, our colleagues quickly focused on leveraging our digital capabilities and strength, creating one of the broadest online education networks in our field, including Straumann Campus, which is a complete web learning environment. It offers advanced interacting virtual events with live booth, webinars, expert talks and chats.
The campus activities in the past two quarters have been some of the most intense digital approaches in the industry. Due to travel restrictions and the healthcare precautions, dental progresses and education events around the world have either gone near flow or have been canceled altogether. To gain share of voice at digital conferences, we have orchestrated multiple virtual forums and symposia to offer training and education to showcase new solutions and to present clinical evidence. To fill the vacuum resulting from cancellations, we are creating our own industrial events, for example, Apex, events in North America, which are designed to give the impression of being at an event and visiting our exhibition stand. The experiences feature interactive tours, education sessions, panel discussions, augmented reality presentations of latest technology, specials promotions, interactive sales appointments and more.
This year's EAO meeting was completely virtual and drew more than twice the normal number of visitors. Our satellite symposium live attracted 800 participants, and we are more than 1600 visits at our virtual rooms. Another example of our strong online outreach in Q3 was the EMEA summit of our women implantology network. Win is a key initiative to reach, support and encourage the growing number of female dentists. Rather than postponing this year's summit, we also went virtual and welcome more than 3,800 dental professionals offering education, advice, technology updates and networking over a period of 7 days.
Our campaigns to introduce new products have also gone virtual. Last week, we held a prelaunch event online to present Straumann's new zygoma implant system and our immediacy concept, which was attended by more than 500 participants in 30 countries. It featured 4 hours of lectures, demonstrations and panel discussions in addition to providing direct access to key opinion leaders and local representatives. We also introduced the learn in the box experience, which enables dentists to select and configure a package of information, training and hands on achievements. Another unique online event was our Global DSO Summit, which brought more than 50 CEOs from the world's leading dental service organizations, together with top speakers to discuss the impact of COVID-nineteen on DSO leadership and also the future of oral health care.
As you can see in Slide 21, the participants represented 28 countries and more than 31,000 clinicians over the world. Through lockdown, we continued collaborating closely with DSOs, helping them to bounce back and building relationships for the near future. As you can see in Slide 22, our 2nd strategic priority focuses on accelerating growth in our core implant market and strategic segments. With regard to the premium implant segment in Slide 23, our smile in the box service provides opportunities for customers to grow their businesses, offering easy access to digital dentistry and enabling them to perform complete treatments in a single session, reducing patient visits accordingly, saving time and increasing productivity. Strong and BLX is a key element in our strategy to drive premium implant segment.
As you know, one of the key advantages of BLX is high thermal stability, making it ideal for emergency protocols. Thanks to its unique selling points, BLX has continued to show great progress this year. And as Peter mentioned already, we are very confident that BLX sales will exceed the 2019 levels despite the pandemic impact. Sales will gain further momentum from launches in APAC and LATAM early next year. Building on its success, we have developed a next generation tissue level implant called TLX.
This combines the innovative fully tapered design of BLX with our iconic proven tissue level implant, which one of the longest and best selling implants on the market. With high prime stability combined with the advantages of tissue level design, like current implant health preservation and reduced surgical procedures, Helix will help us to gain further share of the fully tapered segment, bringing us closer to the goal of the market leadership in immediacy. The clinical program is now underway and includes a large prospective randomized controlled trial at the University of Perth. Ferb. At this point, we would like to show you a short interview with Professor Daniel Buser, one of the world's most respected and well known implantologist who helped to pioneer our tissue level implants more than 30 years ago.
This is the new Swiss Institute of Translational and Entrepreneurial Medicine in Bern. And we're here to speak with its Chairman, Daniel Bouzer about Straumann's new soft tissue level dental implant, TLX. Professor Buser helped to pioneer the original tissue level design over 30 years ago.
That was actually 1985. And Schroeder, my mentor, came to me and said, Danny, we go into a new project with Fran Suter, and you will be our clinician. And you have a chance to treat those patients. Just you, for half a year, take the chance, and that's how we started with this tissue level implant, 2 piece first time 2 piece implant and a hybrid design implant. That means a machined top and TPS at that time, TPS surface for bone anchorage.
In addition to being one of the most widely used dental implants, the Straumann tissue level is extremely well documented. 1 of the largest and longest independent studies was published by Dierks et al in 2014.
When the Dierks study says it all, first of all, I love the study because it's done by the Swedes. So it's not a Bernese study. And they show a clear difference between 3 different implant types. 2 were nonhybrid and one is hybrid, and they had a much less susceptibility for peri implant complications and a much lower failure rate during healing and in function. It was a 9 year study.
And that says it all, you see.
Straumann's next generation hybrid combines the tissue level concept with the innovative design of its BLX bone level implant.
The future in implant dentistry is with hybrid design implants, so machined on the top in the transcrestal area and micrograph inside the bone. TLX is an interesting really interesting concept because BLX has been developed and this is not a new implant, of course. The idea is many years old, an improved version of BLX. When I saw that, of course, much more aggressive threat. So if, as a clinician, I'm driving to get maximum primary stability, then I would look into that implant.
When I saw it, I told Straumann guys, look, what you have to have it with a tissue level version, also TLX, they call it now, because I want to have that implant with a machined top because I use that implant for sure in the posterior areas. And then, of course, with the potential possibility to do an immediate restoration because there are indications to do that. And another one is to use it in immediate implants because there you need the maximum stability, but also then you need a machine on top. Otherwise, you have to sink it extremely deep into the tissue. So that makes it very special, and that's why I'm very excited to go into this field as well.
Yes. I had the chance about 4 weeks ago to do a first TLX starter proof of concept surgery. And the handling was very smoothly. You could feel that the feeling touch was excellent. There was a punched site, so we didn't have to open a flap.
And the radiograph you see here very nicely, you see actually here a tissue level implant, which is in place for, I don't know, 10 plus years. And you see this has a 2.8 millimeter machine surface all the way down to here and the same here. And you see how the bone adapts. And this is the sulcus, and this is all highly smooth. And this implant here has 1.8 millimeters So with a 2.8 millimeters then the implant shoulder would have been at the crest.
Now when this is a And then the radiograph looks not so that the implant is And then the radiograph looks not so that the implant is so deep, but that's the way we have done tissue level implants since the late '90s, put them deeper to have this chance to have only the smooth surface exposed to the sulcus. And I told him we're going to give him to start with 8 weeks, and then we take an ISQ, and then he will get his crown. Very excited about it.
And that sentiment is shared by other experts in the broad clinical trial program, which is underway to evaluate TLX prior to the market release. We'll share more on that in the future. But for now, it's goodbye from Bern and thanks for watching.
We expect to start the limited market release in the first half of twenty twenty one, as you can see in Slide 25, together with a summary of the key benefits. We also aspire to leadership in the nonpremium implant segment with our Oncocchio, Neodent and Medentica brands. In addition to international rollout, we are extending the portfolio and adding innovations. For instance, the newer than 2.9 millimeter narrow diameter implants for use in limited bone and a 7 millimeter wide implant for extraction sockets. Both have ELIX fully tapered designs for immediacy indications.
Neogen's EZ Pack concept is also an all in one set comprising an implant and a free in one abutment solution. These impacts can be used for conventional or digital workflows with immediate or temporary respiration. This concept combines flexibility with simplicity and efficiency and due to launch in November. Both Neonet and Entogeal are working on guided surgery solutions, and the latter is developing additive manufacturing technology to produce screw retained titanium bars. For its part, Medencika is developing an innovative surface technology to promote soft tissue attachments to its multiplatform abutment solutions.
All of these projects are further illustrations of our investments in development, which have continued despite the necessary cost reduction measures due to the pandemic. And finally, we have sharpened our 3rd strategic priority to create the leading ecosystem for aesthetic dentistry. Slide 28 shows how we are using digital technology to connect systems and components into a powerful ecosystem. We recently announced that PreShake Cures and oral scanners, which we distribute, are now fully integrated into our software solutions and services. As a result, the scanners can connect seamlessly with our orthodontic restorative, implant, chairside and digital dentistry solutions with just one click.
Most recently, our collaboration with FreeShape has focused on integrating Trio scanners with ClearCorrect to facilitate case submission and ordering, as you can see in Slide 29. In the new workflow, dentists simply select the ClearCorrect option in Trios, and the scans together with the case information are routed to ClearCorrect's doctor portal automatically. ClearCorrect has also upgraded its ClearPilot software for enhanced convenience and time savings in treatment planning. And perhaps more most importantly, we launched Clear Quartz, our new high performance multilayer aligner materials ahead of schedule. Clear Quartz is a huge step forward in term of comfort, durability, sustained force, optimized clarity, excellent tooth adaptation and stain resistance.
It is proprietary to ClearCorrect and is now available in the U. S, South America and initial APAC markets. Rollout in Europe and Latin America will follow in the coming months pending regulatory approvals. All of these additions provide us with leading edge technology and a highly competitive solution to address the global clear aligner market. And that brings me to Slide 31 and some thoughts about the outlook.
We remain cautious about the months ahead in view of concerns about the economy, the rapid increase of COVID infection rates, especially in Europe. And the fact that the pent up demand seen in countries after shutdown restrictions were lifted has now been almost fully absorbed. The increasing uncertainty make it very difficult to make any forecast even for just a reminder of this year. So we are still refraining from offering guidance for full year revenue and earnings. Our underlying business fundamentals are intact, and we are confident that when the general economy and consumer confidence returns to normal levels, we will emerge as an even stronger brand and partner of choice for our customers.
And now I would like to open the question and answer
session. Boris Horn, can we
have the first question please? The
first question comes from Christoph Greitler from Credit Suisse. Please go ahead.
Thank you.
Is on TLX. Actually, could you make an estimate or an indication on how large you think that tissue level segment is in the fully tapered market? Is there already a segment? Or basically, you have to build that up? That would be the first question.
And the second question, I think I noticed in your press release that the BLX launch in Japan was pushed to 'twenty one. Is this just purely kind of due to the overall market situation in Japan?
Yes. Thank you for the questions. When it comes to TLX, TLX is another bridge into our strategy to lead in the future the fully tapered segment. We started with Bialyx. We have launched the Zygomatic system, which is also a huge opportunity as a door opener or large fully tapered specialist.
And now we are coming with our TLX, which is offering a unique benefit about primary stability, but also the capacity for clinicians to try to prevent perimplantitis, thanks to the neck of the implant. Then there is not so far fully tapered neck implants existing. And I would say there is no segment, as you said, we have to create it. But this is what we have done with our tissue level infant franchise so far, and we have been able to generate some significant success here. And this is another opportunity for dentists to have more simplicity in registering their case than a BLX implant.
All in all, we believe that this is another very interesting strategy for achieving our goal, which is to gain 30% to 35% of the fully tapered implant in the next 3 to 4 years. When it comes to the BLX launch in Japan, actually, we are doing limited market release as we speak, and we are we have studied our activity with BLX in Japan. What we are meaning doing happening in January is the full market release. Then there is no kind of a step back here. But we want to make sure we are training the clinician properly.
We are training our team properly in order to go afterwards in a very successful for market release. And we have studied our commercial activity there.
Next question comes from Daniel Djerdovkan from Njerbo.
Also two questions. Maybe you can share some experience in partial lockdown countries right now like Israel or Belgium, Wales, Netherlands? Are the dentists' shops closed there? Or is it now different versus spring? And maybe you can also shed some light on how the development was in October
so far.
And the second question, also to TLX, you especially with your U. S. Experience, the U. S. Is more a tapered market.
Do you believe that with the neck so the tissue based fully tape, but you have a good chance as well to develop the market with this implant in the U. S. Like with PLT and PLx? Thanks.
Well, when it comes to the partially locked areas like Wells or Island or The Netherlands, there is actually no processes closed. Then there is still some activity ongoing, and we have not seen a drop in activity for the dental practices as we speak. Now obviously, potentially, one of the risks is having less patient flow if they are then requested not to travel around. However, as soon as you have a medical appointment, you are free to do so. Then it's too early to say for us what would be the consequences of those lockdown.
But obviously, it would not go in the right direction for continuing a significant growth if countries would further go in lockdown around us in Europe. When it comes to October, without sharing too much data here because it's still not closed, we have still seen October as pretty positive versus what we have seen in the last month. And if things would stay the same and the virus being controlled, we would be rather positive on what's coming in the future. We are focusing once again on what we can control, which is especially our customer support. But there are some microeconomic factors and also the virus development factor that are pretty still worrying and that where we cannot control at all.
When it comes to TLX in the U. S, yes, I think U. S. Market, it's still a very much BLX implant because U. S.
Is a very bone level implant. Therefore, the largest growth potential is with BLX and also with zygoma implants because it's a specialist market where you have a lot of specialists also using advanced technique, including zygoma implants. This is one of the strategic reason why we are done zygoma is to push TLX and especially in the U. S. TLX will be more gaining share in Europe and in Asia Pacific, where there is a lot of GP activity.
Okay. Thanks very much.
The next question comes from Veronika Dubajova from Goldman Sachs. Please go ahead.
Good morning, gentlemen, and thank you for taking my questions. I have 2, please. One, can you give us a little bit of sense of the cadence for the cadence of growth throughout the Q3? Just kind of curious if you saw big variations for month to month and region by region. And maybe Gjo, you can also clarify your kind of comment on October.
I wasn't sure if I understood that you felt growth accelerated sequentially versus September or not. So if you could comment on that. And then my second question is a financial one for Peter. Looking at the performance in the Q3 and assuming even with some deceleration in the Q4, just curious how you're thinking about profitability for the second half of the year. You have the underlying cost savings kicking in.
You have lower activity levels. It would seem to me that you should be at least meeting last year's margins. But tell me if I'm thinking about that incorrectly in the second half, by the way, I meant, not for the full year.
Thank you, Veronica. Yes, I think, as you said, it's really different from region from region. Then if we start with the region that started in the pandemic, which is Asia Pacific, then we see building momentum. And since they went out of lockdown, we see an increasing recovery with China leading the way, obviously, but also having really good performances in a country like New Zealand, Australia, Japan as well, even though Japan has a specific situation in Q3. As last year, we had a stock buildup in the practices because of some tax decision from the government.
And we would see things continuing to improve as they are also entering in the summer period over there, at least mainly in the south part of Asia Pacific, which should not push the virus up and China being controlling the pandemic very well. Now if you look at the Europe and U. S, we have seen some significant pent up demand at the beginning of the quarter, which is July mainly end of June July. And since then, we have seen a rather steady but positive trend in the practices, especially in the patient flow. I would not say that we are seeing momentum going up, but we have been rather positively surprised by the level of activity that we have seen coming back in the practices.
And this is still at a rather very positive level. When we look at LATAM, which is for us, LATAM is the one who has been suffering a lot from the crisis also still in Q3, even though in the end of the quarter, it became much better. And we see also in Q4, the Latin America region getting out of the crisis and posting some interesting growth rate.
So coming to your second question on the margin development, Veronika. Before going into some business comments, please keep in mind that we are facing also in the second half a significant negative FX impact not only on the top line, but that also has an impact on the margin compared to 2019 due to the strong Swiss francs versus most of the other currencies. From the business perspective, all the cost saving measures that we have initiated in the second quarter, they have fully kicked in, in the 3rd quarter. They were also kicked in, in the 4th quarter. So on top of that, we also have lower business activity level compared to 2019 due to the travel restrictions, due to the congresses that are not taking place and due to this to that most of the training and education events are canceled as well or are only done remote and virtually, Guillaume has explained.
So that also reduces our cost base in the second half. However, I would not consider that as a sustainable cost level going into 2020 21, where I would expect these activities to increase once again. And also, the very promising development in Asia Pacific and LatAm also allows us to ramp up activities and invest in further growth and gaining market share. So I would not expect for the full year as the margin level at the 2019 level, but definitely a significantly higher margin than in the first twenty twenty should the situation develop as Okay. That's very helpful.
Okay. That's very helpful. Thanks, guys. And then can I just squeeze in a quick follow-up just on the ClearCorrect business? Curious if you could comment on what the cases looks like in the Q3 or year on year?
Well, we have been well, clear, correct. We have been pleased with the development, especially on introducing our new material ahead of schedule. We have been pleased also to launch our new software that will improve GP capability to do treatment planning in a much easier way, also ahead of schedule. We have seen also then a positive trend versus Q2. Then very pleased with this development.
Now we want to continue having a new customer position in all the regions where we have launched ClearCorrect lately, which is especially Europe, where we had to restart again our activity. As you know, we have done a lot of stop and go. And we have done that in Q3 finally and kind of 3 months really in a row where we have been stopped. We haven't been stopped and we have seen some really interesting outcome at the moment with double digit growth. And that's what we are looking forward being able to continue in the future.
Okay. Thanks so much.
The next question comes from Tom Jones from Berenberg. Please go ahead.
Good morning. Just
The first was just on the comment that you made a couple of times during the presentation about nonpremium growing slightly faster than premium in many markets. The question I had is, is this just a reflection of the non premium customers getting back to high levels of activity quicker? Or are you starting to see some dentists who are suffering a little bit of financial pressure starting to shift from using premium implants down towards using non premium implants?
Yes. Thanks, Tom, for the question. We don't see this happening. We say that we are growing faster, and the facts are there significantly on nonpremium because of premium significantly because of low underpenetration or underpenetration of the value value segment. We are gaining significant share on the value segment because we are starting from low and a lot of our new customer acquisition are also down there.
Then but we don't see at the moment dentists shifting from premium to value in a significant manner. This is not explained by this trend.
Okay. That's perfect. And then the second question I had was partly relates to margins as well, was on the very strong capital equipment sales. Obviously, that's very helpful for your top line, but a lot of that business is sort of distributor type business. So the sort of 2 part question really, does that have any meaningful impact on margins that we need to consider for H2?
And then secondly, more from a revenue perspective, do you think the very strong sales you seen in intraoral scanners is the start of a sustainable trend?
Or do you just think this is
a kind of a positive blip that we've see during the quieter period between the 1st and second wave of the pandemic?
Yes. I think it's an important strategic question as well. I will take the last one first, and then Peter will comment on the margin. What is very important to consider on the digital side is keeping access to customers. And what is critical, especially when you see how the dentistry is going, there is and we many companies are talking about this digital platform coming up.
And we need to have access to this digital platform, and it starts with intraoral scanners. Tomorrow and already today, but even more tomorrow, surgical planning will be done as a service for dentists as it is the case for clear liners where you have treatment plan, which is mainly done for dentists in at least on the GP side. And we want to make sure that we are going to have access to those dentists. If you have other competitors bringing their own scanners, they might prevent you afterwards in the future that those customers will have access to our solutions, our common implant, our Neodent, our Medentica and our Clear aligner. Then this is a very important strategic approach to make sure that we are increasing our user base of intraoral scanner to keep developing services and having a
reach of those guys. And that's the first point from a strategic standpoint. And the second part of your question, Tom, was relating also to the margin and the change in product mix. I would say we have not seen a fundamental change over the past couple of months in that And we need to differentiate between the impact on the gross margin and the impact on the operating margin. Obviously, with growth above group average of some of the newer segments where we generate lower margins, such as digital equipment or also the auto business, that is structurally changing our product mix, and the gross margin will slightly decrease due to that.
But that has been the trend already in the past couple of years since we initiated that strategy, and I would expect that also a little bit going forward. However, on the operating margin, all these new businesses are incremental on the operating profit and operating margin under a normalized situation. And normalized, I mean, in that case, if we are rolling out a new offering in a new country, such as auto in a new country, for example, obviously, that's an investment case. And we need to invest in the buildup of the respective organizations and gaining the customers. But after 2 years, 3 years, I would expect that a similar margin levels as with the other businesses.
Okay. That's very helpful. And just a follow-up on the margins. Just to maybe help us try and quantify it if you are willing, follow-up on Veronika's question. You mentioned that FX is likely to be a significant headwind to margins, but would you be prepared to go as far as to quantify current FX rates?
What would the margin of H2 in 2019 have been at current FX rates?
Well, on the one hand, you have the backup chart in the presentation from where you see the impact of the different FX rates and the changes of the FX rates on the margin on the absolute EBIT as well as on the revenue. So that gives a certain indication. And on the margin side, I think you can extrapolate the negative impact on the margin from the first half to the second half twenty twenty. That's a rather good approximation in that respect.
Well, thanks for that.
Given the current FX level rates, especially with the U. S. Dollar that significantly devaluates in the mid summer this year, I would also expect a negative impact on sales as well as on margin in 2021 should the rates stay as they are currently.
Sure. That's very helpful. Thanks very much.
The next question comes from Patrick Wood from Bank of America. Please go ahead.
Perfect. Thank you. I have a few questions, of course, please. The first one, I'm just curious when you say that you feel the backlog has been completed. What makes you say that, just objectively from the outside looking at revenue numbers and things like that?
If that's true, that implies there's very, very little net new demand coming in and you guys have been kind of living off backlogs. So just curious why you felt that the backlog and what gave you confidence the backlog has been done with? And then the second question is somewhat related, just to help understand the tonality of what you guys are trying to say, because it sounds like you said for
the U. S. And Europe, June, July works through a
lot of the backlog. But it sounded to me at least that there was still reasonable growth in August, September, October after the backlog had been sort of used up. So I guess I'm just trying to understand that dynamic relative to growth.
Yes. On the backlog side, we believe well, I have to say it depends how you define backlog. But the backlog that we define is the cases that has not been done and they were planned in the period May, which has been rescheduled by surgeons and GPs on the surgical side. And most of the patients that were planned have been rescheduled. And what the backlog, when we mean when we are meaning that the backlog is almost absorbed is because all the patients that were lined up that have not been treated during those months are now being scheduled or treated or not at all.
And we have seen most of them being treated, which is also the good news because we have not lost any patient in that process. Now it does not mean that there is not the as you call that, the net new demand because we still see patient flow and the patients that are still eager to have their treatment done. And as you can see, we are still seeing a trend that consumers are spending more for their health. And we also believe that there are less alternative at the moment as we have seen and heard that you cannot travel anymore or then holidays capabilities reduce or other kind of spending are also limited. Then there is a focus on personal health, which is important, and we believe that it will still drive some net new demand towards dental practices, including implants and clear aligners.
We have seen then a significant spike for the rescheduled of those patients in June, July, and we have seen then the more regular activities afterwards in total practices that have been able to resume almost their activity level. And in that sense, that's what we mean by the pent up demand almost absorbed. And when we look at Asia Pacific, that's one of the good example that we see. Also is that we have significant growth now, which is rather regular and which is not based on pent up demand at all. It's just based on regular growth with a very underpenetrated market.
Now it's not fully absorbed because we are still in 2 areas, especially in Latin America, where they are getting out of the crisis, and we still believe that the pent up demand effect in this region will come in the months to come than October November because they have been suffering about the crisis still during the Q3. And in North America, there might be still some remaining of pent up demand, which is difficult to evaluate because the virus has not really completely disappeared during a period as it has been the case in Europe. Then all in all, that's the way we are seeing the pent up demand absorption.
The next question comes from Michael Jungling from Morgan Stanley.
Great. Thank you. I also have two questions. The first question is in relation to capital equipment. Could you be more precise as to what the growth rate was in Q3 and how you see the capital equipment demand for your digital solutions over the coming quarters?
And question number 2 is, when it comes to the value players, there is a number of meaningful assets for sale. I think you know who they are. Does it make sense to add additional value implant brands to what you already have today?
Yes. When it comes to capital equipment, we have a double digit growth. And do we think that it's going to be the same? Yes. We believe that there is a strong trend in capital equipment, but especially apparel scanner because this is not only the way to access digital workflow and more efficiency, but also by the fact that this is also protecting the clinician and the nurse from the virus.
You don't have, once again, to deal with analog impression and saliva when you are using intraoral scanner that it's really a combined benefit of efficiency and safety, which is making the intraoral scanner a big hot topic within TELSI3 at the moment. Now we have a very high Q4 comparison period because we have been very strong also last year on capital equipment, specifically on our scanner. But we believe it's going to be also a rather significant volume in Q4 this year. When it comes to value players, we are looking at every opportunities that we would see would be fitting our strategy and our increased market share into the value segment. We have to say we have been really pleased with the development of our value share or value gain in all geographies.
We have been quite successful in North America, Latin America, Asia Pacific and also now Europe. Then we believe that we are very well equipped with the 3 international brands we are having now with Neodent, Medentika and Antojia, where all of them are delivering really good results. Then the need for an additional brand is lower. But if there is any good strategic local opportunity, then obviously, we would be looking at them.
Okay, great. And maybe I can just follow-up on the capital equipment growth rate in the 4th quarter. If you tie it all together, is Q4 for you organically a flat growth quarter? Or do you foresee it to be more likely to be above flat?
Just sort of curious how
you're thinking about the 4th quarter
now that you've
It's Judith. At the moment, that's why we're not providing guidance because it's very difficult to say. We are still bullish about our business. We see the trend already positive. And if we can really see the current activity that we are doing now, there is no reason we cannot be positive.
Now once again, we are focusing on what we can control. That means customer satisfaction. That means new customer position. That means training and education online in order to pursue that trend. Now coming to the area we cannot control, which are once again the potential recessions that may come and especially the virus which is coming up.
As you know, we are quite exposed in Europe. And at the moment, it's quite worrying in Europe. Then this might obviously impact our 3rd, Q4. And that's the way we are seeing that with, let's say, some positive perception internally about what we do and a significant question mark on how macro factor will impact our results.
It's kind of interesting, Ella, because you've got October in
the bag. December is not
a big month normally for the dental implant industry.
So you've only got 1 month left in terms of making assessment as to how Q4 may be. So I'm somewhat surprised that you are not able to provide
a bit more color whether it's going to
be a growth quarter or whether it's going to be a declining quarter based on November?
Well, again, we will see what November will bring. Otherwise, if we would know exactly what will come up, once again, on the pandemic side, I think you are hearing like us that they are and it has been discussing the questions like Wales, like Netherlands, like Ireland are coming in lockdown. There are obviously discussions that are and announcements that are going to come in France today, and that will be done also later in Italy and Spain by the end of the week. Then and Germany also and being very exposed to this region. Obviously, we don't provide any guidance.
I think we have been pretty clear on this. Once again, we believe that we there is strong options to be positive. But once again, we are going to see what's coming.
Great. Thank you for the info.
Okay. The
next question comes from Julien Dermois from Exane BNP Paribas.
I also have 2. 1 relates to the savings that have been generated during the pandemic. We start to see some companies saying that some of those savings could become structural. In the U. K, that would probably refer mainly to virtual meetings, virtual congresses and some of those marketing activities.
What do you think is the approach of your customers to these events? Are they happy with these? And do would you consider maybe doing a bit less going forward? And could that end up being a structural gain in the years to come? So that would be the first question.
And second question relates to clear aligners. So you are shifting gears on that side with this new material and new software, the full integration with ventral scanners. What are the next strategic steps in that space? Is it now fully about execution and making it an even greater commercial success? Or is there anything else on the agenda?
And would you just be kind enough to help us understand how much it represents of your sales? I mean, just a ballpark estimate and then just confirm or not that you have crossed the CHF 100,000,000 threshold for that business in 2020?
Well, when it comes to the structural side, then we are a growth story. And it's what we want to do is making sure that we can fuel growth and keep investing as much as we can as soon as we see that we can generate return. And we are seeing positive developments on the actual online activity. And we see also that this is a great period for us to continue to invest because we see some of our competitors being weaker at this moment in time. Then we want to continue doing this and gain shares, and I think that's the way we are seeing our business.
When it comes to the Clearliner side, yes, we still have a lot to do. Not only it's about execution in order to continue our growth. It's also about geographical expansion because that we have been just starting in Europe and we had like to stop and go. We are developing just now in Latin America and have now launched in Brazil and having our manufacturing in Brazil, which has really started full speed during this Q3. And we have our activity in Asia Pacific where we are still registering ClearCorrect in most of the countries, which will help us also to generate significant growth.
The second area where we need to develop significantly in ClearCorrect is our capability to address additional segments. We discussed many times that we are still not at the level of Align. We are still focusing on GEDs with simple to moderate case. Then we are doing significant investment on our side to be able to continue improving our value proposition and our software capability, especially because we believe on the material, we are at power or even better than Align and most of the competitors. But on the software side, we need to continue developing it to address more advanced cases, complex cases and also from a regulatory standpoint, the teens market.
And you see a lot to be done on the ClearCorrect side and a lot of really great growth opportunities moving forward.
And next question comes from Marcos Viola from MainFirst. Please go ahead.
Yes. Thank you. Good morning from my side. My first question is on the BLX market share. It seems that the N1 implant is still in delay and is now expected to be launched rather in late 2021.
So can you elaborate a bit on the competitive dynamics here?
And are there other measures that Envista
is taking to protect its position? Or have you maybe even noticed an acceleration in market share gains since it became clear to dentists that DIN-one will not be launched near term? And secondly, I got the impression that you came incrementally a bit more cautious on the development of your business with this release, but so far this seems to be driven by rising external risks and the environment only. So my question is whether you have seen a decline in any of your internal KPIs so far, which make you more cautious? And then finally, could you give us an update on your launch plans for the BLX in Brazil?
Will you launch it for the upcoming pent up demand? Or will that be later?
Yes. Can I kindly ask you to rephrase your first question? Because it's about N1. It was about N1 with the delayed launch. That's what you were saying.
And secondly, how your market share has moved since then And maybe what kind of measures competition is taking to prevent you from taking share given that they do not have up to date product?
Yes. I think we have seen some, again, delay with N1. As we said several times, we have not seen N1 in the market in a significant manner. Then they have been delayed in those activities. We see that coming with really small touches in some European markets with a very targeted approach to customers, which means that I don't think it had any impact on the market share as we speak on the fully tapered implant.
At least it did not modify nor slow down our BLX market penetration, and we are still very pleased and very bullish on what BLX can generate when it comes to our growth and our market share gain on the fully tapered segment. For your second question on the key performance indicator that we are looking at internally, there is no key performance indicator that are showing us that we cannot continue on this trend. Then we are just very cognizant of the micro situation because we have seen the impact of the first wave and how it has really significantly impacted our business by dental practices being closed or adult practices not being fully while getting a complete patient flow as they were having prior to COVID-nineteen crisis. Then we are just very cautious on the fact that it could come back as we see Europe, and we don't want to provide any too positive expectations from that actual factor. And the third one, which was the VLX in Brazil, yes, we are planning to launch VLX in Brazil very early 2021.
That would be ready for a part of the pent up demand. But once again, Brazil is a very, very small premium market. It's a niche in Latin America and especially in Brazil and Neuven is seen already as a premium brand, then we are going and well positioned to generate significant benefit with the pent up demand more with our new dent product portfolio than with the BLX per se, which will help us to gain further share in the premium segment.
Great. Thank you.
The next question comes from David Adlington from JPMorgan. Please go ahead.
Thanks, guys. Just a couple of questions left. So just on IDS. I'm actually surprised it hasn't been canceled yet. Obviously, you're not attending next year.
It's usually a big event for you guys and a nice source of growth. I just wondered, was that a difficult decision to make? Or have you become much more comfortable with the new way of selling? So it's become less of a concern? And then secondly, just on DSO, I'm just wondering what you're seeing at the moment in terms of further consolidation in that space and how helpful that is for you?
Yes. I would say, IDS, on one hand, has not been a difficult decision because it's all also about protecting our people. And we were all having all our teams not being very comfortable to feel that they would be in a closed environment with many people and very limited control of the situation. Then as we really stand for protecting our people as priority number 1, the decision has been quite clearly taken. Now from how are we planning to continue presenting our innovations and our gaining share through addressing a new customer target group that we could meet at IDS.
That's correct. That's why we are planning again significant investment next year with a lot of online events. And we have seen, as you said in your question, this has been pretty efficient. And we have been very pleased with what we have been able to generate. We are also improving very significantly in how we are doing this, how we are following up customers and leads from those virtual events.
Then yes, we see that also as an opportunity to reinvest this amount of money to more online and targeting activities than the IES per se. And we don't see this as a constraint when it comes to our growth rate for innovation. When it comes to DSO, yes, we feel like DSO will continue some aggressive acquisition strategy. This is also a good moment for consolidation. We see some practitioners that might be now tempted to go into the DSO side by wanting to be supported by getting back in business.
Then we know DSO are really interested to benefit from this current turbulent times to increase their market penetration. We see that as an opportunity as well because we are developing a stronger and stronger relationship there and having some significant plan to grow with them moving forward.
Great. Thank you.
The next question comes from Oliver Metzger from Commerzbank. Please go ahead.
Yes. Hi. Thanks a lot for taking my questions. The first one is a follow-up on 2 previous questions. So you have made the comment that October was pretty positive.
You also commented that this was linked basically purely to underlying demand. So as long as we don't see disruptive changes for Odanta Parag, this is, is it fair to say that this positive development should continue for at least November? That's the first question. The second one is on TLX. So is it fair to assume a similar price premium compared to BLX?
And the first is pretty quick on Romania. How were you present in Romania before the acquisition of Arches Biotech?
Yes. That said, if you remove all export factor, we are confident that all the things we put in place will allow us to have positive results moving forward by the end of the year. But again, as we are in this environment, which is still very volatile and uncertain, that's the things that we need to take into consideration. But I would say so far, so good. And we are obviously very excited about considering gaining market share as the program we put in place have been successful during Q3, and we'll continue to roll them out in Q4.
When it comes to TLX pricing, yes, it will have the same premium than BLX because the benefit of the product is very significant, and it's a very unique value proposition in its fully tapered segment. 3rd, when it comes to Romania, we have just we were seeing Romania as an interesting market to come in. It's 120,000 implants then pretty significant in Eastern Europe. We have just created our subsidiary in April of this year, and we were planning to try to accelerate our growth in this interesting market by trying to acquire this distributor who is very present in the Romanian market. And obviously, it will accelerate our footprint in this additional dominated value segment market.
Just for clarification, so you have not been active in Romania before. Is that correct?
Just with a distributor with very, very low presence. That's why we decided to start up our subsidiary because it was important for us to accelerate that. We were not pleased with the distributor we were with. And it was, I'd say, not significant versus now the acquisition we have just done.
Okay, great. Thank you very much.
The next question comes from Kit Lee from Jefferies. Please go ahead.
Thank you. Just one last for me, please. I just want to follow-up on BLX or other BLT. Have you seen the new BLX accounts also buying BLT now? And if so, where is your market share with BLT today versus last year?
Yes. We have seen, as we have said in the beginning of the from the beginning of the launch of BLT that a significant number of BLT users were also starting to use BLT for, I would say, the more regular cases. We've using BLX in the most advanced cases where this really high primary stability was the and we have seen an average of 40% to 50%, depending on the region, about the elite user finally going also to the BLT side supporting us to grow our BLT franchise. Do we have seen that continuing? Yes, we have seen that continuing because we strongly believe that a specialist especially will want to use mainly one brand as soon as he is very satisfied with it and that the service level is also at a very high level.
Then not only we see Beadex as a way to as a way to increase our capability to gain share in the fully tapered segment, it will help us to push the BLT market share, which is above 35% now in the apicality tapered segment.
And if I guess, if you are continuing to penetrate the BLX segment and people are also buying BLT, is it fair to say that that 35% level would probably be higher next year as well and maybe 50% is the level that we should think about for BLT?
Well, this is really our objective midterm. Yes, we are not looking at our strategy by just pushing our market share in the fully tapered segment, but also continuing to push our market share in the apicaly tapered segment because we are truly believing that BLT is also by far the best product in its category.
That's great. Thank you.
I'll keep it at 2. And just I'm still trying to understand through your answers on October versus September, whether you're trying to tell us that October growth is positive, but it is less than September because we're starting to see the incident rates creeping up in Europe? Or what are you trying to tell us that October is flat on September or maybe even above? It would be really helpful if you would give us a bit more color on that to see how patients are behavior amid the increase in incidence rate in Europe. And then my second question, without being too critical, I do understand that there is a lot of uncertainty related to the next couple of months, mainly due to COVID-nineteen as we see infection rates going up.
But arguably, we could say that this is probably not going to be significantly different come February 2021 when we expect you to give us a guidance for 2021. How shall we think about the guidance for 2021? Do you believe you will have established like a learning that will allow you to provide us some guidance for 2021? Or do you think the uncertainty will make it impossible for you to give us visibility for 2021?
Well, on your questions, again, when it comes to October, 1st 2 months is not finished, and we need to see what will be the last day that is always very important in our business. Secondly, I would say September October, I would say it's almost same level than September, then we are pleased with this. We don't see momentum being built up, but we don't see a decrease right now. And I hope this is answering this question. The second thing is we are not going to talk about 'twenty one right now.
We have a really not big uncertainty and volatility about, again, how could be the 4th quarter because of how the second wave might come in and also how the North America area, which is very important for us, will react to the election, which is going to happen in a couple of weeks. Then I believe we will know much more when we will arrive at the Q1 2021, and we'll see if we will be in a position to give a 2021 guidance. We hope so, like everyone, because that means that volatility will be a little bit less, which is not only important for you, but it's obviously also very important for us. And we all hope that it's going to be the case. At this moment in time, it's just too difficult to say.
Thank you very much.
The next question comes from Falko Friedrichs from Deutsche Bank. Please go ahead.
Thank you very much. Two questions, please. Firstly, on TLX. It would be very helpful if you could provide us with a very brief summary again of your expected launch roadmap for the product. I think you said you plan
to launch it in
the first half of next year. So is there a reasonable expectation that you're going into Europe first next year then maybe Asia in 2022? So it would be very helpful to get your thoughts here. And then secondly, could you give us a quick refresher on your current ClearCorrect capacity? Obviously, very important topic for you as you're scaling up.
It would be interesting to hear whether you were able to make all the additions you wanted to make so far and what your plans are for the next year?
On Felix, we are we said that we are planning first time 2021 in Europe, and I think we are planning Q2. We were also leveraging the IDS time line, and we hope that we will be able to launch TENPELIX by the beginning of Q2 in Europe. And pending registration, we will plan to launch in some of the Asia Pacific markets, yes, during fall 2021 or early 2022. The largest country being Japan and China, China being the latest in 2022 and Japan being potentially early 2022. And again, when it comes to North America, we will be launching when it will be FDA approved, which should be hopefully by the end of 2021.
But once again, there's a limited impact because we still believe that BLX is the number one priority here as North America is 90% bone level market. When it comes to clear plate and manufacturing capacity, then we have done a lot of work and development here. Then we are pleased to report that our manufacturing in Europe is up and running, leveraging also new technology to allow us to quickly upgrade if necessary. And we'll have quite some positive plan here. We are also pleased to say that we have that activity up and running on the manufacturing side in Brazil as well to deliver not only in Brazil but all North America all South America, sorry, leveraging our capability also in the resin side, where we are going to have all our raw material, which are going to belong to our organization, the raw plastic material coming from bare material, the resin coming from the heater acquisition and the 3 d printer coming from the RapidShape Technology, which is a company in which we invested some years ago.
And in North America, we have been able to develop our production capacity as needed. And we are, yes, pleased to report that the production capacity we're having now is in line with the growth plan we are having.
Excellent. Thank you.
The next question comes from Sunilita Klein from Bernstein. Please go ahead.
Hi, there. Just two questions about the U. S. Business primarily. Can you remind us what proportion of your U.
S. Total implant revenues are going through DSOs today, maybe in the U. S. And also commentary on Europe would be helpful? And then as we think about the different growth rates between premium and discount, can you elaborate on what the margin differences are between the 2?
I know a few years ago, the discount business was fairly low EBIT margin. But as you scaled it up, has that gap narrowed significantly?
Yes. I think when it comes to DSO, our implant business, I would say, it's in the low double digit number. That's the DSO in June would represent something like 15% to 20% of the total market on the implant side. We believe that we are it's a good proxy for performance as well. When it comes to profitability, Kjell, do you want to give your view on
this one? Yes. I mean, if you look at the gross margin and as in the past, the profitability difference from a gross margin perspective is rather small, only a few percentage points, especially as we are running a very efficient production site for the Neodent products in Brazil. And we can also benefit there currently from the low or the devaluation of the Brazilian real. If you look at the operating profitability level, then the gap has been closed over the past couple of years.
But obviously, given the market share in the non premium business that we have, that's still an investment case for us and we are rolling out our value offering in additional countries as we speak currently in some Asian countries. And that also is a certain burden for the margin from that perspective. But in that countries where we are present with the nonpremium offering for quite some time, the margin gap has significantly closed.
Great. Thank you.
The last question comes from Daniel Buchta from SEKG. Please go ahead.
Yes. Thank you very much. Indeed, still two questions from my side. The first one quickly on NUO. I mean, with the full
year results 2019, you announced this a bit bigger and
this should be an important brand for the lower value segment. Can you say a little bit more about how the clinician feedback was in that regard in the various market where you pretested it so far? And then on Dental Wings, with the IDS last year, you announced your VirtuVivo, which you had quite big hopes on gaining market share here. And then the fire came in Canada. And can you share a little bit more about how your positioning here has improved since the manufacturing came back?
And is that still a big hope for you to gain in that lower value intraoral scanner space? Thank you very much.
Yes. Nuvo is definitely an important part of our implant strategy for gaining market leadership on the value segment. The start has been pretty positive. We have started to sell NUBO in Brazil. We have started to sell NUBO in Turkey.
And the feedback from clinicians have been really positive. We are further developing the portfolio. As you may remember, we explained that Nuvo has 3 different connections: the Extonxt, the AnteAnalex and the Conical connection. And the Conical connection is still to be released. That should happen by the first half 2021.
And this is going to be one of the large part of our Nuvo business that should come from here because this is the compatible connection with the Korean brands that are owning a large part of the value segment in many regions. Then we have also started with Nuvo in the U. S. Through a specific dedicated sales channel and the first outcome are also positive. And yes, so far so good on the Nuvo side, And we hope that we'll be able to launch the conical connection in the key markets that are like India, that are like further older Latin American country, but also Europe and North America.
When it comes to the second question for VIRTUAL VIVO, yes, VIRTUAL VIVO then has been launched this year well, relaunched this year. And a large part of its production capacity has been absorbed by the Brazilian market and the emerging market and especially also Turkey, then we have launched we have sold a significant number of them versus last year, which has been pleasing for us. As we have very strong results with the trios in very developed market like North America and like Europe, we are still focusing there and Chipoy also Carestream in China. Then we try to make sure we position the right product to the right regions to maximize the outcome. Thank you for your questions.
And before we close, I would like to share another piece of information with you. I'm pleased to announce the appointment of Silvia Dobrin as our new Head of Corporate Communication. Silzia has worked in the pharmaceutical and medtech sectors for many years and no doubt many of you already know her. Her last position was Director of Corporate Affairs International at Biogen in Switzerland and previously she spent 7 years at Roche in Communication and Media Relations. Prior to that, she worked for Sonova in Investor and Corporate Relations.
She joined us on the 1st December and will take over from Mark Hill, who will be retiring at the end of January after 7 years at Straumann 17 years at Straumann, sorry, yes, that's the emotion. This will actually be remarks, I would like really to thank you for all the support you are providing us and also the financial community with all the information that you have prepared along those 17 years. And I'm sure that you will join me in wishing him and Silvia all the best for the future. Thank you very much, and we wish you a very successful day.